Hartley Pensions are not regulated to give advice. We strongly recommend that you seek Independent Financial Advice prior to making any decision on how you wish to take your benefits. If you do not have a financial adviser you can find one on www.unbiased.co.uk or take free and impartial guidance from the government backed pensionwise service https://www.pensionwise.gov.uk/en
What is the minimum age you can take benefits?
You must be aged 55 or over. There is no upper age limit that you need to take benefits by.
How much tax free cash can you take?
You can take a maximum of 25% of your SIPP’s overall value tax free. This is up to a maximum of the Lifetime Allowance (25% of £1million). You can only take this option once. The remaining fund can be used to produce income. You can specify a lower tax free cash amount if you wish. Hartley Pensions will crystallise only the amount required to generate the tax free cash you have requested.
Can I take an income?
Yes. You can choose to take an income at a specified amount or you can postpone pension payments until you are ready. The income amount is controlled by you but we do recommend you seek advice to ensure your fund can support the income amount you have chosen.
What types of Drawdown are available?
Hartley Pensions offer all types of drawdown to clients. From the 6th April 2015 clients moving into drawdown for first time will move into Flexi-Access Drawdown. Existing clients in Capped Drawdown can stay in capped drawdown. Clients in phased capped drawdown can select to crystallise further funds into capped drawdown.
What is Flexi-Access Drawdown?
All new clients crystallising their funds after the 6th April 2015 will do this under Flexi-Access Drawdown.
Flexi Access drawdown allows client to take 25% tax free cash and then access their remaining fund flexibly. There are no limits on the amount of funds they take from their fund. They can take their entire pot or keep it invested. All income taken either as a lump sum or income will be paid via payroll (14th or 28th of the month) and taxed under PAYE.
What is Capped Drawdown?
Capped drawdown is a form of income withdrawal where your pension is paid direct from the funds in your pension scheme. HMRC prescribe a formula that calculates the maximum amount of income you can withdraw each year. You will receive a benefit review every 3 years (up to age 75 then annually thereafter) that will recalculate the maximum that you can take.
What are Uncrystallised Funds Pension Lump Sum payments (UFPLS)?
This allows you to take lump sum payments from the pension fund without crystallising all of your funds.
- Client has £500,000 pension fund
- Clients wishes to take £100,000 lump sum through an UFPLS
- Of the £100,000 the lump sum will be spilt between tax free cash and income
- £25,000 PCLS
- £75,000 taxed as Income
By taking an UFPLS the client will trigger their Money Purchase Annual Allowance (MPAA).
How will lump sums and income from Flexi-Access treated for tax purposes?
Once the maximum tax free cash payment has been paid all remaining funds withdrawn will be taxed at your marginal rate. This can be paid as regular income or ad-hoc lump sums.
By taking an income or lump sum the client will trigger the Money Purchase Annual Allowance (MPAA). This means that the maximum you can contribute into your pensions without facing a tax charge is reduced to £4,000.
Pension payments are run through PAYE. This means that pension payments are potentially liable to tax. On setup of pension payments a HM Revenue & Customs (HMRC) Tax Code is required to ensure the correct level of tax is applied.
On setup of pension payments we will require either your latest P45 or a HMRC New Starter Checklist to be completed.