Giving you the freedom
to access your pension.
Income Release allows you to access your retirement benefits at a time that suits you and in a method you choose. Available through the Pension Portfolio plan, this flexible option allows you to take tax-free cash and if you want, an income directly from your plan. This means that you don't have to buy an annuity.
An annuity is a financial product that provides a guaranteed retirement income for life in return for a lump sum payment. Annuity rates could fall in the future, making it more expensive to secure a guaranteed income for life.
You don't have to transfer to a different plan or stop working to access the money in your plan. You can even continue to make contributions into your plan if you want.
There is a one-off charge of £180 when Income Release is first used.
How Income Release works
To access your retirement benefits you first need to select all or part of your Pension Portfolio for Income Release, as long as you have a minimum of £20,000 in your Core Investments. You may select any proportion of your plan depending on the benefits you wish to take. If you select less than one hundred per cent of your pension for Income Release, the plan will be made up of two separate accounts - the Income Release Account and the Savings Account.
- Income Release Account
This part of your plan pays out the tax-free cash and any regular income payments that you've selected.
- Savings Account
This is made up of the remaining funds within your plan and you can top this up with further contributions at any time. You can't withdraw an income directly from you Savings Account but you can use it to buy an annuity.
As the Income Release Account and Savings Account can include both Core Investments and Self Investments, your plan may consist of up to four parts:
- Income Release Account Core Investments
- Income Release Account Self Investments
- Savings Account Core Investments
- Savings Account Self Investments
If you take the maximum tax-free cash, your plan will have only an Income Release Account. It won't have a Savings Account unless you make additional contributions to your plan.
It is normally sensible to keep as much as possible in the Savings Account because you can move it into the Income Release Account as you need it, however, you can't move it back again into the Savings Account.
The income payments from your plan are not guaranteed for the rest of your life so it's important to regularly review the level of income taken and the value of your fund to ensure it's sustainable. You should also remember that the value of your investment could go down as well as up so you could get back less than your original investment.
Find out more
Last updated March 2014 65W0288/4