SIPP Retirement Options

The TD SIPP offers you flexibility in the way you take benefits from your pension. Benefits are available to you from the age of 55 and you don't even have to stop working.

Once you have decided when to draw your benefits you have a number of options as to how you take your benefits.

Pension Commencement Lump Sum

However you choose to take your benefits you normally have the option to take 25% of the value of your SIPP as a tax free cash lump sum at the point you decide to take benefits.

Income Options

Once you have decided whether to take a lump sum payment from your SIPP, the funds remaining can be used to either provide you with a drawdown pension directly from your SIPP or can be passed to an insurance company of your choice to purchase an annuity.

Income Withdrawals

Capped Drawdown (drawdown pension):

From age 55, the funds remaining in your SIPP can be used to provide you with a drawdown pension. Your funds remain invested and you continue to manage your investment strategy. Income is available to you up to a maximum level (set by HMRC), in line with the income you could receive from a lifetime annuity, providing you are holding sufficient cash to make the payments. There is no minimum pension, so you can decide not to take any income, if you wish. Capped Drawdown replaced the previous methods of drawing an income - called 'Unsecured Pension' and 'Alternatively Secured Pension - from 6th April 2011.

Flexible Drawdown:

This additional method of drawing an income was introduced on 6th April 2011 and can also be taken from age 55. If you can demonstrate that you have a guaranteed income of at least £20,000 per annum from other sources (such as a state pension, annuity or final salary scheme) you can choose this option. There are no limits to the amount of income you can take, and your funds remain invested in your SIPP.

Annuity Purchase

If you choose instead to purchase an annuity we will arrange for your funds to be paid to an insurance company of your choice who will pay you a regular pension income for the rest of your life. You will need to make a number of decisions about the annuity you purchase at the outset, such as whether to include a pension for your spouse or partner when you die. The annuity rates offered by insurance companies can vary considerably so it is important that you shop around before making your choice.

Phased Benefits

You may find that you do not need to take all of your pension benefits at one time. You may be taking partial retirement and only need part of the income available to you to top up the salary you are drawing or you may have other income that you can draw on in retirement. The TD SIPP lets you take your benefits in stages so that you can take as little or as much as you need.

Before deciding on the benefits that you want to take from your TD SIPP you should refer to our Retirement Benefits Guide for more information about the options available to you and the benefits and risks associated with those options. Please also see the risk warnings below and to the right.

If you are unsure regarding the benefit options available to you, you must contact a suitably qualified financial adviser.

We understand that you may wish to take advice at important key events throughout the lifecycle of your TD SIPP and particularly when you are considering taking benefits. You can ask TD to make payments for this advice to your financial adviser on your behalf from within your TD SIPP.

Risk Warning

If you start to take benefits earlier than you originally intended, the level of the benefits you can take may be lower than expected and may not meet your needs in retirement.

Your TD SIPP may be subjected to additional tax charges at the point you withdraw funds if your pension is valued at more than the lifetime allowance (currently £1.8 million, but dropping to £1.5 million for 2012/13).

If you take a drawdown pension this may erode the capital value of your fund.

If investment returns are poor and a high level of income is taken this will result in your TD SIPP falling in value and could result in a lower income than anticipated in the future.