We can set up your Liberty SIPP as soon as we receive the following completed documents:

• Application form
• Identity documents
• Signed bank mandate

We will write to you or to your financial adviser if you have appointed one, confirming that your application has been accepted, and we will provide details of the bank account(s) we have opened with Royal Bank of Scotland.

However, you will be limited to what you can do with your pension for 30 days following its establishment. This is because the Liberty SIPP is a product regulated by the Financial Services Authority (FSA) and as a result you have a right to cancel the contract for a set period without incurring any costs. To ensure you are in no way disadvantaged by exercising this right, during this period you will not be able to invest any contributions made to the scheme outside the bank account. This guarantees any money paid in can be returned to source.

Upon receiving your application form we will write to you explaining your rights, and how to exercise these if you change your mind.

If you want to make a specific investment within a certain timescale and this restriction will hinder this, you can waive your right to cancel. There is a section on the application form to do this. If you waive your cancellation rights, but then cancel your contract with Liberty after the contract has been finalised i.e. the bank account has been opened, fees will be levied for cancelling.

Yes. There is no minimum age required to open a Liberty SIPP. Where the member is under age 18 a parent or legal guardian will be appointed co-trustee with Liberty Trustees Ltd, but on reaching age 18 the member will take on the responsibility as co-trustee.

There are two stages to AML due diligence; identification and verification. We use the information on the documents you have provided to verify this against independent references and government agencies. We may need further evidence if we are unable to satisfactorily verify your identity electronically.

We then retain copies of your documents and the verification report for the duration of your contract with Liberty and a further 5 years once your contract has been terminated. If you supply incorrect or false information and we suspect fraud, we are required by law to report this to the fraud prevention agencies.

The Supplemental Deed, which forms part of the application, appoints you as co-trustee alongside Liberty Trustees Limited. As a trustee, you must make decisions in the best interests of the beneficiaries of the scheme (you and your dependents). You will be registered as co-owner on all investments and co-signatory on any payments made from the scheme bank account.

A Liberty SIPP allows you complete control over how you invest your money. Neither Liberty SIPPs Ltd nor Liberty Trustees Ltd will give investment or financial advice; you are the driving force behind your saving for retirement, as well as how and when you take your pension.

When it comes to your finances and who you deal with, it all boils down to trust. Whilst there are many pension schemes where the corporate trustee is the sole trustee, with the Liberty SIPP Scheme you have the added comfort that your written authority is required prior to decisions being made on how your pension is run.

With the exception of pre-agreed fees, transactions cannot take place without your authority. This is achieved with you being named jointly with Liberty in your capacity as trustees as owner of all Liberty SIPP investments.

If you have a complaint about Liberty, in the first instance please send your complaint for the attention of the Compliance Officer, who will carry out an investigation into your claims and give you a prompt response. If after this you are still not satisfied with the situation, you can refer your case to The Financial Ombudsman. Contact details for these organisations are available on your Key Features Document.

If you do wish to end your relationship with us, you will have to nominate another pension arrangement to transfer your benefits to. Subject to transfer out fees, we will liaise with your new provider and arrange the transfer.

When your Liberty SIPP is set up you will be assigned a dedicated case worker who will deal with all administration on your scheme and be your first point of contact for all administration and technical queries.

The cost of any professional advice that has been received in respect of your Liberty SIPP can be met from its funds. This includes financial advice and investments advice.

Your fees are tailored to your Liberty SIPP contract. Based on the information provided in your application we will calculate your fees and confirmation of these fees will be produced in your welcome letter.

The first year’s fees will be collected as soon as there are sufficient funds in the bank account. If there is a delay in funds being available because you have not returned documents, we will issue an invoice which you will need to settle personally within 14 days. All recurring fees will be collected on the anniversary of the date the contract commenced. One-off fees will be collected once the transaction has completed.

Under the terms of the bank mandate, we will collect your fees directly from your Royal Bank of Scotland account. This will show up on your statements as “Liberty Fees” followed by the description. You should ensure there are sufficient funds in your bank account to cover fees, as otherwise we will levy further charges for the additional work in arranging for investments to be disinvested.

Whilst you are free to change your original plans for your Liberty SIPP such as varying your investment strategy, your original fees might be amended to reflect this, on the basis you pay for the services you use, but no more. The only exception to this is where the fee is as a result of insufficient funds, or contributions paid where the supporting paperwork has not been sent in advance.

Liberty SIPPs Ltd does not offer any financial or investment advice. We are not regulated by the FSA to provide these services and therefore cannot comment on the suitability of a Liberty SIPP or a particular investment for your personal circumstances. If you are unsure whether a Liberty SIPP is suitable, please consider its cost and whether you will utilise the extra investment and pension flexibilities it offers over other pension products.

Whilst we are happy to accept applications where advice has not been given, we do strongly recommend you seek advice. If you do not have a financial adviser and wish to find an adviser in your local area, you can get a list by typing your postcode into http://www.unbiased.co.uk.

Liberty SIPPs Ltd is regulated by the FSA to establish, operate and wind-up personal pension schemes (including SIPPs). Under the Trust Deed and Rules, Liberty SIPPs Ltd is appointed Scheme Administrator and will deal with all HMRC reporting requirements for registered pension schemes. As such we have a duty to ensure that all transactions which take place within the scheme comply with pension legislation. This is constantly being amended and in April 2006 the pension legislation was completely rewritten, which has affected everybody both in the public and private sector. Liberty SIPPs Ltd will guide you through the constantly changing legislation and provide you with details of what is and what is not permitted.

Liberty Trustees Ltd is a separate entity to Liberty SIPPs Ltd, its sole purpose to be act as co-trustee with you, the Member.

Money laundering is the term given to making money gained through immoral or illegal activity harder for the authorities to trace by placing the money into a legal vehicle.

As an FSA regulated company, we are required to carry out Anti-Money Laundering (AML) due diligence on all Liberty SIPP members and any unregulated person/company from whom we will be receiving or paying money to, so that we can check the funds have been obtained or invested legally.

As most of our business is done on a non-face to face basis, we need documentary proof that you are who you say you are. Without this evidence, we will not be able to do business with you.

You are able to transfer funds from other pension schemes into the Liberty SIPP Scheme. This can be done as part of the application or once the Liberty SIPP has been established. When we receive your instructions, we will ask the existing scheme or insurance company for details of the benefits and any paperwork they need completing to process the transfer. You may have to sign this paperwork, and if so it must be returned to us and not direct to the transferring scheme. This is to avoid a situation where the transfer is set in motion but you have separately told us that you want to exercise your rights under FSA rules to cancel.

When we are informed of your intentions to transfer other pension arrangements into the scheme, we will write and give you notice of your right to cancel. From the date you received advice from your financial adviser (or the date you advised us of your intentions if you have not received professional advice), you will have 30 days to cancel your request. To ensure you are not disadvantaged should you exercise this right, we will not accept transfers into the scheme until this period has expired.

The time taken to obtain the paperwork from the transferring scheme and for the money to be transferred to the Liberty SIPP can vary from a couple of weeks to several months depending on the nature and sometimes the attitude of the transferring arrangement. Liberty SIPPs Ltd will do its utmost to speed up this process.

You or your employer can make contributions by cheque, made payable to “The Liberty SIPP re:” followed by your name, or alternatively by BACS or CHAPS directly into your Royal Bank of Scotland account. If you are making regular contributions, a standing order can be set up from your bank. Contributions can be as regular or infrequent as you decide.

Prior to the scheme receiving a contribution, be it a personal or an employer contribution, you must have sent in the relevant paperwork to Liberty. This ensures that we reclaim any tax rebate you may be entitled to, and also that we comply with AML requirements. If you do not provide this paperwork before contributions are made, we will charge a fee for the additional work in dealing with the contribution retrospectively.

Personal contributions are treated as being net of basic rate income tax and we can therefore reclaim a further 20% on your contribution from HMRC, which we will pay into the scheme bank account. You are entitled to this relief so long as you are a UK resident for tax purposes and it is within your tax relievable limits.

Contributions to registered pension schemes are wholly free of income tax. If you are a higher rate tax payer you can claim a further 20% from HMRC via your self-assessment form on your gross contribution. Unlike the tax reclaimed by Liberty, this further relief doesn’t need to be paid into your pension.

Worked Example:

You make a personal contribution of £800 to the scheme in the tax year 2008/09. Liberty would reclaim £200 from HMRC which will be paid into your scheme bank account, making the payment up to £1,000. If you are subject to 40% income tax you can claim 20% on your £1,000 contribution on your assessment.

Liberty SIPP will not reclaim tax from HMRC for employer contributions. These are considered to be paid gross. Instead, tax relief on employer contributions is offset in the company tax return.

Liberty doesn’t stipulate a minimum contribution that must be paid to the scheme and there is no upper limit on the contributions that can be made, but there is a limit on the amount that is tax relievable. This is calculated against UK relevant earnings for the tax year the contribution is made, and is the greater of £3,600 or 100% of earnings in the tax year the contribution is paid. These limits are gross, so what you can actually pay into the Liberty SIPP is the greater of £2,880 and 80% of UK relevant earnings; Liberty then reclaim 20% tax from HMRC.

HMRC have introduced a cap on the amount that can be paid, known as the “Annual Allowance” set at £50,000 for 2011/12. Where the total contributions from you and your employer over a 12-month period exceed this limit, a tax charged at the client’s marginal rate on the excess will be levied on the member.

Your employer can contribute to your scheme, be it a one-off contribution or a regular contribution. Employer contributions are paid gross into the scheme and hence Liberty will not reclaim tax from HMRC on the company’s behalf. Corporation tax relief is given on company contributions in the company’s tax return. However, this is subject to the agreement with the local tax inspector that the level of contribution is not excessive. Special conditions apply where a company contribution is over £20,000 and your annual earnings are in excess of £150,000.

The employer contributions, together with any personal contributions, are subject to the annual allowance (£50,000 for 2011/12). Where this limit is exceeded over a 12-month period, the member will be taxed on the excess. However, the annual allowance is not applicable in the year in which you commence drawing a pension.

You can make a contribution of £2,880 to each of your dependants’ Liberty SIPP every tax year. Liberty will reclaim 20% basic rate tax which will take it up to the maximum gross contribution to £3,600.

Unlike contributions made to your own scheme, you cannot offset this contribution against your own tax liability so you will not be able to reclaim full tax relief if you are a higher rate tax payer.

Contributions don’t have to be paid in cash, but you must say in advance how much is being contributed. Assets you own personally may be contributed “in-specie” to the scheme so long as they were permitted investments under the legislation. They will benefit from tax relief in the same way as cash contributions and would be subject to the same limits.

Whilst the contribution would benefit from income tax relief, CGT (capital gains tax) may be payable.

Assets owned by the employing company may also be contributed “in-specie”, subject to the same conditions as employer contributions in cash.

Death benefits vary depending on whether your pension funds have been providing you with a pension.

The scheme is written under discretionary trust, and funds accrued under the scheme are kept separate from your estate for Inheritance Tax purposes. Liberty Trustees Ltd has absolute discretion as to who will receive benefits and how much – a mechanism known as “discretionary disposal”. However, we will take into account any wishes you have expressed on your death benefit nomination form, which you can update at any time.

There are 3 possibilities:

• If you are under 75 then any funds that have not been used to provide an income will be paid out free of the recovery charge, currently set at 55%
• Every other scenario will incur the 55% recovery charge when benefits are paid out to the beneficiaries.
• • You can also pay tax free lump sum benefits to a member nominated charity, however only in the absence of any living dependants.

In all situations, the total fund from all your pension arrangements will be tested against the Lifetime Limit of £1.8m, reducing to £1.5m on the 6th of April 2012. Any excess will be subject to additional tax.

If a couple decide to go ahead with divorce proceedings a court can order that pension sharing is to apply. The court will award one party a percentage of the value of the other party’s pension rights. The amount must then be used to provide the recipient with his or her own pension benefits. When a pension sharing order is received, the member’s benefit rights under the SIPP are valued to give them a cash equivalent, i.e. the value of the SIPP assets. The cash equivalent is then reduced by the amount stated in the pension sharing order. This is known as the pension debit. The cash equivalent amount of the reduction in the member’s benefit rights is then allocated to the ex-spouse or former civil partner to provide benefit rights in his or her own name. These benefit rights are known as a pension credit.

Under the SIPP, the cash equivalent amount will be paid from the SIPP to a pension scheme in the name of the ex-spouse and as stated earlier, will then be used to provide pension benefits on retirement. Unless specified in the court order, it will be decided between the two parties how this pension credit is to be paid, be it in cash, or in-specie transfer of an asset e.g. property.

If this cannot be agreed between the two parties, the matter will need to be referred back to the court.

Assuming no benefits have previously been taken from the pension scheme, the pension credit can pay the ex-spouse with a tax free pension commencement lump sum of up to 25% of the pension credit and the remaining fund will be used to provide regular income. These benefits can be drawn from age 55.

On retirement there are two options on how your pension is paid; you can purchase an annuity from a life office or “drawdown” a pension from your pension scheme.

From age 55, you may start drawing benefits from the scheme. You will be entitled to a maximum tax-free lump sum of 25% of the fund and the remaining fund will be used to provide you with regular income throughout your retirement.

Any pension income will be taxed. Until Liberty are advised of your tax code, your income will be paid less basic rate tax and the tax will be passed on to HMRC. Thereafter we will adjust your pension in line with the tax code we are given.

In some circumstances you may take your pension before attaining this age, for example if you had been in a profession where you would be expected to retire well before the minimum retirement age or on the grounds of ill health or incapacity.

To comply with legislation and the Scheme Rules Protected Rights and Non-Protected Rights must be managed under separate arrangements. Your Protected Rights are held within the Appropriate Personal Pension part of the Scheme and must, at all times, be kept separate from Non-Protected Rights funds, which are held under the SIPP section. However both accounts will be merged from 2012 onwards.

You will get paper statements for all accounts held with Royal Bank of Scotland sent to your home address, as detailed on the bank mandate. These will be sent to you on a quarterly basis.

When you apply to join the Liberty SIPP Scheme and an account with Royal Bank of Scotland has been opened, you will be sent details on how to view your bank account online. In accordance with the bank mandate, you will only be able to view your account and will not be able to process transactions.

Until we receive investment instructions, all funds will initially be held in an account with Royal Bank of Scotland. It is likely that wherever you decide to invest your fund, the investment company will need paperwork completing to set up an account in the scheme’s name. As co-trustee you will need to countersign this application along with Liberty Trustees Limited. To ensure there is no way it can be considered that Liberty have provided investment advice, you or your financial adviser will need to obtain the appropriate paperwork.

As the investment will be held in joint names, Liberty Trustees Limited should be listed as the first investor. If you are unsure how to complete the application form, we will be able to help.

If payment is to be made electronically, we will obtain the bank details and send this using our online banking system. If payment is by cheque, we send you a cheque, including pay details for you to sign which Liberty Trustees Limited will then to countersign in accordance with the bank mandate prior to sending to the investment company.

Liberty does not add any investment restrictions to those imposed by HMRC. Generally speaking, the investments that are permitted for Non-Protected Rights are:

• Deposit accounts
• Quoted UK and overseas shares purchased from a recognised stock exchange including the Alternative Investments Market - these must be held via a regulated stockbroker
• Investment trusts, OEICs and unit trusts
• Units in insurance company unit-linked funds
• Commercial property

In addition to the above, the scheme can make loans to unconnected parties and invest in unquoted shares. There is a certain level of due diligence required for these investments, and information will need to be provided to Liberty as these investments are looked at on an individual basis to see whether the investment can proceed.

The Scheme can borrow to assist in the purchase of an investment. The maximum loan the scheme can have is 50% of the fund value prior to the loan being taken.

Can I borrow to assist in placing an investment?

Are there restrictions as to who I can transact with within my pension?

What can’t I do with my Liberty SIPP?

Property Purchase

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Can my Liberty SIPP reclaim VAT paid on property investments?

Tax implications

What are the tax advantages to saving for retirement in a pension scheme?

When will I have to pay tax on my pension fund?