Access Keys




Individual Pensions FAQs

Frequently Asked Questions

Why save in a pension plan?

Pension plans can be one of the most tax-efficient ways of saving for retirement.

The Government will normally give you tax relief that may help increase the value of your plan.

If you’re a basic rate taxpayer and pay £80 into your plan each month, currently the Government will automatically top up your investment with an additional £20.

There might be further tax relief if you’re a higher or additional rate taxpayer. You can claim this when you fill in your annual tax return, or by writing to your Tax Office.

Work out how much you could save in tax relief when paying into a pension.

There are other tax advantages offered by a pension plan –

  • Investments in pension plans are generally free of UK income and capital gains tax, although we can’t reclaim tax deducted at source from the dividends of UK company shares.
  • When you take your retirement benefits you can normally take 25 per cent of the value of your plan as a tax free lump sum. The remainder can be taken as retirement income subject to income tax. From 6 April 2015, the remainder can be taken as a lump sum subject to income tax or as a retirement income subject to income tax
  • If you die under age 75 before taking your benefits, the lump sum paid to beneficiaries is free of tax and normally free of inheritance tax. If you are in income drawdown and die under age 75 any lump sum or income drawdown paid to beneficiaries/dependants is free of tax. If you are in income drawdown and die over age 75, the lump sum paid to beneficiaries is taxed at 45%. If your beneficiary or dependant takes income drawdown instead this will be liable to income tax.

The value of the tax benefits of your plan depends on your individual circumstances. Your circumstances and tax rules may change in the future.

Am I saving enough for my retirement?

Many people would rather not think about how much money they’ll need at retirement. But if you leave it too late to start saving you may run out of time to build a sufficient pension fund.

View our Cost of Delay Calculator to see the difference each year can make.

The first step you need to take is to work out how much you think you’ll need each year when you retire. Although you may have paid off your mortgage, and don’t have work related expenses, you’ll have a lot more leisure time to fill and you may need to replace some of the benefits your employer provided, such as life assurance or private health cover.

Once you have an idea of how much you’ll need, check the value of your pension fund. You'll need to consider how you wish to use your pension fund to provide you with an income, and work out how much money you'll need to support you in retirement.. You should also take into consideration the amount you’ll receive from a State Pension (visit the Pension Service website for more information on this) and any other forms of income you may have.

If there is a gap between the amount of income you think you’ll need and the amount you could receive, you may want to save more now. If you can afford to pay more into your pension plan, you can grow your retirement savings and will have access to more money at retirement.

You should consider putting aside as much as you can reasonably afford – the long term rewards can potentially be well worth it.

Our Quick Pension Calculator can help you work out how much you need to save each month.

How often should I review my pension plan?

You should review your pension plan regularly to check it’s on track to support you as you would like in later life. Can you be sure your pension plan is on course to provide the retirement you desire? You need to keep an eye on it and give it a boost if necessary. That could mean topping up the amount you’re paying in, or simply checking that you’re happy with your choice of investment funds.

Should I top up my pension plan?

By topping up your pension plan you can potentially build up a larger pension fund for when you eventually retire. The more you can pay into your pension plan, the more you’re likely to have in retirement.

Topping up your pension plan may make sense for you. The earlier you start topping up your plan the more time you give your pension plan to potentially grow.

If you’re not sure whether you should top up your pension plan you should speak to a financial adviser, who may charge a fee.

Is there any limit on how much I can pay in?

You can get tax relief on pension contributions up to the higher of 100% of your UK relevant earnings or £3,600 in any tax year. If you’re not earning, you can pay up to £3,600 including tax relief. If you pay in more than these amounts the Government will claim back the tax relief on the excess and we’ll refund your contribution.

There’s also a limit on the amount that can be paid into your pension policy each year. This is called the Annual Allowance and is set by the Government. If the payments made to your pension policy (either by you or your employer) exceed the Annual Allowance you’ll be liable to pay a tax charge on the excess. Tax rules can change.

Where is my pension plan invested?

Your investment needs and appetite and attitude to investment risk can change over time. It’s important to regularly review your investment fund choice to see if it still matches your needs and views.

There are different types of investment funds to suit the needs of different investors – you can choose where your payments are invested and switch funds, usually whenever you want, and currently without charge. Each fund carries different types and levels of risk.

For more information on particular funds, you can search the fund section of our website.

Remember that if you’re unsure about where your payments should be invested, you should speak to your financial adviser, who may charge a fee. The value of an investment is not guaranteed and can go down as well as up, and could fall below the amount(s) paid in.

How do I consolidate my pension plans?

You might have contributed to a number of pension plans over your working life – different employers’ schemes and/or personal pension plans that you’ve stopped contributing to.

In some circumstances it can be a good idea to consolidate all of your pension plans by transferring them to one pension plan with one provider – such as Scottish Widows. For example, you might benefit from higher loyalty bonuses or from lower charges for larger pension funds. It also means that your pension plans will be easier to keep track of with only one annual statement and one set of investment decisions to review.

However, transferring isn’t right for everyone. You could be giving up valuable benefits under your existing pension plans and there may be charges for transferring. Speak to your financial adviser before you decide. Your financial adviser may charge a fee.

What should I do if I change employer?

If your previous employer contributed to your pension plan

If your previous employer contributed to your pension plan, you may want to make up for this drop in contributions to make sure that your pension plan does not suffer as a result. Your options include:

  • Asking your new employer if they would be prepared to contribute.
  • Make up the difference yourself if you can afford to. The long term rewards can be well worth it.

If your new employer has a company pension scheme

Work linked pensions can be a good option as most employers will also make a contribution on your behalf.

You do not have to stop contributing to your own pension plan if you join your employer’s scheme – if you can afford to do so you can contribute to more than one pension plan. This is subject to the limit for tax relief on your own contributions which is the higher of £3,600 or 100% earnings, and the Annual Allowance on both your and your employer's contributions.

You should consider:

  • How much your employer is prepared to contribute to the work linked pension
  • Whether your employer provides tax efficient options such as salary sacrifice, please speak to your employer for more information
  • Whether you can pay additional voluntary contributions, please speak to your employer for more information
  • Whether your employer’s scheme offers the same (or better) levels of charges, investment options and retirement options as your personal pension plan.

Your financial adviser will be able to help you choose the route which best suits your retirement goals, but may charge a fee..

How do I transfer my pension plan to another provider?

You need to think carefully before transferring as this isn’t right for everyone. You could be giving up valuable benefits under your existing pension plan and we may make a charge for transferring. You should consider speaking to your financial adviser before you decide to make any changes. Your financial adviser may charge a fee.

Please call us to discuss your options and we’ll answer any queries you may have. If you want advice please speak to your financial adviser.;

  • Stakeholder and Personal pensions – 0345 761 6160* (Open 8am to 6pm weekdays, 9am to 12.30pm Saturday)
  • Retirement Account – 0345 716 6733* (Open 8am to 6pm weekdays, 9am to 12.30pm Saturday).

Can I take benefits from my policy?

Yes, but by law no benefits can be taken before the minimum retirement age of 55 unless you are permanently unable to work because of ill health or you have a 'protected pension age' from a special occupation.

You can currently take up to 25% of your pension fund as a tax-free lump sum when you reach age 55.

You can read more about the new options available from age 55 here.

Will my pension benefits reduce if I don’t take my benefits on the policy’s normal retirement date?

There may be a charge if contributions to your policy reduce, stop or if you start taking your pension early. Remember, if you take your benefits early, your policy will have had less time to grow, so is likely to be worth less, and the cost of a pension will be higher because you’ve retired at a younger age. Generally, the earlier you take your benefits, the less you’re likely to receive.

If you take your pension benefits before or after your selected pension date or transfer out, and your plan has a guaranteed annuity rate, you will lose this potentially very valuable benefit. So, before taking your benefits early, deferring your benefits or transferring out you should check your policy provisions to see if a guaranteed annuity rate applies to your plan and if it does, you could consider if it would be better not to change your selected pension date.

If you take your pension benefits or transfer the value of your pension either before or after your policy’s normal retirement date, a Market Value Reduction may also apply if you are invested in a With-Profits fund.

For more information about With-Profits and Market Value Reductions, see the Your guide to with-profits page. You should speak to your financial adviser if you need advice about taking your benefits. Your financial adviser may charge a fee.

Can I switch my investment(s) into other funds?

Yes, you have access to a wide range of investments to choose from, allowing you to change your investment strategy to suit your retirement planning needs. Most plans currently allow investment fund switches each year at no extra charge.

Firstly, read your plan literature, and then just call us

  • Stakeholder and Personal pensions – 0345 716 6777* (Open 8am to 6pm weekdays, 9am to 12.30pm Saturday)
  • Retirement Account – 0345 716 6733* (Open 8am to 6pm weekdays, 9am to 12.30pm Saturday).

We’ll answer any queries you may have if you don’t have your plan literature to hand.

How do I change my pension payments?

We understand that your circumstances may change from time to time, and you may need to review the amount you are paying into your pension plan. A number of options may be available including taking a premium holiday or reducing your level of premiums for a few months.

You should consider speaking to your financial adviser before you decide to make any changes. Your financial adviser may charge a fee.

Please call us on

  • Stakeholder and Personal pensions – 0345 761 6160* (Open 8am to 6pm weekdays, 9am to 12.30pm Saturday)
  • Retirement Account – 0345 716 6733* (Open 8am to 6pm weekdays, 9am to 12.30pm Saturday).

Remember, if you do stop saving, you’ll lose out on money from the tax man (and possibly from your employer if they are contributing to your plan). Stopping saving may well have a real impact on the amount of money you will have to live on in retirement. And there may be a charge if you stop or reduce contributions to your policy.

What are my options when I take my pension?

You can normally access your benefits any time from age 55.

For further details of the retirement benefits available, please see our Pension Options page or refer to the Key Features of the Personal Pension."