Retirement income

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What should I think about before accessing my pension pot?

Tax implications
The way you're taxed and how much you have to pay will depend on your individual circumstances, such as any other sources of income or savings you have, and may be subject to change. Read more information about tax and your retirement.
 
How long your money will last
If you take too much money from your pension pot, you may not have enough income to live on for the rest of your life.
 
Investment choice
If you're leaving some or all of your pension pot invested, it's important you consider the funds you're invested in to make sure they're still the right choice for you. The value of the investments in your pot can go down as well as up.

Providing for any dependents
If you take money out of your pension pot it is considered as part of your Estate and may become subject to inheritance tax. Taking money out of your pot may mean there isn't enough money left to provide for your dependents should you die before them.

Help and guidance
You can get help and guidance on the Pension Wise website, over the phone or face to face about the steps you need to take to turn your pension pot into income for your retirement:

  • Check the value of your pension pot
  • Understand what you can do with  your pension pot
  • Plan how long your money needs to last
  • Work out how much money you’ll have in retirement
  • Watch out for tax 
  • Shop around for the best deal

If you take too much money from your pension pot, you may not have enough income to live on for the rest of your life.

Where can I find guidance and advice?

Free impartial advice
The Government offers free and impartial advice through a selection of organisations. They can provide tools and calculators to help you, and experts you can chat online with, call or see face to face.

Pension Wise 

View - Pensions Advisory Service 

Money Advice Service    

Financial advice from an adviser
A financial adviser can provide you with a personal recommendation to help you make the right retirement choice, for a fee.

If you don’t have a suitable adviser already, you can find one in your area at View - Unbiased.

You should make sure that they're authorised by the Financial Conduct Authority (FCA) and you can check this on the View - FCA register.

Silverline
If you’re feeling overwhelmed or would like more general support, Silverline can offer information, friendship and advice.

www.thesilverline.org.uk 
Phone:0800 4 70 80 90

Age UK
Age UK offers free and impartial advice on money matters in retirement, including pension options.

View - Age UK website 
Phone:0800 678 1174

Will I pay tax on my pension income?

The income you receive from your pension is subject to income tax. The income tax bands for the tax year 2018/19 are shown below. These are set by the Government and change every year. You can check the latest details or historic tax bands directly at  Income tax rates or with a financial adviser or an accountant.

If your total income from all sources adds up to more than your Personal Allowance you will have to pay tax at the rate shown below.

x
Tax band for 2018/19 Taxable income Tax rate
Personal Allowance Up to £11,850 0%
Basic rate Between £11,851 and £46,350 20%
Higher rate Between £46,351 and £150,000 40%
Additional rate More than £150,000 45%

The tax you pay depends on your individual circumstances. The above examples are based on current law and tax rates and may change. Income tax bands are different if you live in Scotland.

The amount you can earn in a tax year without paying tax is called your Personal Allowance. You’ll only pay tax on income over that allowance. The Personal Allowance drops by £1 for every £2 above £100,000. There is no Personal Allowance where income is higher than £123,700. Your Personal Allowance may be bigger if you claim Marriage Allowance or Blind Person’s Allowance.

Tax will normally be taken off and paid to HMRC by your pension provider before you receive your income.
 
We use the tax code we get from HMRC to work out how much tax to deduct from your pension.

Do I have to take my State Pension straight away?

No, you don’t have to take the income from your State Pension straight away – you can defer or delay it until you need it. Your pension will automatically be delayed until you start to claim it.

If you do defer the start of your State Pension, it could increase the payments you get when you decide to claim it. For example, the basic State Pension increases by 1% for every 9 weeks you defer, or 5.8% for each complete year.

All State Pension payments are subject to income tax.

How much of my pension pot can I take tax free?

You can usually take up to 25% of your pension pot as a tax-free lump sum. If you choose to buy a retirement income product, you'll need to take your tax-free cash first. If you opt for withdrawals from your pension then the first 25% of each withdrawal will be tax-free.

How can I access my Legal & General pension pot?

Here's a step-by-step guide to help you access your Legal & General pension pot:

  1. We'll send you an Options pack if you're approaching your selected retirement date, or you can contact us to request one. This pack gives you details of the options available to you and the associated risks. The pack will also include a Request for Further Information and Risk Warning Questions document. You will need to complete the Risk Warning Questions and send these back to us. Please note that we can only proceed with your request to access your pension pot if you’ve fully completed the Risk Warning Questions. This is a requirement by the Financial Conduct Authority (FCA) to ensure you get the right information to help you make an informed decision.

    If you want to request an Options pack, you can either email us at optionspack@landg.com or call 0370 060 0784. Call charges will vary. We may monitor and record calls. If you're contacting us by email, please remember not to send any personal, financial or banking information because email is not a secure method of communication.

  2. Once you've decided and told us which option(s) you would like more information on, and you've answered the Risk Warning Questions, we'll send you a payment pack with details specific to the option(s) you've chosen. You will also receive a Risk Warnings document, based on how you answered the questions in the first stage. You'll need to complete all the relevant documents, including the Payment Instruction Form, and return them to us.

  3. When we have all of our requirements, we'll action your request and send you confirmation.

Why should I shop around when it comes to my pension options?

You should shop around to find the best product to suit your circumstances. It's always worth checking what's available in the wider market as you may get a better deal than the one offered by your existing pension provider. If you don’t shop around, you won't know.

How long will my pension pot need to last?

With increased life expectancy, retirement planning is becoming ever more important to ensure you’re not left reliant on the State.

In 2018, in the UK, a man aged 65 had an average further 21.4 years of life remaining and a woman 23.6 years.

How does inheritance tax affect my pension pot?

If you leave your money in your pension pot, then on your death it will usually pass to your beneficiaries free of Inheritance Tax. If you take money out of your pension, you may lose any Inheritance Tax protection on that money as it will be treated differently for Inheritance Tax purposes.

How will the money I take from my pension affect any Pension Credit or state benefits?

Cash or income taken from your pension pot may impact your Pension Credit or state benefits. To find out more visit entitledto.co.uk

What if my pension scheme doesn’t let me make the withdrawals I want to?

Some pension schemes don’t allow withdrawals or may limit how many withdrawals you can make. If your provider doesn’t give you the freedom you want, you can move your pension to another pension product that does. You should always check that you don't have valuable guarantees that could be lost, should you move your pot to another provider. Your current provider will be able to tell you if this is the case.
 

How did the Pension rules change in 2015?

On 6 April 2015, new flexible rules for how you can access your pension pot came into effect. These rules give you the freedom to choose how you use your pension pot if you are aged 55 or over and have a defined contribution scheme.

This added flexibility means when you decide to take the money from your pension pot, you can take it all, take part of it, move it around or leave it where it is.

It's important for you to understand there might be implications to your tax and state benefits. You'll also need to ensure that you have enough retirement income to live on.

What will happen to my retirement income product when I die?

If you've selected a dependant's income or a guaranteed minimum payment period on your lifetime annuity, the tax treatment of those payments will depend on your age when you die.

If you die:

    • before you reach age 75 - any payments made to your beneficiaries will not be subject to income tax.
    • after you reach 75 -  your beneficiaries will pay income tax at their marginal rate of income tax.

If you have a Cash-Out Retirement Plan or a Fixed Term Retirement Plan and you die before the end date of the plan, we'll continue to pay the income to your beneficiary, or to your Estate, until the end of the plan term. Alternatively, they may be able to take the remaining income and maturity amount (if applicable) as a lump sum payment.

How can I buy a Legal & General retirement income product?

You can apply directly for our retirement income products online or through an adviser.

What happens at the end of my Cash-Out or Fixed Term Retirement Plan

If you have a Cash-Out Retirement Plan, you don’t need to do anything at the end of your plan. When it reaches its end date, it will close and no further payments will be made. We’ll write to you confirming that your plan has closed.

If you don’t have any other source of income or savings, or you feel you need help, we strongly recommend you seek guidance or financial advice. Make the most of the free impartial guidance available through Pension Wise by visiting Pension Wise 

If you don’t have a financial adviser, you can find one in your local area by visiting View - Unbiased.

If you have a Fixed Term Retirement Plan, you may have a maturity value. Find out more about your options.

How does my pension provider know how much tax I should pay?

The tax deducted is based on the tax code that HMRC gives to your pension provider.

If your pension provider hasn’t received confirmation of your tax code from HMRC, or you haven’t been able to provide a current P45, then your pension provider will use an emergency tax code. This may mean you’ll pay more tax than is due. The emergency tax code assumes you’ll carry on receiving the same amount each month, even if the money you’re taking is a one-off withdrawal.

What’s the value of my pension pot?

If you’re ready to start taking a pension income, you need to establish how much is in each of your pension pots.

Check the total in each of your pension pots by contacting your provider.

You may be able to check the value of your Legal & General pension through My Account

How can I trace my lost pension pot(s)?

If you think you’ve lost track of one or more of your pension pots, there are ways you can look for them.

I have a Legal & General Pension Annuity, Cash-Out Retirement Plan or Fixed Term Retirement Plan, and would like to make a complaint

We know that sometimes things can go wrong. Our number one priority is to provide you with the highest level of customer service. If there’s a problem please let us know and we’ll try to provide a solution as quickly as possible.

You can find relevant contact details for our Retirement team here.

How do I contact HMRC and what information will I need?

If you're discussing your retirement income or any tax matters with HMRC, you'll need your National Insurance number. You may also need your PAYE reference which is likely to be 846/LEG8 or 206/RAC238. You can find your PAYE reference on your P60. 

You can find contact details for HMRC Contact HMRC here.

How can I update the bank information you hold for me?

If you need to update your bank account information, you’ll need to send us a copy of a bank statement or a letter from your bank that shows the updated account details. The statement or letter will need to be less than three months old.

Please send the information to:

Legal & General Payment Services
PO Box 809
Cardiff
CF24 0YL

How can I transfer my pension to another provider?

Different products offer different options, so you may choose to transfer your pension pot to another provider to access some or all of these options.

Depending on the type of pension you have, transferring to another provider may mean that you incur charges or miss out on valuable guarantees. Speak to an adviser before taking any action. For some options, you may be required by law to get financial advice before any transfers can go ahead.