Understanding your annual SIPP statement

Each year, we send you a statement to show you the value of your Self Invested Personal Pension (SIPP). It also shows what your pension pot may be worth in the future.

To show you this, we use something called a statutory money purchase illustration (SMPI). We must provide this by law because it’s a useful way to show how your pension pot might grow. You can use the illustration to help you plan for retirement.

You do not have to take money from your pension pot at your chosen retirement age. To change that age at any time, please contact us.

Your SIPP’s value at your last birthday

This section shows:

• your SIPP’s value at your last birthday
• any money added to your SIPP in the last 12 months
• how much you’ve been charged in the last 12 months

Understanding your charges

There are two types of charges: HL account charges and investment charges.

HL account charges include:

• management charges for holding investments in your SIPP
• share dealing charges and foreign exchange charges for overseas dealing

Investment charges can include:

• charges from investment managers for managing your investments
• government taxes from share dealing, such as Stamp Duty and PTM levy

Viewing your charges

To view your charges:

1. Log in
2. Select your SIPP
3. Go to the 'transaction history’ tab for account charges
4. Select ‘reference’ next to a deal to see dealing charges or taxes

Fund manager charges are included in the fund’s price, so you will not see them in your transactions.

To ask us a question about charges or request a full breakdown, log in and select ‘send a secure message’.

How much your SIPP could be worth by your chosen retirement age

This section shows what your pension pot may be worth when you reach your chosen retirement age. It’s not a guarantee of how much it will be worth and the actual amount could differ.

We show you:

• how much your SIPP could be worth as a lump sum
• how much you could get each month if you use your SIPP to buy a monthly income, called an annuity

The annuity income in your most recent statement is broadly calculated using interest rates from 15 February 2023. This follows guidance from the Financial Reporting Council (FRC). Annuity rates available now might be different to those in your statement. Rates may also be different by the time you reach your chosen retirement age.

To show you what your pension pot may be worth, we calculate how much it might grow. We use volatility groups and assumed growth rates to do this.

Understanding volatility groups and assumed growth rates

Volatility groups are buckets we put your investments into. We usually choose a volatility group based on how much and how quickly the investment’s price has gone up and down. We generally measure this over the last 5 years, or over the investment’s lifetime if it is less than 5 years old. Some investments are not measured this way, like cash and shares. Instead, we give them a volatility group based on the type of investment they are. For example, cash is always group 1, and equities, investment trusts and ETFs are always group 3.

Assumed growth rates are percentages which assume how much an investment will grow by each year. Each volatility group has an assumed growth rate set by the FRC. Less volatile investments have a lower assumed growth rate. More volatile ones have a higher assumed growth rate.

The following table shows the assumed growth rate for each volatility group. We give your pension an overall assumed growth rate, which is a weighted average of these different rates. Your portfolio's actual growth rate may be higher or lower.

Volatility Group	Assumed growth rate per year
Group 1 (less volatile)	1%
Group 2	3%
Group 3	5%
Group 4	7%

If you have funds which are opted into lifestyling, we will not include this in our calculations.

Assumptions we make to show how much your SIPP could be worth

It's impossible to predict the future. So when we calculate how much your pension pot might be worth, we make some assumptions. We base these on your circumstances now and what they’re likely to be in future. We also base our calculations on how you invest your money with us.

To calculate your SIPP’s worth, we make assumptions about:

• how much money you’ll add to your SIPP
• how much your investments will grow
• how you'll use your SIPP money in the future

Here are more details about our assumptions.

• How much money you’ll add to your SIPP

  If you have a regular payment set up, we assume your future payments will follow the same pattern as now. For example, if you add £100 each month to your SIPP now, we assume you’ll carry on adding £100 each month until you retire.

  If you have a Group SIPP, we assume any regular payments will increase at the assumed rate of inflation. For example, if you add £100 each month this year and inflation is 2.5%, we assume next year you’ll add £102.50 each month.

  We assume you’ll retire at your chosen retirement age.

• How much your investments will grow

  We assume how much your pension pot will grow over time by giving it an overall growth rate. To calculate this, we look at the different types of investments you have and work out a weighted average for them. Having one overall growth rate makes it easier to show your pension illustration.

  We assume different growth rates for different types of investment in your portfolio. See Understanding volatility groups and assumed growth rates.

  We assume that you'll keep the investments you have now until your chosen retirement age.

  We assume a steady rate of inflation between now and your chosen retirement age. Inflation reduces the future spending power of money, so we factor this into the calculations.

  Finally, we assume a level of retained interest to hold cash and charges to hold investments in your SIPP. We allow for charges when we calculate how much your SIPP might be worth in future.

• How you'll take money from your SIPP after you retire

  We assume you’ll retire at your chosen retirement age.

  We assume you will not take any of your pension pot as tax-free cash.

  We assume you’ll use all of your pension pot to provide a monthly income. This is called an annuity.

  We assume the annuity will:

  • be paid just to you for the rest of your life, and not to a partner or spouse
  • pay a monthly amount that’s guaranteed to be paid for at least 5 years, even if you were to die during that period
  • not increase in payment as the years go by
  • be paid monthly in advance

  These assumptions about your annuity are set by the FRC. If you take an annuity when you retire, it could have different terms to this, like a different guarantee period.