Liberty SIPP

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Flexible Retirement Options

Liberty SIPP offers the most comprehensive retirement options available by pension administrators in the UK.  As a consequence of the EU Pensions Directive 2005 and The Finance Act 2011, Liberty offers:

CAPPED DRAWDOWN

This is where pension members can elect to take an income from their funds, subject to a maximum of 100% of GAD (Government Actuarial Department) rates.  The income levels are reviewed every three years (annually for those over 75) and are subject to the member’s age.

FLEXIBLE DRAWDOWN

This is where income levels are unrestricted i.e. not subject to GAD restrictions as per above. It is possible for the member to take the entire fund as a lump sum payment, although from an income tax perspective this may prove unattractive for many members.

It is anticipated that this option will prove attractive to members who wish to take a higher income/encashment on an irregular basis or those who wish to encash part of their fund to finance a one off purchase e.g. deposit for a flat, university fees, car purchase etc. This can also prove to be a tax efficient means by encashing over a number of years and keeping in the 40% income tax bracket.

To qualify for Flexible Drawdown, members must have (and be able to provide evidence) existing pension income of £20,000 per annum. This Minimum Income Requirement can only consist of pension payments from:

• State benefits.
• Defined Benefit schemes.
• Secured Income i.e. Lifetime Annuity
• Overseas pension schemes.

OPEN MARKET OPTION

This is where members can purchase a Lifetime Annuity from any Insurance Company. The main benefit is the provision of a secured income for those who do not require investment freedom.

INVESTMENT CHOICE

Whilst we do not impose Investment restrictions over and above HMRC’s taxable property provisions, extra consideration to investing in liquid assets should be considered.  One of the consequences of the Finance Bill 2011, is to impose a 55% recovery tax charge on all crystallised funds, when lump sum death benefits are payable.

To provide extra flexilbility, Liberty SIPP have become a SIPP provider for the Ascentric Wrap Platform. The platform offers access to industry wide Investments funds offered by the worlds leading fund managers at discounted annual management charges. The annual management charges typically offer a 50% discount to the quoted price offered directly.   

May 13, 2011