AES independent review - Forthplus Pensions (The Forthplus SIPP)

Forthplus Pensions Limited are regulated by the Financial Conduct Authority (FCA), the independent financial services regulator in the United Kingdom, with the regulatory reference: 653170, with permissions to establish, operate and wind up pension schemes.

The Forthplus SIPP was developed by Forthplus Pensions with a new perspective using their understanding of the pensions market to try and ensure whether a member is based in the UK or anywhere around the world, there is access to a genuinely UK focussed and protected pension solution.

Key features of The Forthplus SIPP include:

The Forthplus SIPP offers high levels of control and security to pension savers designed to deliver a range of benefits.
A SIPP comes with greater flexibility over your investment options than some other pension vehicles, giving you greater control over how you invest for your retirement.
The investment options are subject to the investment restrictions of HMRC and their investment policy.
The amount that you contribute to your pension plan will have a direct impact on the value of your pension plan at retirement.
You can contribute to your pension fund by making one-off or regular payments.
You can make personal contributions, which is where you put the money into the pension yourself.
From the age of 55 you will be able to take benefits from your pension (increasing to 57 in 2028).
These can be taken as income, lump sums or by the purchasing of an annuity.

Three key risk factors specific to this product which you should consider when you are deciding if The Forthplus SIPP is able to provide for you through retirement are:

Funding the plan
Investments
Withdrawals

You should also consider other factors which may be outside of your control, such as the availability of tax relief on contributions, changes in legislation and changes to the pension environment.

Forthplus Pensions claims that they help:

Improve the client and adviser experience through better technology, service and products.
Bring simplicity to pensions - to help make systems work for people rather than make people work for the system.
Offer products that can help investors move into retirement with more confidence.

We believe that Forthplus Pensions deliver.

The Forthplus SIPP is a secure, quality product that’s supported by an online system with a range of tools including calculators, guides and printable illustrations that aid advisers and clients in the advice and decision making process.

Alternative pensions arrangements and wrappers (where appropriate) can be transferred into the Forthplus SIPP.

Tax Relief on Personal Contributions:

Personal contributions made to your pension plan can attract tax relief of basic rate tax up to a total of your UK relevant annual earnings, subject to
an overall Annual Allowance (£40,000 for 2020/21).
If you do not have any UK relevant income, you may still be able to contribute up to £3,600 per year gross (£2,880 net) into your pension and receive relief, if you have lived in the UK for any tax year in the last 5 full tax years.
If you do not qualify for any tax relief, or exceed your limits, you may still be able to contribute to your pension, but you will not receive tax relief.

Pensions can be accessed in many ways as there are many FAD (Flexi-Access Drawdown) options.

Forthplus’ SIPP costs £850 to set up, and £450 per year - but contributions, transfers and dealing are free with relatively low charges for drawdown. You can learn more about the costs in the FAQs section of this review.

A SIPP gives you the flexibility to choose when you want to start to take benefits, the amounts you want to take, and can also provide benefits to your dependants following your death from the remaining value of the plan.

NOTE:

We would highly recommend reading the 'expert verdict' section of this independent review.

Additionally, here's a free guide that can help you achieve better results. In this guide, you'll learn:

Academic evidence only shared with a select few firms across the world
A real-life example of why you should never try to outguess the market
Why a fund's past performance is not enough to predict future returns
Why you need to focus on what you can control and why this leads to a better investment experience
Why you should accept the markets for what they are
What can impact behaviour and make people seek instant gratification

The Pros

> Transparent and easy to understand fee structure

> The Forthplus SIPP will not accept non-standard investments within its structure regardless of investor profile

> Strong customer service

The Cons

> Only offers a UK solution

> Fairly new to the market place, established in 2015

What if I want to change my professional adviser?

If you may wish, or need to change your professional adviser during the life of your SIPP, you can.

This could be because of a change in circumstances or unforeseen move.

Forthplus Pensions allows you to easily request a change of adviser to your SIPP, which can be communicated to them online.

When can I access my Forthplus SIPP?

Forthplus says that right from the age of 55 you will be able to take benefits from your pension plan.

You can take these as income, lump sums or by the purchasing of an annuity.

These can come in the form of a tax free element under the current income and lump sum rules for the SIPP (check with a regulated financial planner).

There is no limit on the amount of pension you can take out, although if you started taking your pension before April 2015 you may be in capped drawdown, which is limited.

You can switch to flexible benefits (limitless) at any point, although this will mean the introduction of an annual allowance on contributions across all pensions.

Taking income payments early on in retirement or taking large amounts will reduce the value of the pension and potentially its ability to provide an income into the later years of retirement.

Additionally, if you start taking income earlier than planned, then this may have an impact on the pension fund’s ability to support you, it's longevity and it's ongoing growth.

Your pension holdings may be subjected to additional tax levies if the total value of all your UK pension holdings are greater than the Lifetime Allowance – a limit which the government have put in place in respect of the preferential tax advantages for pension savings.

The limits are £1,073,100 in the 2020-21 tax year. This will increase from April 2021 for 2021-22 in line with CPI.

In certain circumstances, individuals may be eligible for, or may have been provided with, protection in respect of these limits for pension savings they have already built up which near or cross the limits.

Sometimes these protections however are conditional, such as a requirement to no longer contribute to the plan, which may affect the original plans regarding your pension savings.

If you decide to use the pension fund to purchase an annuity, which is where you transfer your pension fund in return for a lifetime income, often guaranteed for a period of time to provide for beneficiaries, relative to your choice.

You can choose to take your tax free element and then transfer the remainder to the annuity provider to purchase the annuity, or forfeit the lump sum in favour of a higher income.

There is no guarantee that annuity rates will improve in the future.

If you elect to take an annuity, it may provide you with more or less income than you may be able to get through remaining in the SIPP.

In taking an annuity, you will give up the benefits in the event of death from your pension, such as the ability to pass on the pension as a lump sum to your beneficiaries, in favour of whatever terms are offered by the annuity provider.

It is usual that the provision of more protections, benefits and guarantees will be provided in return for a lower initial income, therefore, an annuity with a fixed income amount for life, and with no benefits for any dependants will have a higher rate of income compared to an annuity which is fixed to inflation rates and provides guarantees for your dependants should you die within 5 years.

NOTE: Forthplus Pensions does not provide annuity products.

You should consider all of these factors, along with any other questions you may have, with your professional adviser. They will also provide you with information relating to your personal circumstances which you may need to consider prior to applying to The Forthplus SIPP.

Is The Forthplus SIPP a stakeholder pension?

The Forthplus SIPP is not a stakeholder pension.

A stakeholder pension is a relatively simple pension solution with a limited range of investments and a range of governmentally prescribed minimum standards including charges, minimum payment levels and terms and conditions.

These products are generally available and may be more suitable to your needs than a SIPP.
If you are unsure whether a stakeholder pension may be more appropriate, please contact your financial adviser.

What happens to my Forthplus SIPP when I die?

With a SIPP, you are able to pass on any residual pension value as a lump sum or as pension income to your nominated beneficiaries.

Who will receive your pension:

On your application form you will be able to nominate who you wish to receive your pension and the percentage you wish to allocate to that individual. The Scheme Administrator will then take this nomination into account when arranging for the dispersal of pension benefits.

You can change your nominated beneficiaries at any time simply by writing to Forthplus Pensions with new instructions.

How the benefits will be passed on to your nominated beneficiaries:

Your nominated beneficiaries will be notified that you have pension benefits to be passed on. They will be given the options available to them so that they can confirm how they wish to take on the benefits.

The options currently available to them are to take the amount as a lump sum, paid straight to their bank account, or to have the amount paid as an income.

Tax implications:

If the Member is under the age of 75 when they die, the whole value of the pension can be passed on tax free, subject to your lifetime allowance.

If the Member is over the age of 75 when they die, payments to the chosen beneficiary will be subject to income tax at the beneficiary’s marginal rate.

There are no restrictions on the level of withdrawals that can be taken, or may be able to be transferred to your nominated beneficiary for them to take as a pension.

NOTE: The Lifetime Allowance still applies to payments on death (subject to the withdrawal limits).

Can I withdraw my whole pension fund in one amount?

Yes, with Flexible Benefits, you are not limited on the amount of pension you can take.

However, withdrawing the whole pension fund means that your pension plan will have no further funds, meaning that it cannot provide ongoing income for you in the future.

There may also be major tax implications to withdrawing your whole pension fund and we
strongly advise that you seek professional financial and tax advice before considering this step.

What are the fees and charges for Forthplus's SIPP?

1. Charges for the first year of your pension - £850

2. Charges for your pension from year two ongoing - £450 per year

3. Additional options:

Having an additional bank account (EUR and/or USD) - £50 each, per year
Additional Valuations and basic Subject Access Requests (1 inclusive each year) - £25 each

Other things you may have to pay for:

1. Pension Drawdown - £150

Thereafter, you can choose to take income, as follows:

Taking One-Off or Annual pension income: £50 each payment
Taking Monthly or Quarterly pension income: £150 annually

2. Flexible Pension Drawdown (UFPLS) - £200

3. Transferring Out, Winding Up or Purchasing an Annuity - £0

4.Pension Splitting (Divorce) or Arranging Death Benefits - £450

5. Additions Services such as:

Payment of Benefits from your EUR/USD Account - £10 per transaction
Payment of Benefits using currency exchange services - £15 per transaction
Payment of Benefits as an asset (in-specie) - £150

NOTE: Should work fall outside the above, be deemed to be excessive or otherwise, the management reserve the right to charge on a time-cost basis which will be agreed prior to
the commencement of the request.

The charges are subject to UK Value Added Tax (VAT). Based on a current understanding of tax legislation, if you are not ‘normally resident’ within the EEC, VAT will not normally be due. Otherwise, this amount will be chargeable and additional to any amounts quoted.

If you have any questions or require any further information on these charges, please
contact your financial adviser.

Expert assessment of Forthplus Pensions

Overall, this is a very competitive product with transparent low annual fees rather than hidden percentage charges.

The set up cost is less than half that of similar products, and drawdown is reasonable as long as you remain above the £20,000 minimum.

Forthplus is a cost effective SIPP that is technically proficient.

It represents a good safe haven for many people who have previously been with other providers.

Read the UK regulator’s advice on pension transfers here.

Never deal with a firm that isn’t authorised as a UK pension transfer specialist. For pensions worth £250,000 or more, we recommend contacting us for a Second Opinion.

Forthplus Pensions is an Edinburgh-based, FCA-regulated SIPP provider, with products and systems developed exclusively for fully regulated independent financial advisers.

Forthplus Pensions Limited is authorised and regulated to operate, establish and wind up pension schemes.

Forthplus Pensions Limited are the Scheme Administrator for The Forthplus SIPP, a Self Invested Personal Pension, which is a UK-based, personal (non-work-based) pension, registered with HMRC.

The Forthplus SIPP operates with a separate Trustee ‘Forthplus Trustees Limited’. A Bare Trustee, meaning all client assets are held entirely separately from those of the Scheme Administrator ensuring no client money is mixed with operational expenses at any time.

Forthplus
Pensions

An independent review by our team of experts

REVIEW SUMMARY