Taking your pension

Unlike some other pensions, the Retirement Account offers a range of ways to access your pension benefits using the same policy.

Your options when you retire

When you set up a Retirement Account you’ll be asked how you’d like to take your pension benefits. This is so the GIS can invest it as required as you near your retirement date. This means you can leave the investing up to Scottish Widows.

If you’re not sure of your risk appetite or how to take your pension at retirement, you can choose the default option. This is a balanced Governed Investment Strategy (GIS) that targets flexible access at retirement. This could suit a typical customer and reflects what we most commonly see in terms of risk appetite and retirement options. The default strategy is not personalised to you, and it may not meet your needs at retirement, so please consider this when making a decision about your investment options.

If you’re unsure what to choose, you can always seek financial advice. There will be a charge for this service.

However, if your plans change, you can amend how you want to take your benefits or your chosen retirement date at any time. 

The current minimum retirement age is 55 (57 from April 2028) and that’s when you can start accessing your benefits. But that doesn’t mean it’s right for you and so, before making a decision, you should consider all your options. For example, you might just want to reduce your working hours and access only some of your benefits rather than stopping working altogether. 

Get a guranteed income for life

This type of income is called an annuity. You can take up to 25% of your pension pot as a tax-free cash lump sum then use the rest to get a regular and secure taxable income for life.

There are different types of annuity which vary how much income you would get e.g. you could choose to buy an increasing income and/or choose to provide a continuing income for a loved one after you die. 

Access it flexibly

Known as Flexible Access Drawdown, you can take up to 25% of your pension pot as a tax-free cash lump sum, and leave the rest invested, you can then take taxable withdrawals as and when you like. 

The level of income you take and any investment growth will be key factors as to how long your pension pot will last and you may run out of money in retirement without careful planning. 

Take some or all of your pension as cash

Known as encashment, you can take part of your pension or close your pension entirely taking the whole amount as cash in one go. Up to the first 25% of each amount you take is tax-free and the rest is taxed at your highest tax rate by adding it to the rest of your income for that year. Please bear in mind this could take you into a higher tax bracket. 

However, be aware that without very careful planning you could run out of money in your retirement.

You need to consider that your circumstances can change and you may decide to defer your retirement, take it early or change how you want to access your benefits. Individual tax circumstances and tax rules can change.  

Your questions answered

  • You may already have an idea of how you want to take your pension benefits. However, it’s important to go back and review your situation before finally deciding. Your decision should be based on a number of things including your age and health, if you plan to stop working altogether or just reduce your hours, if you’ve got financial dependents and whether you’re looking for a fixed or flexible income.

    You should consider how much you might need to spend in retirement and also think about if you’re planning to use any savings or assets you have outside of the pension e.g. you might be considering downsizing your home. 

    To help you understand what income you will have in retirement it’s worth seeing what you might receive as part of the Basic State Pension. Do remember you won’t be able to take your State Pension until you’re in your mid to late 60’s.

    Check your state pension here

  • If you’re in ill health you may be able to take your pension benefits before age 55, if you are in serious ill health you may be able to take your whole pension pot as tax-free cash. Serious ill health means you have been diagnosed with less than 12 months to live. 

  • If you plan to take money from your pension soon after you transfer to us, this is an important decision. As such, we’ll ask if you’ve had financial advice or Pension Wise guidance, or if you would like some before proceeding with your transfer.

    What is financial advice? 

    This is what you’d get from a Financial Adviser. They’ll talk to you about what your finances look like today, and your plans for tomorrow and recommend the best products to suit your personal situation. They’ll normally charge you for their advice.

    Find out more about financial advice or you can also get help to find an adviser through Scottish Widows

    Who are Pension Wise?

    Pension Wise from Moneyhelper, offers free and impartial guidance about your pension options. It’s a government service where you can get an appointment with a Pension Wise specialist, who will talk you through your options. Find out more about Pension Wise, by visiting the MoneyHelper website.

Before you start

We will require the following details from you:

  • Your National Insurance number
  • Your existing pension provider’s name
  • The policy numbers of each pension you want transfer
  • The Scheme name if it’s a workplace pension
  • A recent transfer value for each pension

How to apply

Ready to transfer your old pensions into one easy to manage account? 

You can open a Retirement Account with Scottish Widows in just a few steps. Before you start make sure you’ve reviewed: