What we offer Stocks Learn Company Help UK Get app Log in

Freetrade pension (SIPP) Open SIPP account SIPP charges Transfer your pension Trace your pension SIPP guides

The Freetrade SIPP

Terms and Conditions

Version 2.0, January 2021

Introduction
The Freetrade SIPP is administered by Gaudi Regulated Services Limited (Gaudi). The Financial Conduct Authority is
a financial services regulator. It requires Gaudi, the Scheme Administrator, to give you this important information to
help you to decide whether the Freetrade SIPP is right for you. You should read this document carefully so that you
understand what you are buying, and then keep it safe for future reference. If you are unsure whether this product,
its features, investment options and charges are right for you then you should take appropriate financial advice.
Neither Gaudi nor Freetrade are authorised to give you financial or investment advice.

Aims of the Freetrade SIPP

The pension plan is designed to let you:

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.

To give you the potential for capital growth.

Please note that the Freetrade SIPP does not currently offer a facility to take your pension benefits when you reach
your intended retirement age. This currently means you will have to transfer your pension fund to another provider
when you want to take your money out or convert it to an income.

Your commitments
Once you have commenced a Freetrade SIPP, your commitments include:

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.

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 and
Conditions 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 the Charges Schedule.

Risk factors
Below are outlined risks associated with saving for retirement through a pension plan. Some of the risks below refer
to the investment performance of the funds in your pension plan. Remember that you are responsible for the
investment decisions. We recommend you read the key information documents, where these are available, that
outline the specific risks applicable to potential investments.

The favourable tax treatment for pension savings and the age at which you can first start to take benefits could
change in the future.

Investment performance or charges may be better or worse than expected, which could affect the potential size of
your pension fund and therefore the benefits you receive.

The charges or fees you pay in relation to this pension plan may be higher than expected, which could affect the
potential size of your pension fund and therefore the benefits you receive. Other things that can affect the
potential size of your pension fund and the benefits you receive include the amount you pay or transfer in to the
pension plan, which could be lower than you anticipated, or if you take benefits earlier that you were aiming for.

Investment conditions can also affect your pension income - if you convert your pension fund to an annuity (i.e.
purchase a policy from an insurance company that provides you with a regular income) then prevailing interest
rates at the time of conversion will affect the amount of annuity you will receive.  Generally speaking, lower interest
rates mean lower annuity amounts, although annuity amounts are also affected by other factors such as life
expectancy and your state of health.

Alternatively, if you decide to draw your pension income directly from your pension fund then investment returns
may not sustain your income requirement.

There may be a delay in receiving benefits if some of your investments cannot be sold quickly.

You have a right to cancel your pension plan within the first 30 days. Where you have invested during this period
and you exercise your right to cancel then the amount returned will be the amount realised less any costs
associated with the investment and subsequent disinvestment.

Whilst the pension plan can accept transfers from other pension schemes, not all transfers may be suitable. For all
transfers you are responsible, with the help of a financial adviser if necessary, for ensuring that the transfer is
suitable for you.

A cash transfer from another pension scheme will mean your pension fund may miss out on investment growth for
the time it takes from disinvestment under the transferring scheme to investment under this pension plan. You may
therefore wish to consider transferring the  investments in-specie where this is an available option. The transferring
scheme may charge you for making an in-specie transfer.

Questions and Answers: 

About the Freetrade SIPP
What is the Freetrade SIPP?
The Freetrade SIPP is a pension plan that allows you to save for retirement in a tax-efficient and flexible way. 

The benefits you can receive are subject to UK pensions legislation. This includes rules about limits on
contributions that can qualify for tax relief, the earliest age you can take benefits and limits on what those benefits
can be without incurring tax penalties, including the amount that can be taken as tax-free cash.

Who is the Freetrade SIPP for?

To be eligible for this product you must be a UK resident and have attained age 18.

It is intended to be used by people who want to:

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.

Who will administer my Freetrade SIPP?

Gaudi Regulated Services Limited will administer your pension plan in accordance with the Trust Deed and Rules.
This involves the day to day running of your pension plan, ranging from processing contributions, transfers,
investments and paying benefits, to ensuring the pension plan adheres to HMRC rules and regulations.

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 Scheme under which the Freetrade
SIPP operates. These documents also appoint The Trustee and the Scheme Operator, who is responsible for
registering the Scheme with HM Revenue & Customs (HMRC) to ensure the favourable tax treatment mentioned
earlier is applied to the pension plan. The Trustee of the Freetrade SIPP is Gaudi Trustees Limited and the Scheme
Operator is Gaudi Regulated Services Limited who is authorised and regulated by the Financial Conduct Authority.

Will my pension plan have its own bank account?

This type of pension plan does not have a separate bank account for each pension plan but operates under a
designated Scheme bank account which is a pooled account run by the Lloyds Bank on behalf of Freetrade and the
Trustee. Money paid in to or out of your pension plan will go via this account, which may also hold uninvested cash.

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 table below 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:
2.9%

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:

Years to Monthly
Single payment
retirement contributions

£50 £100 £300 £10,000 £20,000 £50,000

Value £3,854 £7,709 £23,127 £11,560 £23,119 £57,798

5 Years
Income £156 £312 £937 £468 £937 £2,341

Value £7,947 £15,893 £47,680 £13,363 £26,725 £66,813

10 Years
Income £318 £637 £1,911 £536 £1,071 £2,678

Value £12,348 £24,696 £74,089 £15,447 £30,893 £77,234

15 Years
Income £489 £979 £2,936 £612 £1,224 £3,061

Value £17,138 £34,276 £102,828 £17,856 £35,712 £89,280

20 Years
Income £671 £1,342 £4,026 £699 £1,398 £3,496

Value £22,405 £44,810 £134,429 £20,641 £41,282 £103,204

25 Years
Income £867 £1,734 £5,202 £799 £1,597 £3,994

Value £28,249 £56,497 £169,492 £23,860 £47,720 £119,301

30 Years
Income £1,081 £2,162 £6,485 £913 £1,826 £4,565

Value £34,783 £69,565 £208,695 £27,582 £55,163 £137,908

35 Years
Income £1,316 £2,633 £7,898 £1,044 £2,088 £5,219

Value £42,135 £84,270 £252,809 £31,883 £63,767 £159,417

40 Years
Income £1,578 £3,155 £9,466 £1,194 £2,388 £5,969

The monthly SIPP fees are paid directly by you as opposed to being deducted from the pension fund and the
impact of these fees 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?

Whilst you cannot currently draw benefits from the Freetrade SIPP and will have to transfer to another pension plan
to do this, pension plans usually allow you, once you have attained minimum pension age, to draw as much or as
little of your pension fund as income as you like, when you like, along with offering different benefit options. How
much pension income you will get therefore depends on your choices and many variable factors such as income
tax, the value of your pension plan and investment performance.

What are the charges?

All of the charges applicable to the Freetrade SIPP are detailed in the Charges Schedule which you should read as
part of this Key Features Document and the Terms and Conditions.

The Freetrade SIPP fee will be taken via your linked debit card on the day you first fund your SIPP, which will
become your monthly billing date for future payments.

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.

The transfer can be received in the form of cash or by transfer of the investments, 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.

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. Remember
though, reducing or stopping contributions, even temporarily, will reduce the possible value of your pension fund at
retirement. 

Contributions can be made by Apple Pay, Google Pay and bank transfer or other methods Freetrade may allow at
its discretion from time to time.

Are there limits on what I can pay in?

There is no minimum contribution.

The maximum contribution is an amount up to the tax relievable contribution limit allowed by HMRC.

All relevant UK individuals can pay, and get tax relief on, contributions up to £3,600 gross each year. Where your
earnings are in excess of £3,600 you may make gross contributions of up to 100% of your earnings known as
relevant UK earnings subject to a maximum amount known as the Annual Allowance, which is set by the
Government. The Annual Allowance applies as a total limit across all of your registered pension schemes in a tax
year.

It covers:

Your payments.

Employer payments made on your behalf.

Any increase in the value of retirement benefits you may earn from a defined benefit pension scheme.

The Annual Allowance does not include transfers from other pension arrangements. They do not receive extra tax
relief, so there is no upper limit on them. The Annual Allowance does not apply in a tax year in which severe ill-
health benefit conditions are met or death occurs.

Where you have started drawing benefits flexibly from any pension arrangement, then contributions to this pension
plan and other money purchase pension schemes will be restricted to the much lower Money Purchase Annual
Allowance.

If you are a high earner i.e. have `adjusted income’ of over £240,000 and `threshold income’ of over £200,000 then
your Annual Allowance will be subject to a tapered reduction of £2 for every £1 of earnings above £240,000 up to
£312,000.

Any payments over an Annual Allowance will be subject to an Annual Allowance charge. The amount of tax charged
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.

Where you were a member of a registered pension scheme but had not fully used your available Annual Allowance
from the previous three tax years, you may be able `carry forward’ that unused allowance and include it in your
self-assessment tax return which may reduce or eliminate the Annual Allowance charge.

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 claim tax relief on what I pay into my pension

plan? 
Yes; your contributions can attract tax relief.

All relevant UK individuals can pay up to £3,600 gross per annum (i.e. before tax relief) or 100% of their relevant UK
earnings (subject to the Annual Allowance or Money Purchase Annual Allowance if applicable) whichever is the
greater. The Scheme Administrator will claim basic rate tax relief from HMRC and invest it in your pension plan. For
example, for a contribution of £10,000 you would pay £8,000 and the Scheme Administrator would reclaim £2,000
from HMRC. (This example is based on 20% basic rate tax.)

Contributions are made net of basic rate tax irrespective of whether you are employed or self-employed.
Contributions made by your employer are made gross.

If you pay income tax at a higher rate than the basic rate, you can claim the extra tax relief through your self-
assessment tax return on your personal contributions.

Unused Annual Allowances for the previous three tax years may be “carried forward” for the purposes of making a
contribution in excess of the Annual Allowance for the current tax year but not greater than 100% of your earnings.
This cannot be used where you are subject to the Money Purchase Annual Allowance.

Can I make contributions if I have ‘Enhanced

Protection’ or ‘Fixed Protection’?
If you have either Enhanced or Fixed Protection then it will be lost if you make, or someone on your behalf makes, a
contribution. Losing protection could have serious tax consequences as you may have to pay a Lifetime Allowance
charge (See `Is there a limit on benefits I can take from my pension plan?’ below for what this means).

Enhanced Protection was introduced to protect pension funds built up prior to 6th April 2006 from being subject to
a Lifetime Allowance charge.

The Government subsequently reduced the Lifetime Allowance on three separate occasions on 6th April 2012, 2014
and 2016 and accordingly introduced Fixed Protection to protect pension funds built up prior to each of those
dates from the Lifetime Allowance charge.

Protection from the Lifetime Allowance is a complex area and if you are in any doubt as to whether making a
contribution will affect any protection you have, you should seek appropriate financial advice.

Investing in the Freetrade SIPP

What can I invest in?
All investments held within the Freetrade SIPP must be purchased via, and held under ‘Invest by Freetrade’, which
currently offers US and UK stocks, ETFs and investment trusts.

Freetrade offer two investment service accounts:

The standard Freetrade account which provides a wide choice of the above investments.

The Freetrade Plus account, for which there is a monthly subscription, which extends the range of investment
further and provides additional add on benefits.

Further details of the range of investments available under both accounts is available in the separate ‘Investment
Brochure’. 

The Freetrade SIPP investments meet the FCA’s definition of ‘standard’ which broadly means FCA authorised or
recognised collective investment schemes, structured products or listed securities which are capable of being
valued on a regular basis and sold within 30 days.

How do I decide what to invest in?

You can choose to invest in anything available through the ‘Invest by Freetrade’ service via the Freetrade mobile
app, subject to whether you have selected the standard Freetrade account or Freetrade Plus account.

The investment decisions are yours but you can refer to investment guidance provided by Freetrade to help you
determine what investments may be suitable for you. Please note that the guidance provided on suitable
investments does not constitute advice and you are responsible for selecting the investment appropriate for you.

Limits
Is there a limit on benefits I can take from a pension
plan?
Whilst you cannot currently take benefits from the Freetrade SIPP and will have to transfer to another pension plan
to do this, you should be aware that there are limits on how much benefits you take without incurring additional tax
charges. 

The maximum you can take from all your pension arrangements without incurring an additional tax charge is called
the Lifetime Allowance (LTA) as set each year by the Government. If you exceed the LTA and any LTA protections
you may have, you will be subject to the Lifetime Allowance charge. If the excess is taken as pension income the
charge is 25% and if taken as a lump sum it will be 55% of the amount above the available Lifetime Allowance. The
charge will be deducted from your pension fund and paid to HMRC when paying your benefits.The Lifetime
Allowance is now increasing each tax year in line with inflation. However, in the past there have been a series of
reductions. The Government has made it possible for individuals potentially affected by the reductions to apply for
various types of protection from the Lifetime Allowance charge.

You can still apply for Fixed and Individual Protection 2016 provided that you have not had contributions paid to any
pension schemes from 6th April 2016 and you do not already have Enhanced or Primary Protection. This will
generally only be of interest to those who anticipate that the value of their pension benefits at the time they take
them will exceed the standard Lifetime Allowance prior to it having increased to £1.25m.

Every time you take benefits from a pension plan, some of your LTA is used up. Checks against the LTA are carried
out at various points, including:

Whenever you use part of a pension fund to:

– take a tax free cash sum.
– create a drawdown fund.
– purchase a lifetime annuity.

In the event of your death before age 75.

At age 75 (if you still have funds in the pension plan).

At each of the above stages, an allowance is made for any tests that have already been carried out.Lifetime
Allowance charges apply to any further benefits taken once all the LTA is used.

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 transfer made.

Taking benefits from the pension plan

Currently you will need to transfer some or all of your pension fund in the Freetrade SIPP to another pension plan
in order to take benefits. The type of benefits you can typically take from a pension plan are summarised below but
you should check the terms and conditions of any alternative pension plan

Benefits summary

Option From age 55

Up to 25% of your pension fund can normally be taken as a tax free lump
Pension Commencement sum when combined with designating funds to flexi-access drawdown or
Lump Sum (tax free cash
sum) purchase of an annuity. Note: receiving the Pension Commencement Lump
Sum does not trigger the Money Purchase Annual Allowance.

An annuity can be purchased, the amount of which will be determined by

the value of your pension fund and annuity rates available in the annuity
purchase. Generally speaking, annuity rates depend on interest rates, life
Use your pension fund to expectancy and the type of pension benefits you are buying (e.g. an
buy a lifetime or five-year increasing or level pension and whether any guarantees or dependants’
pension income, often
referred to as an annuity benefits are included). If you are in poor health or have a lifestyle that could
adversely affect your life expectancy (e.g. heavy smoker), then you may get
an enhanced annuity rate. Note: income received via an annuity does not
trigger the Money Purchase Annual Allowance.

Flexi-access drawdown - You may designate some or all of your pension

fund into flexi-access drawdown. The fund remains invested and you can
draw as much or as little income from the drawdown fund as you wish,
when you wish (subject to the Terms and Conditions of the pension plan).
The income you draw from the pension fund will be subject to income tax
Draw a pension income at your marginal rate. Note: the Money Purchase Annual Allowance is
directly from your pension
fund triggered when you first drawdown an income but there is no obligation to
draw an income.
Uncrystallised Funds Pension Lump Sum – You may use some or all of your
pension fund to pay you this type of lump sum. 25% of the lump sum is tax
free, the remainder will be subject to income tax at your marginal rate. Note:
taking this lump sum will trigger the Money Purchase Annual Allowance.

You could take a combination of the benefits described above and you do
not have to take benefits all in one go. An annuity can be purchased from
A combination of the above
to meet your individual funds in drawdown as well as from uncrystallised funds. The way in which
requirements you take benefits is flexible and can be structured to meet your individual
requirements.

When can I take benefits?

You may take benefits from a pension plan from age 55. You may also take benefits earlier if you suffer serious ill
health or an illness or an accident which leaves you permanently unable to carry out your current occupation and
you cease that occupation.

If you are 50 or over the Government provides a free and impartial service to help you understand what your
choices are and how they work. This can be accessed online, over the telephone or face to face - see
www.pensionwise.gov.uk.

It is strongly recommended that prior to accessing your pension benefits you seek advice from a suitably qualified
financial adviser or obtain guidance from Pension Wise.

Death benefits from your pension plan

What if I die?
The table below summarises the benefits payable.

All of the pension fund is available to

What benefits
provide your beneficiaries with a lump sum
can be provided?
payment or an annuity.

Most people will qualify as an eligible beneficiary for lump sum death
benefits under the scheme rules. The Scheme Administrator will use its
discretion to choose who to make the payments to having made reasonable
Who can receive a lump sum enquiries to identify the eligible beneficiaries. It is highly recommended
payment?
that you complete and keep updated an “Expression of Wish” of who you
would like your beneficiaries to be that, whilst it cannot be binding, will be
taken into consideration.

How are death benefits claimed?

To claim death benefits, the person dealing with your affairs should contact Freetrade directly, at the email address
“[email protected]”. They will confirm the information needed to pay the benefits as quickly as possible.

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.

Is my pension fund taxable?