When your plan ends

Your maturity options

We've created these pages to help you understand what happens at the end of a Fixed Term Retirement Plan. When your plan comes to an end, it will be time for you to decide what to do with your maturity value, as you have different options. This is an important decision, you'll need to consider your options and we strongly suggest you get professional advice. We will send you a letter four months before your plan is due to end explaining your options.

What you'll need to consider

  • Guidance and advice
    Before you decide what to do with your maturity value we strongly recommend you seek guidance and financial advice. This is an important decision and you must consider all of your options carefully.

    Take a look at the free impartial guidance available through Pension Wise. This page doesn't provide financial advice. It's up to you to decide which option is suitable for you. If you don't have an adviser go to View - Unbiased to find one near you.

  • Shop around:
    It's important to shop around when you consider your options. If you choose to use your maturity value to buy a new product, this could be from us or from another provider. Other providers may have more appropriate products or be able to offer you a better deal. Check out the Money Advice Service guide 'Your pension it's time to choose (PDF: 1MB)' for more information on shopping around.

  • Tax implications:
    Please refer to how much tax will I pay if I take cash? In the questions below.

  • Providing for dependents: 
    You should also consider how your money will be treated on your death and whether there is enough money left to provide for your dependents. With some options your money will be subject to inheritance tax so it's important to consider this before you decide.

  • State benefits:
    Using your maturity value for an income or cash may affect any state benefits that you receive. You should check first by contacting the View - Pension Service , your local tax office or Pension Wise.

  • Sustainability of income:
    If you don't have any other source of income or savings, you may only have your maturity value and what the State provides you to live off. This may not be enough to fund the kind of lifestyle you want in the future.

What are my options?

There are four options available to you:

  • Option 1: Buy a new fixed term plan.
  • Option 2: Buy a guaranteed income for life (a lifetime annuity).
  • Option 3: Take cash.
  • Option 4: Take a flexible income (Flexi-access drawdown).

You can explore your options here: Your Maturity Options (PDF: 232KB)

What do I need to do now?

Once you have decided what you would like to do with your maturity value please contact us. You need to decide what to do with the whole of your maturity value; you can't leave any money in the plan.

When can I take my maturity value?

Not before the plan end date but you can tell us what you would like to do in advance.

Can I take tax-free cash?

No you can't take tax-free cash from your Fixed Term Retirement Plan.

Can I choose more then one option?

Yes, it's possible to choose more than one option, however as your maturity is treated as a single amount, we'll need you to confirm these options at the same time.

What happens if I don't tell you what to do?

When your plan ends no further income payments will be made. We'll continue to hold your maturity value until you tell us what you want to do. We won't pay any interest on the maturity value.

I've moved overseas. What options do I have now?

If you live overseas there are certain restrictions on the options and products available to you. Please contact us for more information on +44 345 7660 813. Open Monday to Friday 9am to 5pm. We may record and monitor calls. Call charges will vary.

Will my pension annual allowance be affected?

The annual allowance for the 2018/2019 tax year is £40,000. If the total gross contributions paid by you, your employer or a third party, into any UK Registered Pension Scheme you've taken out are over the Annual Allowance, you'll be subject to a tax charge.

If you're taking an income from your Fixed Term Retirement Plan you will already have a reduced Annual Allowance of £4,000 gross for the 2018/2019 tax year. Taking your maturity value as cash or using it to provide a flexible income will also trigger the reduced allowance. The reduced allowance is sometimes called the 'Money Purchase Annual Allowance'. For more information: View - www.gov.uk.

Where will my maturity value be paid if I take cash?

We'll pay any cash into the account which we've already been paying any plan income into. If your plan does not pay an income, we'll contact you to confirm your account details for the payment.

How much tax will I pay if I take cash?

The money you take will be taxed in the same way as earned income and will depend on your individual circumstances. The amount of tax you pay will be determined by your tax code and will take into account any other income you receive, including the State pension.

Income tax is split into bands and you pay different rates (20%, 40% and 45%) on earnings that fall onto each band. The table below illustrates this:

Income tax bands
Taxable income

This is the amount of earnings a person will pay income tax on:

Taxable income = total earnings - personal allowance

Personal allowance The basic personal allowance is £11,850 for the tax year 2018/2019; this is the amount of income that can be earned during a tax year before paying income tax. The personal allowance reduces by £1 for every £2 of income above £100,000 and is therefore zero if income is above £123,700.
Rates of income tax

2018/2019 rates of income tax

Nil income tax (for most, £0 to £11,850) 0%
Basic rate (for most, £11,851 to £46,350) 20%
Higher rate (for most, £46,351 to £150,000) 40%
Additional rate (Over £150,000) 45%

Income tax threshold

Taxable income above which the higher rate applies £34,500.

Taxable income above which the additional rate applies £150,000 (No personal allowance - see above).

Savings This example does not include any income earned from savings above the personal savings allowance.

Example - for illustrative purposes only. Figures are based on 2018/2019 rates of income tax shown in previous table. A customer decides to take their whole maturity value of £60,000 as cash. They have no other benefits or income.

 

Income tax example
Maturity value   = £60,000
Income tax due

£11,850 (personal allowance) x 0%

£34,500 (£11,851 to £46,350) x 20% (basic rate)

£13,650 (£46,351 to £60,000) x 40% (higher rate)

Total tax = £6,900 + £5,460

= £0

= £6,900

= £5,460

= £12,360

Maturity payment
(Maturity value less tax)
£60,000 - £12,360 = £47,640


There is general guidance on the taxation of pensions on GOV.UK. If you're a Scottish taxpayer, the rates of income tax will differ. More information is available at: www.gov.uk/scottish-rate-income-tax. These details are based on our understanding of tax law and HM Revenue & Customs' practice. The law and tax rates may change in future. The amount of tax you pay depends on individual circumstances and may be subject to change.

Find out more about how much tax you might have to pay here www.pensionwise.gov.uk.