Bank Interest
How we share bank interest
The Bank of England’s Monetary Policy Committee is responsible for setting the UK’s Bank Rate. The Bank Rate determines the rate of interest that the Bank of England pays to commercial banks that deposit money with them. It influences the rates those banks charge people to borrow money or pay on their savings. If the Bank Rate changes, the interest rates that apply to financial products can change too as the cost of providing some products is strongly influenced by the Bank Rate.
We may receive variable interest from our banking partners – an annual estimate is shown on your latest personal illustration. We use this interest to help meet the running costs of your plan. The amount of interest we share with you will be determined by the Bank Rate and the annualised rate of interest achieved by Curtis Banks. We will update and disclose this figure at the start of each calendar quarter.
The Bank of England Bank Rate as at 1 October 2023 was 5.25%
Annualised gross interest rate earned in the quarter 1 June 2023 to 31 August 2023 was 5.06%
The effective rate of interest that we will share with you from 1 October 2023 will be 2.92%.
What does a Bank Rate change mean for you?
A change in Bank Rate directly affects the amount of interest available which we may pay to your plan. The Bank of England Bank Rate at the start of each calendar quarter will determine how much interest will be applied to any cash that you hold in your SIPP bank account. This means that the interest you receive is not guaranteed to stay the same, and is likely to change if the Bank Rate changes. It can go up or down.
The impact of changes in the Bank Rate is shown in the table below and this will be applied to the annualised rate of interest achieved by Curtis Banks:
| Bank of England Rate | Proportion of interest paid to your plan |
|---|---|
| 0.5% or below | 0% |
| 0.51% – 1.00% | 40% |
| 1.01% – 2.00% | 50% |
| 2.01% – 3.00% | 60% |
| 3.01% – 4.00% | 70% |
| 4.01% – 5.00% | 80% |
| 5.01% or above | 90% |
What is a ‘tiered’ interest rate and what does it mean for you
The interest rates payable to your plan explained in the above table operate on a tiered basis. The tiered system we apply means that the higher the Bank Rate, the greater the proportion of interest we pay to your plan.
For example, if the balance of your bank account is £10,000 for a 12 month period, the Bank Rate is 5.25% and the annualised rate of interest earned by Curtis Banks is 5.06%; your plan will receive interest on each tier as follows:
| Bank of England Rate | Proportion of interest paid to your plan | Amount of interest paid to your plan |
|---|---|---|
| 0.5% or below | 0% | (0.50/5.25) x 0% x 5.06% x £10,000 = £0.00 per year |
| 0.51% – 1.00% | 40% | (0.50/5.25) x 40% x 5.06% x £10,000 = £19.28 per year |
| 1.01% – 2.00% | 50% | (1.00/5.25) x 50% x 5.06% x £10,000 = £48.19 per year |
| 2.01% – 3.00% | 60% | (1.00/5.25) x 60% x 5.06% x £10,000 = £57.83 per year |
| 3.01% – 4.00% | 70% | (1.00/5.25) x 70% x 5.06% x £10,000 = £67.47 per year |
| 4.01% – 5.00% | 80% | (1.00/5.25) x 80% x 5.06% x £10,000 = £77.10 per year |
| 5.01%+ | 90% | (0.25/5.25) x 90% x 5.06% x £10,000 = £21.69 per year |
This will give your plan a total annual interest of £291.56 with an effective rate of interest of 2.92%
The rate of interest earned by Curtis Banks will be updated each quarter. The tier levels are set by Curtis Banks and are subject to change without notice.
The following table shows the Bank of England Bank Rate, interest rate earned by Curtis Banks and interest shared with you:
| Quarter beginning | Bank of England Rate | % interest earned | % interest shared |
|---|---|---|---|
| 2021 Q1 (Feb) | 0.10% | 0.99% | 0.00% |
| 2021 Q2 | 0.10% | 0.80% | 0.00% |
| 2021 Q3 | 0.10% | 0.79% | 0.00% |
| 2021 Q4 | 0.10% | 0.71% | 0.00% |
| 2022 Q1 | 0.25% | 0.79% | 0.00% |
| 2022 Q2 | 0.75% | 0.82% | 0.11% |
| 2022 Q3 | 1.25% | 1.07% | 0.28% |
| 2022 Q4 | 2.25% | 1.51% | 0.57% |
| 2023 Q1 | 3.50% | 2.19% | 1.03% |
| 2023 Q2 | 4.25% | 3.33% | 1.72% |
| 2023 Q3 | 5.00% | 4.20% | 2.35% |
| 2023 Q4 | 5.25% | 5.06% | 2.92% |
What happens in the event of a negative Bank of England Bank Rate?
In the extraordinary event that the Bank Rate drops below zero, no interest will be paid to your plan. Curtis Banks reserves the right to recoup any costs associated with operating the SIPP bank account under our product specific Terms and Conditions for your plan. We will inform you of any charges, giving you as much notice as reasonably possible, which will generally be at least 30 days in line with the product specific Terms and Conditions of your plan.