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Accessing your pension

The retirement savings you've built up in your plan will be used to provide you with a regular income.

You can start taking your income at any time from age 55, even if you haven't stopped working. You can choose from a range of options to help tailor your retirement benefits to your needs. If you become severely ill, you may be able to take your benefits earlier.

Cash lump sum

You can normally take up to a quarter of the retirement savings that you have built up as a cash lump sum, free of tax.

Regular income

What's an annuity?

An annuity is a financial product that provides a guaranteed retirement income for life in return for a lump sum payment.

The rest of your retirement savings (or all of them if you haven't chosen the cash lump sum option) is used to provide your retirement income. Typically, this involves using the money you've built up in your pension to purchase an annuity. And you can structure it in a way that suits you. For example you might want your retirement income to:

  • increase automatically each year
  • increase by a fixed amount or in line with inflation
  • be paid for a guaranteed number of years
  • provide an income for your spouse, civil partner or dependants on your death.

It's also possible to take an income directly from your pension fund and leave the rest invested. Whichever way you receive your income, it will be subject to tax.

Find the best deal for you

Just because you have saved with Scottish Life doesn't mean that you have to take your retirement income from us. You're free to shop around and compare other companies' rates to get the best deal. There is no penalty if you choose this option.

Lifetime Allowance

There is a limit on the amount you can have built up in this and any other pension plan when you start taking your retirement benefits. It is set by the Government and is known as the Lifetime Allowance - if you exceed it, the excess will be subject to a tax charge.

Read more about the Lifetime Allowance.

Tax charges

Tax charges will apply to the value of any retirement benefits above this allowance. The tax charges depend on whether you take the excess amount as a lump sum or a regular income1.

Important notes:

  1. If you have a pension that provides a retirement income based on salary or earnings (often known as a final salary pension) and/or you are already receiving an income from a previous pension, this counts towards the Lifetime Allowance. A different calculation is used to value these retirement benefits. Your financial adviser can provide you with details.

Last update 28 March 2012
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