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In detail
You can open your Retirement Account from just £200 a month
You can pay regular or single payments to your Retirement Account. If you’re employed, your employer can also contribute.
You can choose to transfer any other pension plans you have to the Retirement Account. This could make your pensions savings easier for you to manage, or provide you with the investment you require. You should always seek advice before transferring the value of a pension plan. Transferring may mean giving up valuable guarantees or other benefits offered by your existing pension arrangement(s).
We’ve designed the Retirement Account with you in mind, and have put together an extensive range of investment options which lets you work with your financial adviser to build the right portfolio for you.
You can choose your retirement age - anytime between the ages of 55 and 75. You can take your benefits by:
- moving (designating) part or all of the value of your Account from Retirement Planning to Retirement Income
- using the value of your Account to buy one or more annuities, from us or another annuity provider.
You can normally take part of the value of your Account as a tax free cash sum.
By age 75, you must use the value of your Retirement Account to buy an annuity.
How does the Retirement Account (Retirement Planning) work?
Retirement account has the flexibility of being a Personal Pension and, when you need it, a Personal Pension with a self invested option. It allows you to consolidate your retirement savings in one Account, offering you choice and control. In addition to a range of Scottish Widows Pension Funds, you can choose to invest:
- in external funds accessed via a Funds Supermarket;
- any Fixed Term Cash Deposits we make available;
- with one or more selected Discretionary Fund Managers;
- direct investment on listed stocks, shares and other securities.
- in commercial property;
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. The tax treatment depends upon your individual circumstances and may be subject to change in the future. Tax rules may also change.
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" 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.
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. You’ll have the same choice of investments as those available in Retirement Planning. 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.
Your financial adviser will be able to provide you with more details.
Who can open the Retirement Account?
The Retirement Account is available to individuals aged under 75.
We can only accept applications from individuals resident in the UK or a limited number of other territories. Please ask for details.
How much can be paid in?
For Retirement Planning, 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 |
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 2010/2011 tax year is £255,000.
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 2010/2011 tax year is £1.8m. A tax charge may also apply to some higher rate tax payers if the Special Annual Allowance is exceeded.
Your financial adviser will be able to provide you with more details.
How much does it cost?
Many pension plans have a charging structure which is referred to as "bundled". This means that you may know the overall running cost of your pension, but that it may be difficult to tell which charges relate to which parts.
The Retirement Account takes a different approach to charges. We’ve broken down charges into their component parts, so they are more transparent.
This will help you to:
- 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.
Your financial adviser will be able to explain more about the charges that apply to the Retirement Account.
How do I know it’s the right pension for me?
You should discuss your pension needs with your financial adviser. If you haven’t got one don’t worry - you can find a local Financial Adviser here.
How can I keep track of my pension?
Once you’ve started your Retirement Account, you can view your account online at any time to get a valuation of your pension savings. We will also send you updates each year of your Retirement Account value, along with an illustration of what you may get at retirement if certain assumptions are met.
Have we answered all your questions?
If you have more questions about our range of individual Pensions, our FAQs may help to answer them.
If not, please Contact us.
Charges, limits and terms may change from time to time.
