The Freetrade SIPP

Version 4.0, November 2023

• Save for retirement in a tax-efficient and flexible way.

• Make transfer payments from other suitable pension arrangements.

• Take control of your pension fund investments by making your own investment decisions.

• Take advantage of the potential for capital growth.

• Take benefits at retirement in stages, if you want to.

• Specify to whom you would like benefits to go to on your death, although the decision rests with the Scheme Administrator.

• To pay money in and/or transfer benefits from other suitable pension arrangements.

• Keeping those funds within a registered pension scheme until you take benefits, the earliest age at which is 55, but rising to 57 from 6 April 2028.

• Taking responsibility for the choice of the investments in your Pension Fund.

• To adhere to the terms and conditions of the pension plan. Please see the Freetrade SIPP Terms for more details.

• To tell Freetrade if you stop being eligible for a pension plan or you are aware that your contributions are not eligible for tax relief. Please see the ‘Questions and Answers’ section for examples where this could be the case.

• Paying the fees in accordance with Freetrade’s Terms and Conditions.

• Take advantage of the tax benefits of making pension contributions.

• Decide exactly how their pension is invested, choosing products that reflect their outlook on our changing world.

• Consolidate other pensions into one accessible and low cost account.

• Easily monitor the performance of their Pension Fund and make decisions at the touch of a button.
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• Withdraw money flexibly at any time after age 55, rising to 57 from 6 April2028, while continuing to make investment decisions about the remaining assets. (See the section ‘Taking benefits from the pension plan’ for more details.)

They should also be prepared to commit to tying up their money, normally until at least age 55 (rising to age 57 from 6 April 2028), which is the earliest age from which benefits can normally be paid from pension plans.
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If you are in any doubt as to whether this pension plan is right for you, then you should consider speaking to a financial adviser.

Who will administer my Freetrade SIPP?
‍Platform One Limited is the registered Scheme Administrator of your pension plan and ensures it is administered in accordance with the Trust Deed and Rules and adheres to HMRC rules and regulations.

Freetrade provides the digital systems to allow you to interact with and receive information about your pension plan via the Freetrade mobile app.

Freetrade Limited is the custody provider for all client assets.

Is this a Stakeholder pension scheme?
‍No. Stakeholder pension schemes are a specific form of pension that must meet Government minimum standards relating to contributions, charges and provision of a default investment fund. Stakeholder schemes are generally available and it is for you to consider, with the assistance of a financial adviser, if required, whether one might meet your needs as well as the pension plan on offer.

What are the Trust Deed and Rules?
‍The Trust Deed and Rules are the legal documents that have established the Freetrade SIPP Scheme under which the Freetrade SIPP operates and which govern how the Scheme is administered. These documents also appoint The Trustee and the Scheme Operator. The Trustee of the Freetrade SIPP is Gaudi Trustees Limited and the Scheme Operator is Platform One Limited who is authorised and regulated by the Financial Conduct Authority.

What will my pension plan be worth?
‍The final value of your pension plan will depend on how much is paid in, how long you invest for, the charges paid, and how well the investments perform.

The following information are examples to show the effect time and performance could have on the returns you could receive with the Freetrade SIPP. In reality your circumstances may differ meaning you could achieve more or less than the amounts shown below.

The following table shows what the value of your Freetrade SIPP could be, and the annual income it could provide if you didn’t take the tax-free lump sum, using a range of possible contributions and periods to retirement. These figures account for the effects of inflation, so are in ‘real terms’.

The figures are based on the following assumptions:

• 5% annual growth

• An inflation rate of 2.0%. So after deducting 2.0% each year for inflation the growth rate in real terms will be: 3.0%

• Intended retirement at age 65

The actual rates of return will depend on the value of your portfolio and the performance of your investments. As such, returns may differ from those shown below.Here’s what you might get back from your Freetrade SIPP:

The cost of running your SIPP is included in your Freetrade Plus subscription fee that is paid directly by you, rather than costs being deducted from the Pension Fund and the impact of these costs is therefore not reflected in the illustrations. These illustrations should not be used directly to compare the Freetrade SIPP with alternative pension products, which take charges from within the Pension Fund.

You will be sent an annual statement showing how your pension plan is doing. The value of your pension plan will also be available through the Freetrade mobile app.

How much pension income will I get?
This type of pension plan allows you, once you have attained minimum pension age, to draw as much or as little of your pension fund as you like, when you like, along with offering different benefit options as explained under the ‘Benefits summary’ section below. How much pension income you get will depend on your choices and many variable factors such as income tax, the value of your pension plan and investment performance.

What are the charges?
‍As a customer of Freetrade you pay a subscription fee which includes access to the Freetrade SIPP in accordance with Freetrade’s Terms and Conditions. Freetrade uses this fee to pay the service providers required for running your pension plan. In broad terms, these fees cover such things as administration, custody, payment processing et cetera. Therefore you do not pay a fee directly to Platform One for the administration services it provides to Freetrade.

There may be rare situations where an additional fee is required for carrying out work not covered by this fee. Where this arises you will be notified before any work is carried out to agree to this additional fee.

There are no other fees for the Freetrade SIPP except Freetrade’s standard investment related fees and a fee for withdrawing benefits by Uncrystallised Funds Pension Lump Sum (see the section ‘Taking benefits from the pension plan’ below). Further information about the charges applicable to the Freetrade SIPP can be found in the Charges Schedule, which you should read as part of this Key Features Document and the SIPP Terms.

Paying into the Freetrade SIPP

What are my payment options?

Transfers in from other pension plans
‍You can transfer pension benefits from other suitable pension arrangements, at the discretion of the Scheme Administrator.

The transfer can be received in the form of cash or by transfer of the investments (an in-specie transfer), provided those investments can be held under the Freetrade SIPP. If the same investments are available under your Freetrade SIPP with lower fund management fees, you will be given the option to convert to those investments.

There is no minimum or maximum amount.

Transfers in of funds that are in drawdown are not currently accepted.

Transfers from defined benefit pension schemes and schemes that provide safeguarded benefits are not accepted.

Please note that if you are transferring benefits from another pension scheme that has tax-free cash protection this protection may be lost on transfer.

If you are in any doubt about the benefit of transferring, you should contact a qualified financial adviser.

Making contributions
‍If you are eligible to make UK tax relievable pension contributions you can make one-off contributions into your Freetrade SIPP at any time.

This gives you the flexibility to pay exactly what you feel you can afford to contribute, when it suits you. Always remember that reducing or stopping contributions, even temporarily, will reduce the potential value of your Pension Fund at retirement.

Contributions may be made through a transfer of money via such methods as Freetrade may allow in accordance with the Freetrade Terms and Conditions.

Understanding tax relief on pension contributions

Will I get tax relief on what I pay into my pension plan?
‍The Government encourages people to save for their later years by giving income tax relief on contributions paid into pension plans.

There is a limit on how much tax relief you can receive on pension contributions, but providing you are under the age of 75 and a relevant UK individual (which you will be if you are a UK resident), you will be eligible to receive income tax relief on contributions up to the tax relievable limit.

There are also various types of Annual Allowance which, if exceeded, mean you will have a personal tax charge that effectively claws back some of the tax relief your pension plan receives. These are explained below.

What is the tax relievable limit?
‍This limit is referred to as the gross contribution limit, i.e. ignoring tax relief, and applies to the total personal contributions you make in a tax year to all pension plans you have.

This is the greater of £3,600 and 100% of your earnings, known as relevant UK earnings, a full definition of which can be provided on request but which includes salary and bonuses paid to you if employed or, if self-employed, your income which is chargeable to income tax.

The contributions you make to this pension plan are referred to as net contributions, i.e. allowing for basic rate income tax relief to be added. Therefore, assuming a basic rate income tax of 20%, the amount you can pay in (the net contribution tax relievable limit) is the greater of £2,880 and 80% of your earnings.

Although your pension plan will receive basic rate tax relief on contributions you make, up to the tax relievable contribution limit, you may receive a personal tax charge directly from HMRC if total contributions in a tax year to all pension plans exceed the Annual Allowance, or if applicable, the Tapered Annual Allowance or Money Purchase Annual Allowance. Please see the section ‘How might I be taxed on pension contributions?’ below, for more information.

Can I make contributions above the tax relievable limit?
‍No. This pension plan does not allow contributions above the tax relievable contribution limit to be made.

How do I get the tax relief on my contributions?
‍Basic rate tax relief is automatically collected from HMRC by the Scheme Administrator and is paid into your pension plan, although it can take several months for it to be received from HMRC.

For example, for a total contribution of £1,000 you would pay £800 and the Scheme Administrator would claim £200 tax relief from HMRC. (This example is based on 20% basic rate income tax.)

If you pay income tax at a higher rate than the basic rate, you can claim extra tax relief through your self-assessment tax return. You will receive this tax relief rather than it going into your pension plan, but it does make your contribution even more cost-effective.

For example, for a total contribution of £1,000 you would pay £800 and the Scheme Administrator would add £200 basic rate tax relief claimed from HMRC. If you pay 40% income tax on at least £1,000 of earnings then you can claim a further £200 in tax relief. Therefore your pension contribution of £1,000 would only cost you £600.

How might I be taxed on pension contributions?
‍You are allowed to make contributions above the Annual Allowances (but not above the tax relievable limit) in this pension plan. The tax relief received in to your pension plan remains there, but you should consider the impact of receiving a personal tax charge on the excess contribution, which will reduce the tax-efficiency of making such pension contributions.

Total contributions for this purpose include:
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• Your gross contributions, which includes any contributions paid by a third party.

• Employer contributions.

• Any increase in the value of retirement benefits you build up within a tax year in a defined benefit pension scheme.

While the Freetrade SIPP cannot accept employer contributions or third party contributions, they do count towards the pension contribution Annual Allowances, which are explained below.

For the avoidance of doubt, transfers between pension arrangements are not included.

‍What are the different types of Annual Allowance?

• Annual Allowance
  ‍£60,000 from 6 April 2023.This applies to everyone, unless subject to the Tapered Annual Allowance, but you may also be subject to a Money Purchase Annual Allowance.

• Tapered Annual Allowance
  ‍Between £60,000 and £10,000 from 6 April 2023.If you have `adjusted income’ of over £260,000 and `threshold income’ of over £200,000 then your standard Annual Allowance will be reduced by £1 for every £2 your adjusted income goes over £260,000. This means your Annual Allowance could be reduced to £10,000.

• Money Purchase Annual Allowance£10,000 from 6 April 2023.If you have started drawing benefits flexibly from any pension arrangement and have triggered the Money Purchase Annual Allowance, total contributions to this pension plan and other money purchase pension schemes, will be subject to the lower Money Purchase Annual Allowance.

How much will the tax charge be if I exceed an Annual Allowance?
The amount of tax charged on the excess contribution over the relevant Annual Allowance will be your highest marginal rate of income tax and will ordinarily be paid by you to HMRC via declaring the excess payment on your self-assessment tax return.

It may be possible to request that the tax charge is paid out of your pension plan funds if you are eligible under ‘Scheme Pays’ rules.

If you have not fully used your available Annual Allowance from the previous three tax years and provided you were a member of a registered pension scheme during that period, you may be able to `carry forward’ that unused allowance and include it in your self-assessment tax return. This may reduce or eliminate the Annual Allowance tax charge. This cannot be used where a Money Purchase Annual Allowance tax charge applies.

If you think you may be close to, or exceed, an Annual Allowance and you are in any doubt about its impact, you should seek financial advice as this is a complex area.

Can I make contributions if I have ‘Enhanced Protection’ or ‘Fixed Protection’?
Enhanced Protection was introduced to protect pension funds built up prior to 6 April 2006 from being subject to a Lifetime Allowance charge. The Government subsequently reduced the Lifetime Allowance on three separate occasions, on 6 April 2012, 2014 and 2016 and introduced Fixed Protection to protect pension funds built up prior to each of those dates from the Lifetime Allowance charge.

From 6 April 2023 you are able to make contributions to a pension plan without losing any pension protection for which you applied before 15 March 2023, including any rights to a higher Pension Commencement Lump Sum (PCLS). If you apply for protection on or after 15 March 2023 certain types of protection will be lost if contributions are made to any of your pension plans.

Is my Pension Fund taxable?
Pension funds do not pay UK taxes on income or capital gains from investment growth. However, tax cannot be reclaimed on UK and some overseas dividends.
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Are death benefits taxable?

• Death before age 75: Benefit payments are not subject to income tax provided the lump sum is paid or annuity is set up before two years from the date of notification of death to the Scheme Administrator. If benefits exceed the Lifetime Allowance then the recipients of the death benefits will be personally liable to pay the Lifetime Allowance charge to HMRC.

• Death after age 75: Benefit payments are subject to income tax at the recipient’s marginal rate.

• Inheritance tax: This is not normally payable although it may arise in the event that payments are made to your estate.
  
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Transfers out

Can I transfer out of my pension plan?
You can transfer all or part of your pension plan to another registered pension scheme at any time.

You may be able to transfer some or all of the investments held in your Freetrade SIPP to your new pension plan if it is also able to hold those investments. Otherwise your investments will have to be sold and a cash transfermade.

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Further Information