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Media  >  Press Releases  >  Archive  >  Scottish Life launches flexible Income Release plan

12 October 2007

Scottish Life launches flexible Income Release plan

New Income Release plan gives clients the freedom to access their pension fund without having to wait until 'retirement'

Scottish Life, the pensions specialist arm of the Royal London Group, is to launch an Income Release plan that allows IFAs and their clients to maximise the flexibility provided by A-day rule changes, as well as to provide a traditional income drawdown facility. Illustrations for Income Release will be available to IFAs from 5 November with new business being written from 3 December.

Fully integrated within Scottish Life's successful Pension Portfolio proposition, Income Release allows customers to take a tax-free lump sum without the need to take income¹ and then continue to save for retirement - so giving the opportunity to "accumulate as well as decumulate".

In addition, where a client elects to take planned income payments, the product includes an innovative 'Income Tap' facility which transfers an agreed amount of money² into a low risk fund, while the remainder of the portfolio continues to be invested for longer-term income and growth. Once the Income Tap has been set up, it can be automatically topped-up at an agreed frequency in order to help secure ongoing income payments.

Keith MacPherson, Head of Individual Business at Scottish Life, comments:

"Technically speaking, Income Release provides an integrated unsecured pension option which allows the adviser and client to consider fully or partially crystallising the pension fund to provide a pension commencement lump sum and/or income, within a single plan.

"Put more simply, Income Release allows individuals to get a tax-free lump sum from their pension plan after the age of 50 (age 55 from April 2010) while still building up their pension fund. It means that a pension is no longer 'locked up' until you stop working."

Income Release is available both for new plans and for existing Pension Portfolio and 'Individual' policyholders. There is no minimum for the amount that can be taken in cash. There is no designation charge to take income or cash if the initial fund value is over £40,000³. Further charges would be deducted from the plan to cover the advice costs for Income Release, where a customer has agreed a commission remuneration payment with their adviser.

Keith MacPherson added:

"We believe that the very competitive annual management charge, often as little as 0.5%, will make Income Release particularly attractive to IFAs and their clients."

The plan has been developed after extensive research and feedback from advisers. It uses 'notional designation', where all investments within a single plan, both designated and non-designated, are treated as identical for investment purposes.

Clients can also invest the proceeds of other, non-pension, savings in the Income Release plan (such as ISAs, stocks and shares, deposit savings) so maximising the tax-efficiency of an individual's overall retirement savings⁴.

The product is backed up by extensive online service for advisers and clients.

- ENDS -

Notes

¹ This facility is only available if over age 50 (age 55 from 6 April 2010).
² Any number of payments can be transferred, up to a maximum of 60 months' income.
³ A charge of £100 will be applied for policies with an initial value below £40,000,excluding self investments.
⁴ Subject to normal annual pension contribution limits.

Pension Portfolio and 'Individual' pension plans are written under the provisions of the Pension Schemes Act 1993 and Part 4 of the Finance Act 2004 and are offered and administered by Royal London.

Investment returns may fluctuate and customers may not get back the full value of their investment.

For further information please contact:

Scottish Life

 Alasdair Buchanan, Head of Communications
 0131 456 7133
 07919 170 413

Polhill Communications

Jenette Perry / Loreen Addy
020 7655 0530

Editor's Notes:

Scottish Life was founded in 1881 in Edinburgh as a proprietary company, becoming a mutual company in 1968.

On 1 July 2001, Scottish Life demutualised and transferred its business to The Royal London Mutual Insurance Society Limited. Scottish Life is a division of Royal London and is the specialist pensions business within the Group, providing individual and group pensions to the market via intermediaries.

Scottish Life and Royal London's other intermediary businesses are based in Edinburgh where 1,200 staff are employed, with 190 working in other parts of the UK and overseas.

Royal London Group is a specialist financial service provider. Its businesses focus on those sectors of the market which value premium propositions, operating through a number of brands:

• Scottish Life - UK pensions market
• Bright Grey - UK protection market
• Scottish Life International - offshore investment markets
• RLAM - fund management
• RLAS - life and pensions administration

Royal London is the largest mutual life and pensions company in the UK with Group funds under management of £32.7 billion. Group businesses serve around three million customers and employ 2,570 people. (Figures quoted are as at 30 June 2007)