Important information - the value of investments can go down as well as up so you may not get back what you invest. Eligibility to invest in a SIPP and tax treatment depends on personal circumstances and all tax rules may change. You can't normally access money in a SIPP until age 55. This information is not a personal recommendation for any particular product, service or course of action. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.
What are Investment Pathways?
Investment Pathways are designed to ensure that anyone with a Pension Drawdown Account should have access to good-value investments that broadly match a range of goals.
The Investment Pathway goals
Our Investment Pathways aim to mirror four goals that someone may have for the money in their Pension Drawdown Account.
- I have no plans to touch my money in the next five years
- I plan to use my money to set up a guaranteed income (annuity) within the next five years
- I plan to start taking my money as a long-term income within the next five years
- I plan to take out all my money within the next five years
Pension drawdown at a glance
It’s hard to know what you’ll be doing in the future, so picking a retirement income to last a decade or two (and, hopefully, even longer) isn’t easy. At Fidelity, we don't charge drawdown fees, all you pay are your fund managers’ ongoing charges and our low-cost service fee, so our pension gives you the flexibility to take whatever income you want – and change it when you need to.
- You can usually take up to 25% of your pension pot as a tax-free lump sum
- You have the option of taking this cash from your pension pot at any point from age 55 (57 from 2028)
- The rest of your money stays in your pension pot for you to manage
- Flexibility of taking money when you need it and making further contributions if you wish
- If you manage your money carefully and regularly review how any income is reducing your pension pot, you can help to ensure that your money lasts as long as possible
- You can choose where to invest the money in your pension pot to meet your needs
- Any cash you take from your pension pot as drawdown reduces the amount of income you could receive
- All income is taxed the same as any earnings you have. You should ensure you understand what tax rates might apply to you
- You could run out of money if you take too much income from your pension pot
- Your pension pot could go down dramatically if you don’t regularly monitor how your funds are performing
- You need to decide which funds your pension pot is invested in as the performance of any funds will affect how long any income will last
What is an annuity?
- An annuity is where you move your pension to an insurance company who will provide you with a lifelong, regular income. This income will be taxed as earnings.
- You can take up to 25% as a tax-free lump sum before you set up your annuity.
- There are many types of annuities and features you can select, such as inflation protection and a spouse’s pension.
- If interest rates are low, you may not get much income for your money.
- Provides you with a guaranteed income that will last as long as you live.
- You may be able to pass something on, depending on how you set up your annuity. If you die after you’re 75, your beneficiaries may have to pay tax on the money.
The Fidelity Investment Pathways
For each Investment Pathway goal there is a corresponding Fidelity fund you can invest in. These four funds are all ‘accumulation’ funds. This means that any income generated by the investments in a fund is re-invested so it contributes to the fund's potential growth.
You can decide how you use our Investment Pathways within your Pension Drawdown Account. This means you can spread your money over more than one Investment Pathway, move money from one Investment Pathway to another or choose an Investment Pathway for some of your money and invest the rest in your own choice of the other investments in our range.
If you're not already in drawdown and you would like to withdraw money from your pension, you will need to call our retirement team, available 9am to 5pm, Monday to Friday.
Our specialists can help you understand drawdown and Investment Pathways, and offer guidance or personalised advice.
Call us on 0800 368 6882