Pension questions and answers

We’re working on some exciting improvements to our pensions, and the services that support them. They’ll bring everything up to date and make your account easier to manage.

While we’re working on the improvements, we’ve had to make a few changes to the way you can pay into your pension. Although we’re not able to take online payments by debit card, you can still top up your account with either regular or ad-hoc payments online, by phone or by post.

Here’s how:

Online: If you have a Direct Debit set up, sign in to Online Service and select the top up link to make an additional one-off Direct Debit payment.

By phone: To set up a Direct Debit or top up using a debit card, please call 03456 10 20 30.

By post: Cheques should be sent via post to Freepost Virgin Money, PO Box 9522, Chelmsford, CM99 2AB. Please remember to let us know your name, account number and postcode.

You also have the option of transferring in other pensions into your Virgin Money Pension but you need to make sure this is the right thing to do. We strongly recommend you seek financial advice first to fully understand the costs, risks and benefits.

There is no limit to how much you can put in but there are certain limits that may trigger a tax charge.

Each year, most people can contribute, up to the lower of:

• 100% of their salary
• £40,000

The rules are different if:

• You are over 55 and have flexible accessed your pension savings
• You don’t pay income tax
• You earn over £200k
• You already have pensions worth more than £1,073,100

For customers with earnings of more than £200k, your annual allowance is calculated using a sliding scale. Search gov.uk for ‘tapered annual allowance’ for more details.

Most companies automatically enrol new staff members into their pension scheme, so it's worth checking with your new employer. If they offer a company pension and they contribute to it, you should join so you don't miss out. You can still keep your Virgin Pension and continue paying into it if you wish.

If you become self-employed or your new employer doesn't offer a pension scheme, you can still keep paying into your Virgin Pension which helps your retirement savings stay on track.

If you're off work, but are still being paid (e.g. paid maternity leave or sick leave), you can continue to pay into your pension as normal. If your employer is paying into your pension, you'll need to ask them if they'll continue to contribute while you're off work.

If you're not being paid, you can still make payments into your Virgin Pension however the tax benefits are reduced - you automatically get tax relief at 20% on only the first £2,880 you pay in each tax year.

Even if you're not earning, you can still make payments into your Virgin Pension however the tax benefits are reduced - you automatically get tax relief at 20% on only the first £2,880 you pay in each tax year.

If you don't have any money to spare, you can stop paying into your pension at any time and start saving again whenever you're ready. Just remember, stopping or reducing your payments to your pension plan may reduce the amount you get back from your pension.

When you took out your Virgin Pension, you may have named one or more people who you want to receive your pension savings when you die (your 'beneficiaries'). If you need to name or change your beneficiaries, please call us.

Your beneficiaries will not pay income tax on the amounts they inherit (unless you are over 75 when you die). They can choose to receive a lump sum, or take an income from the pension savings.

Thanks to changes in pension regulations, you’ve more choice these days about how and when you access your pension. As well as being able to take a 25% tax-free lump sum, you can:

• Take it in smaller amounts over time (25% of each withdrawal is tax-free)
• Turn it into a regular income through ‘income drawdown’ or take a series of cash lump sums
• Turn it into a regular income by buying an annuity that pays a guaranteed income for life

It is important you fully understand all the options available to you so you can make sure your choice gives you the best possible retirement income.

Free and impartial advice
If you are over 50 and have a pension based on how much you’ve paid in (a defined contribution pension), Pension Wise is a government service offering free and impartial guidance.

For online guidance or to arrange phone or face-to-face guidance visit www.pensionwise.gov.uk or call 0800 138 3944.

Financial advice
If you're looking for advice, you can search for an independent financial adviser at www.unbiased.co.uk.

Once you are 55 you can access your pension savings.

Take your pension savings as a lump sum

• You can take your whole fund as cash in one go and get up to 25% of this tax-free.
• Or you can make several withdrawals over time and receive 25% of each withdrawal tax-free.

Any withdrawals over the tax-free amount of 25% will be taxed at your marginal rate (your individual income tax rate, based on your total income for that tax year, including money from pensions).

Take a regular income
If you'd prefer a regular income, you can:

• Take an income directly from your pension savings fund, which remains invested (known as ‘income drawdown’). Through income drawdown, you can take up to 25% of your pension savings immediately tax-free and the rest as taxable income at a later date.
• Take out an annuity (where you swap your pension savings pot for a secure, taxable income, either for a fixed period or for life).

At Virgin Money we offer you the option to take your whole fund as one lump sum, with 25% tax-free.

If you'd prefer to take a regular income from your pension savings when you retire (through income drawdown, withdrawing smaller lump sums or by arranging an annuity), you'll need to transfer your pension savings to another provider offering that option.

Glidepath is designed for people who want to keep their pension money invested when they retire. Pension regulation changes mean that the option to take Income Drawdown is easier and more people are now looking for flexibility in retirement.

However, if you’re planning to buy an annuity, with your pension pot, in the next few years, Glidepath may not be right for you because 36% of your pension will remain invested for growth after your 65th birthday. This means greater ups and downs in value. If you want that annuity, it might be best to:

• Choose your own investments for your pension savings. This would allow you to invest more of your money in a lower risk, more defensive fund between now and when you plan to buy an annuity.
• Move your pension to another provider that offers a lifestyle strategy better suited to your retirement goals

If you’re unsure, over 50 and need advice, please speak to Pension Wise (pensionwise.gov.uk).

Otherwise, please speak with an independent financial adviser (you can find one at unbiased.co.uk).

Glidepath is designed around age, rather than a fixed point in time to access your benefits. It aims to work for most people, and for the range of ages when most people expect to start accessing their pension pot. For many people with private pension arrangements, this date will be different to their state pension age.

Additionally, Glidepath is designed to keep some of your pension pot invested for growth throughout retirement. It’s for people looking to draw an income from their pension pot (an option we hope to add in the future), rather than buy an annuity on a fixed date.

Yes, the Virgin Money Pension Growth Fund 3 and the Virgin Money Pension Defensive Fund are available for you to invest directly into your pension. You’ll just need to call us on 03456 10 20 30. We’ll send you all the information you need.

Our two new funds have higher charges than the ones used by our existing AFS (0.60%), but there are good reasons. The new funds are more diverse, holding a wider range of investments. Rather than just investing in the UK, they will spread your money across lots of different markets both in the UK and overseas. This means you will have access to markets such as the US, China and Japan – the three largest economies in the world. The Funds will also benefit from regular review of the mix of shares and bonds and geographical allocations, to ensure they remain aligned with our latest research and thinking.

The higher cost reflects the higher cost in managing the investments, but we believe they will help deliver better outcomes after fees than the current funds.

The pricing is different because the investment is different: the assets, risk, and potential return of each fund need to be managed differently.

For example, the Defensive Fund invests more money in lower risk assets, with a lower expected return, and lower running costs. It’s priced at a level that gives the fund a better chance of delivering good returns.

Rest assured, each of our funds has been fully assessed to ensure it’s priced competitively and offers good value.

Glidepath invests your money in a mix of two funds: the Virgin Money Growth Fund 3 and the Virgin Money Defensive Fund.

Your total cost will depend on how much of your money is invested in each of these funds. This will depend on your age. The table below shows an example of how this cost would be worked out. If you would like to see your fund mix for your age, our Glidepath page has the information you need.

Personal pension example