Retirement Account

Retirement Account in detail

• Retirement Planning
• Retirement Income
• What income will you receive?
• Investment options
• Risks

Retirement Planning

How does the Retirement Account (Retirement Planning) work?

• Retirement Account has the flexibility of being a Personal Pension with a self invested option if required.
• It allows you to consolidate your retirement savings in one Account, offering you choice and control.
• Wide choice of investment options
• When you make a contribution, we’ll automatically add an additional amount in respect of basic rate tax relief, meaning you can benefit from the tax relief being invested immediately. We recover the tax relief from HM Revenue & Customs at a later date.
• Higher rate tax payers can claim additional tax relief in their self assessment tax return

Retirement planning payments

• The minimum payments that can be made after any tax relief has been added, are;

  	New policies	Increments
  Regular (monthly)	£200	£50
  Regular (annually)	£2,400	£600
  Single (one off payments)	£10,000	£2,000
  Transfers (from another pension)	£10,000	£2,000

• All payments into or out of a Retirement Account will pass through the Control Account(s) which are unique to the Retirement Account. Each policy “part” (Planning or Income) has its own Control Account, which acts as a clearing and transactional account for all monies paid in and out of the Retirement Account. To help you to keep up to date with your Retirement Account you can view the Control Account(s) online.
• We can only accept payments from you which are eligible for tax relief. Tax relief is available on payments which don’t exceed your relevant UK earnings, or £3,600 if higher. We’ll refund any payments which aren’t eligible for tax relief, normally following the end of the tax year in which the payments were made.
• If in any year, the total of all payments (including any made by an employer or other individual on your behalf) into your entire pension arrangements exceeds the Government’s Annual Allowance, you’ll be liable for a tax charge on the excess. The Annual Allowance for the 2011/2012 tax year is £50,000.
• The minimum initial amount that can be designated from Retirement Planning to Retirement Income is £10,000 before tax free cash (TFC), provided the total value of the Account is at least £50,000. For subsequent designations to Retirement Income, the minimum amount is £2,000 before tax free cash.
• It is also possible to transfer the value of an existing ‘income drawdown’ plan to a new Retirement Account. The minimum transfer value in these circumstances is £37,500.
• The Government applies a Lifetime Allowance to the total value of pension benefits you can receive. If the value of your pension benefits from all pension arrangements exceeds the Lifetime Allowance, a tax charge will be payable on the excess. For most people, the Lifetime Allowance for the 2011/2012 tax year is £1.8m.

Retirement Income

How does Retirement Income work?

• Retirement Income allows you to take a flexible, taxable income from the value of your account whilst it remains invested.
• Same choice of investments as those available in Retirement Planning with the exception of Governed Investment Stategies.
• From age 55, you can choose to move (designate) part or all of the value of your Account from Retirement Planning to Retirement Income.
• Each time you designate an amount, you can normally take up to 25% of the value as a tax free cash sum. The remainder must be used to provide your taxable income, although you can choose to take nil income if you wish. The maximum yearly income you can take will be calculated in accordance with Government rules.
• If you decide not to take all your retirement benefits at once, you can choose to take your benefits in stages. This is known as ‘phased retirement’. It’s not possible to ‘phase’ the value of any protected rights derived from contracting out of the State Second Pension (S2P) scheme.
• By age 75, you must use the value of your Account to buy an annuity or transfer to another pension provider.

What income will you receive?

What you get back from your Retirement Account will depend on a number of factors, including how much you pay in, how long your account is invested, how well investments perform, and interest rates when you retire. The value of the plan when you decide to take your pension isn't guaranteed and can go down as well as up.

Calculate your income

• Quick pension calculator – get an idea of how much to put away each month to help achieve your goal.
• Pension tax relief calculator – work out how much you could save in tax relief when paying into a pension.
• Cost of delay calculator – find out the effect of delaying the start of your pension.

Charges

• Clear and transparent charging structure which is broken down into components so that you can:
  • see what each of the parts actually costs; and
  • assemble a tailored pension contract to meet your requirements and your budget.
• There are three main types of charge;
  • Service Charge – this is charged by Scottish Widows, and is for the set up and ongoing administration of your Retirement Account.
  • Investment Charge – this is the cost of each investment, including purchase and sale costs, management charges and other investment-related expenses. Investment charges differ depending on the investments selected.
  • Adviser Payment Charge – this is the cost of advice and any other related services you agree with your financial adviser.
• The Service Charge is tiered, with lower charge rates applying to higher Account values. If the value of your Account increases from one tier to another, the Service Charge rate will reduce. However, if the value of your Account falls from one tier to a lower tier, the rate will increase.

Investment options

Approximately 1000 funds to choose from

The Retirement Account caters for both straightforward investment needs and those that are more complex, The Account offers you access to a wide range of in-house and external funds covering a number of asset classes.

The investments options are:

Governed Investment Strategies

A range of strategies that gradually move your plan into lower risk investments as you approach your selected retirement date. Each strategy invests in a portfolio of funds and we regularly review these and the Governed Investment Strategies and make changes if necessary. See the Governed Investment Strategy Guide for more details.

Scottish Widows Pension Funds

External funds accessed through a Fund Supermarket

Fixed Term Cash Deposit

Direct investment on listed stocks, shares and other securities

You can invest directly in stocks, shares and other securities listed on HM Revenue & Customs recognised exchanges. Deals can be placed online or by telephone service. The Share Dealing service is currently provided by Stocktrade, part of Brewin Dolphin, the largest independent private client investment manager in the UK.

Your own personalised investment portfolio provided by one or more selected Discretionary Fund Managers

Direct investment in UK Commercial Property

Self investment option

For a self invested option, invest in Share Dealing and Discretionary Fund Management.

Risks

• Charges, limits and terms may change from time to time.
• The level of income you receive from your pension plan will depend upon a number of factors including the value of the plan when you decide to take your pension, which isn´t guaranteed and can go down as well as up.
• The value of the investment is not guaranteed and may go up and down depending on investment performance (and currency exchange rates where a fund invests overseas).
• In long-term investments, risk and reward are inseparable. Put simply: low risk generally means low potential growth.
• The tax treatment depends upon your individual circumstances and may be subject to change in the future.
• Tax rules can change.

Need further information?

Read our FAQs or contact us.

View our pensions calculators and guides.

Not for you?

See our other pension products.