What is our Cash-Out Retirement Plan?
It’s a fixed term contract that will pay you a fixed regular income over a term of between 3 and 25 years.
To apply you must be aged between 55 and 85 and have at least £10,000 to invest after you’ve taken any tax-free cash you might want to withdraw.
It may be suitable for you if:
- You want to withdraw the full value of your pension pot by receiving set regular payments over a period of your choice.
- You don’t want your pension pot to be subject to any investment risk.
- You want your chosen beneficiaries to receive your income if you die before the end of the term.
- You want to use your pension pot to provide you with an income for a specific period. For example, to bridge the gap to an alternative source of retirement income such as a final salary pension, or, if you’re deferring your State Pension, to increase the amount of income it pays you, or so that it pays you a lump sum.
- You want to take the money out of your pension pot but you would incur a higher rate of income tax by taking it in one go, than if you spread the withdrawal over several years.
It may not be suitable for you if:
- You want to withdraw cash amounts from your plan as and when you choose.
- You want a ‘maturity’ payment at the end of the plan, as once you reach the end of the term the payments will stop.
- You want to change the amount of income you receive during the plan term.
- You want an income that lasts for your lifetime and does not end at a set date in the future.
- You or your partner have certain lifestyle health risks or have been diagnosed with a more serious medical condition(s). This could lead to your income being higher through a product that assesses your health.
- You could immediately withdraw the full amount from your pension pot and not pay a higher rate of income tax than you’d normally pay. If you’re unsure of your income tax position, we recommend that you seek financial advice.
For more details please read the Key features of our Cash-Out Retirement Plan (PDF: 951KB)
What are the options?
You can tailor your Cash-Out Retirement Plan to your needs. The options you choose will determine your income.
|Tax-free cash||Take up to 25% of your pension pot as a tax-free cash sum. If you don’t take it at the start of your plan, you won't be able to take it later.|
|Amount of income or term of your plan||Choose how much income you want and how often it’s paid, and we’ll work out how long your plan term will be. Alternatively, choose how long you want your plan to last, and we’ll work out how much income you can receive. Once you've decided and started your plan, you won’t be able to change these options.|
Example Cash-Out Retirement Plan
Molly is 65 and would like to use one of her pension pots to pay for travelling and enjoying the start of her retirement.
She invests £40,000 from an existing pension plan into a Cash-Out Retirement Plan and chooses a term of five years. We calculate the fixed income Molly will receive is £8,040 each year, and the income will continue to be paid to her beneficiary if she dies before the end of the term.
Over the full term of the plan, the total amount due to be paid, before income tax, is:
£8,040 x five years = £40,200
These are example figures only. For details of the actual amount that you could receive please ask us for a quote.
Important things to consider
- You can’t make any changes to the plan once it’s started.
- If your circumstances change during the term of the plan, you will not be able to cash it in or transfer to another scheme.
- As you'll receive a fixed income, inflation will reduce the buying power of your income over time.
- Plan payments are income and are subject to income tax. This could affect any benefits you claim.
- The tax you pay on the income from the plan will depend on your individual circumstances and can change. This may affect the income you receive from us.
- You may be able to get a higher amount of income through a product that assesses your health and offers higher returns for certain lifestyle or medical conditions.
- At the end of your plan your income will stop.
A version of this product is available through financial advisers. Explore the How to choose section to see some of the different ways you can get help and advice.
When your plan comes to an end
You don't need to do anything. When your plan reaches it's end date it will close and no further payments will be made. We'll write to you to confirm 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.
Pension Guidance and Advice
We strongly recommend that you seek guidance from the Government’s free and impartial service Pension Wise.
Find out more about guidance or advice
Remember, it’s important to shop around and get as much guidance and advice as you need before you make any decisions on what is best for you. Other providers may have more appropriate products or be able to offer a higher level of retirement income.
We've done our best to avoid complex jargon but take a look at our jargon buster if you need more explanation on any terms we use.