Here’s everything you need to know about The Retirement Account - key features, how it works, helpful links, guides and brochures.
To open The Retirement Account, you must:
- Be a UK resident, aged 18 years or over
- Have at least £20,000 to invest (transferred from another scheme and/or one-off contributions)
- Use a financial adviser
Why choose The Retirement Account?
The Retirement Account is a pension solution designed with flexibility in mind. Use it to consolidate your pension pots, make regular or one-off contributions, grow your savings and take retirement benefits when you retire.
You can choose to take your pension in one go, phase your retirement over a few years, take a tax-efficient income, access tax-free cash and provide for loved ones when you die.
You can also control where you want to invest your money. With the help of your adviser, you can select from a wide range of investment options.
Flexible income choices
When you’re ready to retire, you have the flexibility to control the type of income you want. Whether you want a guaranteed lifetime income, a flexible drawdown income, or a combination of both. You can always change your income choice, as and when you need.
See diagram below for how the product works.
Choosing a pension drawdown
With this income option, your pension is invested in a portfolio of funds. These funds are chosen with an adviser to reflect your goals and the level of risk you’re comfortable with.
- Access to a wide range of funds
- A taxable regular income
- Taxable lump sums
- Option to use some of your pension drawdown pot to buy a guaranteed income
Over time, you can choose a combination of the above options to suit your needs.
Guaranteed income – added benefits
You can add the following features to your guaranteed income choice.
You can protect your income against inflation by choosing an ‘escalating’ income, which means that your income will increase over time.
Pass money to loved ones
Choose from one of the following three options:
A chance to guarantee your payments for up to 30 years. If you die before this time, your loved ones will receive the income for the rest of this period. They can also decide to exchange any money owed from future instalments for a lump sum, which we’ll calculate at that time.
With this option, we’ll pay your loved ones a lump sum when you die. The amount can be up to 100% of the lump sum used to buy your guaranteed income, minus any payments you received before your death.
Give a child or dependant a portion of your income for the rest of their life, if you die before them. This can be up to 100% of your income.
Once added, these features can’t be changed. Your financial adviser can help you decide which ones might be right for you.
Flexible payment dates
You can choose to receive your income monthly, quarterly or yearly.
Tax relief and contributions
Any pension contributions made by you, or by a third party on your behalf, are eligible for basic rate tax relief. You can get tax relief if your gross contributions don’t exceed your UK earnings, or £3,600 in a tax year, whichever’s the highest.
Employer contributions do not get tax relief.
How tax relief is paid
When you make contributions, we add basic rate tax relief to your pension account. If you pay higher or additional rate tax, you’ll be able to claim extra relief from the Government through your tax return. You can make contributions until you’re 75 years old.
The information on tax relief and contributions is based on our understanding of current UK tax legislation, as of December 2021 and could change in the future.
Transferring other pensions
You can transfer money from another registered pension scheme or Qualifying Recognised Overseas Pension Scheme to The Retirement Account. This can be done at any time.
Making a transfer
- A transfer from a pension plan where you haven’t drawn any benefits will be paid into your pension savings pot
- A transfer from a pension plan where you’ve started to draw benefits will be paid into your pension drawdown pot. Tax-free cash won’t be available on pension drawdown money but you can choose to take an income and/or taxable lump sums.
What about tax?
Tax on investments
You won’t have to pay tax on your money while it’s in The Retirement Account. The investments in your account are generally free of UK income tax and capital gains tax, apart from income tax paid on dividends from UK companies.
Tax on income
If you take a regular income from your account, you’ll need to pay income tax, through PAYE.
You’ll also need to pay income tax on any lump sum payments taken from your pension drawdown pot and a proportion of any payments taken from your savings pot.
The amount of income tax you pay depends on your financial situation and the options you choose. Speak to HMRC or a financial adviser to understand how your decisions will affect the amount of tax you pay.
Tax on death
If you die before the age of 75, your beneficiaries will receive any income and lump sum payments tax free. If you die after the age of 75, this money will be taxed at their marginal rate of income tax.
The information on tax relief and contributions is based on our understanding of current UK tax legislation, as of June 2020 and could change in the future.
A range of investment choices
With the help of your financial adviser, you can control where your money’s invested. Choose from our Core Range, Governed Range and Extended Range
- Free access to investments across all the ranges
- Select different funds for your pension savings pot and drawdown pot
- Change the range you want to invest in, free of charge
- No minimum investment amount
See the table below for The Retirement Account product charges.
What are the risks?
The risks in your account depend on the investments you’ve chosen.
- The money saved in your pension pot could continue to grow, but it could also go down in value, as with any investment.
- The level of income you can take from your investments is not guaranteed.
- You may run out of money earlier than expected if investment returns are poor and/or you are taking out too much money from your pot.
- A reducing pot could result in less money being available to purchase guaranteed income (annuity) from your account later in life and also reduce the value of death benefits for any beneficiaries.
- An increasing pot could exceed the Lifetime Allowance resulting in a tax liability.
Guaranteed income (annuity)
- Annuity rates change regularly, so if you buy a guaranteed income (annuity) in the future, rates may be better or worse than those we offer when you open The Retirement Account.
- Over time, inflation will reduce your guaranteed income’s buying power, especially if you have not chosen an option where your annuity increases over time to help guard against inflation.
- Any guaranteed income (annuity) will finish when you die, unless you choose to include death benefits when you set it up.
- We may stop offering new guaranteed income (annuity) policies at any time by giving notice to you. So if you wish to use money in The Retirement Account to buy an annuity in the future, you may have to do so with another provider.
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