Self-Invested Personal Pension
Benefits from age 55 to age 77
Pension commencement lump sum
The maximum tax-free lump sum that can be taken is 25% of the fund used to provide pension benefits up to the lifetime allowance and must be taken by age 75. Therefore, the maximum tax-free cash is as follows:
| Tax Year | Maximum Tax-free Cash |
|---|---|
| 2010/2011 to 2015/16 | £450,000 |
Individual members may be entitled to more than this amount if pension fund protection has been granted.
Pension
Any pension taken from the fund will be treated as earned income and will therefore be liable to income tax. Pension income may be taken from age 55 to age 77 as listed below.
- A scheme pension, paid to the member by the scheme over the member's lifetime.
- A lifetime annuity purchased from a life assurance company. The annuity must be payable up to the member's death or the end of any guarantee period should the member die within this period.
- An unsecured pension, where the pension is taken from the fund via income drawdown. The amount of pension that can be drawn down is between 0% and 120% of the amount of annuity that could be provided using the Government Actuary's Department's annuity rate applicable for the member at the time they take benefits. The level of unsecured pension must be reviewed at least every five years.
- A short-term annuity purchased from a life assurance company. A short-term annuity is payable for a term of no more than five years and must end before the member reaches age 75.
Protected rights benefits cannot be taken in isolation. A proportionate amount must also be drawn from your non-protected rights fund. Your protected rights fund must include specific provisions for the payment of income to a spouse or civil partner in the event of your death.
Any pension taken from the fund will be treated as earned income and is therefore liable to income tax.
This information relates to the Rowanmoor Pensions SIPP.