Security & Legal Structure
The Trustees
All your pension assets are held in a Trust, with you and The HD SIPP, the Professional Trustee, acting as Trustees. This arrangement keeps the pension assets outside your personal estate and, therefore, in normal circumstances the death benefits will not be subject to Inheritance Tax on your death.The HD SIPP legal structure
The HD SIPP is a Registered Pension Scheme under Part 4 and Schedules 36-38 of the Finance Act 2004. Its Registered Pension Scheme Number is 00662600RY.
From 6th April 2007 establishment, operation and winding up a personal pension scheme (including a SIPP) is a regulated activity of the Financial Services Authority (FSA). HD Administrators LLP are Authorised and Regulated by the Financial Services Authority (FSA). Ref: No. 465359
The HD SIPP is established as a Master Trust with a central trust deed which covers all the provisions and rules. Each new SIPP investor completes a Supplemental Deed to adhere to the master trust. The supplemental deed establishes a single ring-fenced trust for each individual SIPP and covers the provisions of these individual trusts.
HD Trustees Limited is the professional trustee for each SIPP, and you are appointed a co-trustee of your SIPP only. This gives you co-ownership and control of your SIPP funds and investments.
SIPPs can join together to purchase assets such as property in their joint names, and the percentage ownership and provisions for joint ownership are determined by completion of a Declaration of Trust.
Key documents
- Master Trust dated 13 December 2006. There are
three companies involved:
- Newcastle Building Society - Provider
- HD Trustees Limited - Trustee
- HD Administrators LLP -Scheme Operator and Administrator
- Supplemental Deed between HD Trustees Limited and the Individual
- Deed of Amendment dated 11 September 2008 to allow Protected Rights benefits to be included within the pension (i.e. Appropriate Personal Pension) Download the Trust Deed
- Application Form - this includes all information required by HD Administrators LLP and Newcastle Building Society to establish and run the SIPP, and is a legally binding document between you and the three companies mentioned above. HD Administrators LLP fulfils the role of scheme Administrator under the terms of the Finance Act 2004, and carries out the role of scheme Practitioner carrying out the administration duties.
SIPP Banking
When an HD SIPP is established and ALL mandatory documents are received, a Pension Plus Account will be opened by HD Administrators LLP with the Newcastle Building Society. The purpose of this account is to hold the SIPP’s cash deposits. The minimum balance at all times is £1.
This account is operated by HD Trustees Limited as sole signatory and Trustee of the SIPP. No funds are transferred into or out of these accounts without written authority from the member, either as a specific instruction or by completion of an investment application form, benefit request form, contribution standing order or cheque or other specific documentation requiring funds to be transferred.
HD Administrators LLP can transfer funds on receipt of instructions from an adviser or investment adviser who is authorised and regulated by the FSA, provided there is a suitable mandate in place signed by the member which authorises them to accept such instructions.
Interest on the Newcastle Pension Plus account is paid on the 1st 5th April and 5th October each year. The rate of interest credited to your Pension Plus account is 0.4% below Bank of England Base Rate for balances of over £50,000, and 0.6% below Bank of England Base Rate for balances of under £50,000.
Bank clearing
For receiving contributions to the HD SIPP, and making payments-out, such as pension payments, investments, sundry expenses, and HD Administrators LLP’s fees, HD Trustees Limited use a clearing account, through which sums are credited to and debited from each individual Newcastle Building Society Pension Plus Account. The account incurs no charges except for a £30 charge for same day transfers. This account is a client money account, and while funds are held in this account they represent client funds. Funds are only held in this account for as long as it takes for them to pass through clearing (typically three working days).
The account is operated on a “Statutory Trust“ basis, which means HD Administrators LLP have no discretion to pay funds out of the account on behalf of a SIPP client before they are received. No interest is credited to the member’s SIPP while funds are being passed through this clearing account, although HD Administrators LLP reserves the right to earn interest on the available balance held in this account on a daily basis, at the prevailing rate. Transfers are normally made by BACS and are subject to a three working day clearance period. Same day CHAPS transfer instructions must be given to HD Administrators LLP by 11.00am on a working day, and are subject to a £30 CHAPS charge for UK transfers, different charges apply to overseas transfers.
The HD SIPP and the Financial Services Compensation Scheme
Within the HD SIPP each member has an individual Cash bank account with the Newcastle Building Society:
- Interest is paid at 0.6% below the Bank of England Base Rate up to the value of £50000 and;
- 0.4% below the Bank of England Base Rate over £50000.
The Newcastle Building Society is regulated by the FSA and is a participant of the Financial Services Compensation Scheme (FSCS). Bank deposits are covered for 100% of their deposit, up to £85,000 (for firms declared in default from 7 October 2008), however this is the total cover available to an eligible claimant in relation to all accounts held with any single bank.
All HD SIPPs are established in a manner which provides a clear audit trail to identify each individual member which means that the £85,000 limit is available to every member.
In the course of administering a SIPP, monies are occasionally held by HD Trustees Limited in a master account with the Yorkshire Bank, for example, whilst the Direct Debit collection by the Newcastle Building Society is in the process of going through, again the HD SIPP is administered in a manner which provides a clear audit trail to identify each individual member which means that the £85,000 limit is available to every member whilst held within the master account.
Once established the SIPP may hold investments, deposits or insurance products. If the provider(s) of the underlying investments in the SIPP fails rather than the SIPP itself, the trustee of a SIPP could make a claim on behalf of the investor, subject to the claim arising out of investment business and being part of the FSCS. Therefore, on the assumption that the product offered by a potentially insolvent insurer is an investment, and would give rise to a claim for investment business, the SIPP would be able to claim, subject to the £50,000.00 limit for investment claims.
Furthermore, if a trustee of a SIPP has a claim, it would be treated as a claim by the member of the SIPP, rather than the trustee, so that if eligible all members would have their own claim, and therefore the limits in protection would relate to each member.
For further information please refer to the FSCS website: http://www.fscs.org.uk/consumer/ or contact the Customer Services Team on 020 7892 7300.
Investment Managers
The Trustee must give its prior approval to your intended Investment Managers.
