SIPP/SSAS

Key Terms Explained

SIPP / SSAS

Key Terms Explained

We understand that sometimes there are technical terms used which may be new to our clients. Below is a helpful overview of some key terms that are used in our documentation and literature.

Term Definition
A-Day 6 April 2006 is known as A-Day. It was the date on which multiple existing pension tax systems were overhauled and replaced with a new, single set of rules.
Adviser A financial adviser who is appointed by you in order to assist you with your SIPP or SSAS. Your chosen adviser must be authorised and regulated by the Financial Conduct Authority . You can appoint one adviser to act on your behalf, we’ll liaise with your adviser in the first instance, but you can both provide us with instructions.
Adviser Charges Fees charged by a financial adviser for the services they offer. We can only pay adviser charges from your SIPP/SSAS for financial advice and services related to your pension.
Annual Allowance The maximum value of pension savings you can make each year while benefiting from tax relief. The annual allowance that applies to you will vary depending on how much you earn, whether you have taken money from your pensions, and the method you used to do so. See our Annual Allowance factsheet for more information.
Annual Allowance Charge A tax charge which applies if the annual allowance is exceeded. The annual allowance charge amount is found by calculating how much income tax would be due if the excess amount was added to your income for the year. See our Annual Allowance factsheet for more information.
Annuity A policy that provides a guaranteed income for the rest of your life in exchange for all or part of your pension fund. Curtis Banks do not offer annuity products directly.
Beneficiary Someone nominated by you to receive the remaining benefits from your pension in the event that you pass away before your pension is empty. For more information, please see our Death Benefits factsheet.
Block Transfer A block transfer is a way for people to move from one pension to another without losing a protected retirement age or scheme specific lump sum. To learn more see our block transfer factsheet.
Capped Drawdown A type of pension income where a maximum income limit restricts the amount of income available each year, in order to minimise the risk of the pension fund running out during the individual’s lifetime. It’s no longer possible to begin a new capped drawdown plan, but you may still have funds in capped drawdown which began before 6 April 2015.
Carry Forward A way for individuals to increase their annual allowance in a given year by using up unused allowance from the three previous tax years.
Commercial Property For our commercial property glossary, please see here.
Connected persons/Connected Party A connected party is any person that falls within the definition of a connected person in section 993 of the Income Tax Act 2007. A connected party includes family members or any company or partnership connected with you or your relative.
Contribution Money paid into a pension by you, your employer, or someone else on your behalf. Contributions are pension savings that count towards the Annual Allowance.
Crystallised Funds Crystallised funds are those which have been assigned to provide pension benefits.
Death Benefits Funds in your pension after you pass away can be paid to a beneficiary, these are called death benefits.
Dependant HM Revenue and Customs (HMRC) define a dependant as: a spouse/civil partner of the deceased client; a child of the client aged 22 or under; a child of the client who is aged 23 or over who was dependant on the deceased client due to physical or mental impairment. A dependant is also defined as another individual who was: financially dependant on the client; in a mutually dependant financial relationship with the client; or dependant on the client due to physical or mental impairment.
Drawdown One way of accessing your pension benefits. In drawdown, you keep your pension fund invested and take income payments directly from it.
Expression of Wishes An expression of wishes is your way of telling your scheme administrator who you would like your beneficiaries to be.
Flexi-access Drawdown A type of pension drawdown, available from April 2015. There are no income limits for customers in flexi-access drawdown. Taking pension income under flexi-access drawdown will trigger the Money Purchase Annual Allowance.
Government Actuary’s Department (GAD) The provider of rates that are used by all pension providers to calculate the maximum income that can be taken from a Capped Drawdown fund each year. GAD rates are also used to calculate pension illustrations.
Investment For our investment glossary, please see our Schedule of Allowable Investments.
Lump Sum Allowance A limit on the amount most people can take as a tax-free lump sum during their lifetime. The lump sum allowance (LSA) is £268,275 for the 2024/2025 tax year.
Lump Sum and Death Benefits Allowance A limit on the amount which can be taken as a tax-free lump sum during lifetime or following death before age 75. The lump sum and death benefits allowance (LSDBA) for the 2024/2025 tax year is £1,073,100.
Money Purchase Annual Allowance The maximum amount that you, your employer, or a third party can pay into your money purchase arrangements in a tax year without penalty, if you have flexibly accessed pension benefits after 5 April 2015. The Money Purchase Annual Allowance for the 2024/25 tax year is £10,000.
Money Purchase Arrangement A type of pension scheme where each member builds up their own individual pension fund, and the pension benefits available at retirement depend on the value of that person’s fund.
Nominee A person who is not a dependant but has been chosen by the client to be a beneficiary when the client passes away. For more information, please see our Death Benefits factsheet.
Normal Minimum Pension Age (NMPA) The age at which people can normally start to access their pension benefits. Normal minimum pension age is currently 55, although it’s due to increase to 57 in 2028.
Overseas Transfer Allowance The current overseas transfer allowance (OTA) is £1,073,100. Where an individual transfers from a UK registered pension scheme to a qualifying recognised overseas pension scheme (QROPS) there is a limit on the amount that can be transferred without incurring an overseas transfer charge (OTC). The current OTA for the 2024/2025 tax year is £1,073,100.
Pension Commencement Excess Lump Sum A pension commencement excess lump sum (PCELS) is paid where the member has used up their lump sum allowance (LSA), and the total of the member’s scheme pension capital value exceeds their available LSDBA (Lump Sum and Death Benefit Allowance).
Pension Benefits A lump sum payment and/or income payable by drawdown or by buying an annuity or a combination of both.
Pension Commencement Lump sum (PCLS) Also known as tax-free cash. A tax free payment which most people can receive when they start accessing their pension benefits. It is normally 25% of the value of the pension benefits being accessed. PCLS payments are subject to the lump sum allowance and lump sum and death benefit allowance.
Pension Sharing Order A pension can be split between two people following a divorce or the dissolution of a civil partnership. A pension sharing order is a court order that instructs us to transfer some or all of a pension to a former spouse or civil partner.
Protected Pension Age Before A-Day, some people were able to access their pensions earlier than normal minimum pension age. Under certain conditions, such individuals can still access their pensions at an earlier age, known as their protected pension age.
Recognised Overseas Pension Scheme (ROPS) A pension scheme that is outside of the UK but has confirmed to HMRC that they meet the conditions required to be a recognised overseas pension scheme. A registered pension scheme may make a transfer payment to a ROPS without incurring a tax penalty subject to the Overseas Transfer Allowance (OTA). A list of valid ROPS can be found on the HMRC website.
Relevant benefit crystallisation event RBCEs refer to crystalisation events covering the payment of relevant lump sump and lump sum death benefits.
Scheme Specific Lump Sum Before A-Day, some people had pensions which were entitled to PCLS of more than 25%. Under certain conditions, such individuals can still receive the amount of PCLS they were entitled to before A-Day. This is known as a scheme-specific lump sum.
SIPP Self-Invested Personal Pension. The main type of pension that is offered by Curtis Banks.
Small Pot Lump Sum A method of taking the entire value of a small pension of less than £10,000 as a single payment.
SSAS Small Self-Administered Scheme. A SSAS is a small occupational pension scheme.
Successor A person nominated by a beneficiary, to receive funds that were previously inherited from another person. For more information, please see our Death Benefits factsheet.
Tax Relief If you decide to pay money into a pension, you don’t have to pay the income tax that you’d normally pay on that amount- this is called tax relief.
Transitional tax-free amount certificates A certificate which certifies the individual’s transitional tax-free lump sum amount and transitional tax-free lump sum and death benefit amount.
Unauthorised Payment A payment that is not authorised under HMRC guidance and pension legislation. Unauthorised payments by the SIPP/SSAS may result in tax charges being levied.
Uncrystallised Funds Uncrystallised funds are those which have not been assigned to provide pension benefits.
Uncrystallised Funds Pension Lump Sum (UFPLS) A UFPLS is a way of taking benefits from your pension, as a lump sum. Part of a UFPLS will typically be free of tax (usually 25%) and the remainder is subject to income tax. Taking a UFPLS will trigger the Money Purchase Annual Allowance. UFPLS payments are subject to the lump sum allowance and lump sum and death benefit allowance.