Questions and answers

Starting your pension

Important note: The answers here are based on pensions legislation and known future changes as at April 2015. Tax depends on individual circumstances and may change in the future.

Who can take out a Virgin Pension?

You can save in a Virgin Pension if you are employed, self-employed or not employed. You just need to be:

  • 16 or over.
  • A UK resident.
  • Happy to leave your money invested until you're 55 or older (57 from 2028).

You don't need to stop working to take your pension. 

How do I apply?

Applying is simple and only takes a few minutes online. To get started, click here.

How much can I pay in?

You can pay in anything from £1 upwards. You get tax relief on everything you put away, up to 100% of your annual earnings (subject to an upper annual allowance of £40,000). If you are able to save more than £40,000 a year (from 2015/16), you don’t get tax relief on payments above that, in fact you will be taxed on them. If you have unused annual allowance from previous tax years, you may be able to pay in more than this. Please see below.

From April 2015, if you have used the new options to flexibly access your pension savings after 55 (57 after 2028), your annual allowance will be limited to £10,000 for further payments into your Virgin Money pension.

If you are a non-taxpayer, you will receive tax relief on contributions up to a maximum of £3,600 (gross) per tax year. Tax is dependent on your individual circumstances and may change in the future.

Can I pay in more than £40,000 in one year?

If you haven't already flexibly accessed your pension savings, yes, but any payments you make above this amount will normally be taxed.

You may be able to avoid this if you didn't use up your annual allowance in previous tax years.

Some rules apply here – you can only go back three years, you must have been a registered member of the scheme in the tax year you want to use your allowance from, and you can only use up to the £40,000 limit from each tax year. Remember, the limit includes any employer contributions and any other pension savings you may have.

If you've already flexibly accessed your pension savings, your annual allowance will be limited to £10,000 for further payments into defined contribution or money purchase pensions. In addition, you won't be able to carry forward and apply any unused annual allowance from previous tax years.

If you'd like to find out more about this, check the latest information on the HM Revenue & Customs website. To make sure you don't incur tax charges you weren't expecting, seek advice from a tax specialist or financial adviser before investing. Tax depends on your individual circumstances and may change in the future.

Can my employer contribute?

Yes, their payments would form part of your total contribution limits.

If you'd like your employer to contribute, just let us know and we'll send you a form making it easy for them to do.

Can I save in other pensions too?

Yes, you are allowed to save in as many pensions as you like. If you already have a pension which you could make further contributions to, you should speak to an Independent Financial Adviser.

Can I transfer other pensions to Virgin Money?

Yes, you can transfer other pensions into a Virgin Pension, however, you would need to make sure it was the right thing for you to do. If you would like more information please contact us.

Can I pick which pension funds to invest in?

In the early days, our focus is on growing your money in our Pension Growth Fund. It works by locking your money into the long-term potential of the UK stock market, using an investment approach called ‘index-tracking’.

As you near retirement, looking after the money you’ve invested becomes the priority, so we gradually move your money into our lowest risk fund, the Pension Income Protector Fund.

This simple approach is sometimes referred to as ‘lifestyling’. We automatically apply our lifestyling approach to your Personal Pension.

If you would prefer to choose yourself where your money is invested, you can pick from our range of five funds instead.

Read about how our funds compare

Remember, the value of your investments can go down as well as up and you may get back less than you invest. You should also remember that past performance is not a reliable guide to the future.

Understanding the risks

Are there any risks I need to know about?

Investing in stock market shares is not without its risks. They can rise significantly in value over many years, go into periods of decline, or fall suddenly in value, with no guarantees you will get back the full amount you invest.

The key point to remember is that saving into a pension is a long term investment, and the longer you remain invested in the stock market the better you tend to do.

Remember
Under the current rules you can't access your pension benefits before the age of 55 (57 from 2028), even if you retire from work earlier. Also, the amount of pension income provided by your retirement fund will depend on a number of factors, including investment returns, interest and annuity rates when you take your pension benefits.

Claiming your tax relief

How do I claim the tax relief?

Whether you are employed, self-employed or not employed, we claim basic rate tax relief for you and invest it in your pension.

If you pay income tax at the higher rate (or additional rate that applies for those with an annual income above £150,000) you can claim any extra tax relief you are due from the HMRC in your annual tax return. Tax is dependent on your individual circumstances and may change in the future.

Changes to your circumstances

What happens if I change jobs?

The first thing is to find out if your new employer will Auto-Enrol you into a qualifying scheme or if they don’t currently, do they offer a company pension, and whether they contribute to it. If so, you should join, so you don't miss out on any payments they're offering. You can also keep your Virgin Pension, and keep paying into it if you wish.

If you become self-employed or your new employer doesn't offer a pension scheme, it's a good idea to keep paying into your Virgin Pension so your retirement savings stay on track.

Whatever you choose to do, please let us know if you've changed jobs.

What happens if I'm off work?

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 and you'll still receive tax relief on your payments (on up to 100% of your annual earnings and also subject to an upper annual allowance of £40,000). If your employer is paying into your pension, you'll need to check with them whether they'll continue to contribute while you're off work.

If you have time away from paid work, remember you can stop payments into your Virgin Pension if you need to. You can start saving again whenever you wish. If you do make payments into your pension you'll still receive tax relief on up to £2,880 of payments each tax year, even if you have no earnings for that tax year. You can pay in more than that if you wish but you won't receive tax relief on the extra amount. Tax is dependent on your individual circumstances and may change in the future.

What happens if I stop work altogether?

Even if you're not earning you can still pay into your Virgin Pension and receive tax relief on up to £2,880 of payments each tax year. You can pay in more than that if you wish but you won't receive tax relief on the extra amount. Tax is dependent on your individual circumstances and may change in the future.

If you can no longer spare the money you can stop your payments into your pension. You can start saving again whenever you're ready.

Please remember, stopping or reducing your payments to your pension plan may reduce the amount you get back from your pension.

What happens to my savings if I die before flexibly accessing my savings?

When you took out your Virgin Pension, you may have named one or more beneficiaries. Beneficiaries are people you nominate to receive your pension savings when you die.

If you die before you are 75

If you die before the age of 75, your beneficiaries will pay no income tax on the amounts they inherit. They will then either choose to receive a lump sum, or will be able to draw down income from the pension savings.

If you die after you are 75

At the moment, any pension savings not already withdrawn are subject to a 55% tax charge payable by your estate, your executors or a personal representative. From 6 April 2015, this tax charge will be lowered and beneficiaries will have the following options:

  • Take the whole fund as cash in one go

    With this option, the whole pension fund is subject to 45% tax (although the Government has proposed that from 2016/17, it should be taxed at the beneficiaries’ marginal rate of tax).

  • Access the fund flexibly

    Your beneficiaries will be able to access the pension funds flexibly at any age, and pay tax at their marginal rate.

When can I take my benefits?

The earliest you can currently take your pension is your 55th birthday (57th birthday from 2028). You don't have to retire or stop working to take your benefits.

Your retirement

Where can I find out more about my retirement options?

This is a really important time in your life and making the right decision will impact your retirement years. To help you understand your options, there is free impartial guidance available to you. Pension guidance can be accessed on the internet, telephone or face to face – to find out how, visit the Government's website Pension Wise.

We strongly recommend that you seek independent guidance or advice to help you understand your options at retirement. If you are looking for advice, you can search for a professional financial adviser at www.unbiased.co.uk.

Alternatively we can offer you restricted financial advice from a Legal & General Financial Consultant. Email Legal & General at virginmoneypensions@landg.com with your name, address and phone number and a Legal & General consultant will contact you to arrange an appointment. Please note, there will be a charge for this service.

What options do I have when I want to access my pension savings?

From 6 April 2015, if you are 55 (57 from 2028), you'll have complete freedom over how you draw an income from your pension savings – in addition to any tax-free cash you've already taken.

You'll be able to do one of the following:

  • Take your whole fund as cash in one go. You get up to 25% of this tax-free.
  • Make several withdrawals over time and receive 25% of each withdrawal tax-free.
  • Take a regular income. You can do this through ‘income drawdown’ (where you take an income directly from your pension savings fund, which remains invested), or through an annuity (where you swap your pension savings pot for a secure income – this income can be for a fixed period or for life).

Any cash you withdraw above the tax-free amount of 25% will be taxed at your marginal rate of tax. Through income drawdown, you have the option of taking 25% of your pension savings immediately tax-free and drawing down the remainder as taxable income at a later date, as and when you like.

Pension providers don't have to provide all of these flexible options. At Virgin Money, we plan to give 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. If you want to do this, just let us know.

When I take my pension benefits can I take a lump sum?

  • You can normally take up to a quarter of your savings as a tax-free cash lump sum.
  • If the total amount of your pension wealth is £30,000 or less, you can take up to a quarter as a tax-free cash lump sum and the remainder as a lump sum on which you pay tax at your marginal rate of tax.
  • Up to three small pension pots of £10,000 or less, regardless of total pension wealth, can be taken as lump sums.

Will I pay tax on the lump sum?

Apart from the tax free cash lump sum, you will pay income tax on these lump sums at your marginal rate of tax.

What are my options if I am over the lump sum limits?

If you are over these limits and your individual circumstances mean your fund and/or income is large enough to meet HMRC limits allowing you to use drawdown, you could choose to leave your funds invested whilst taking an income. Otherwise, you might want to purchase a secure income in retirement through an annuity. 

How do I access the Government’s free and impartial guidance service?

Pensionwise. Your money. Your choice. Backed by HM Government.

The government is removing the restrictions on what you can do with your pension savings. This means that you will be able to choose the option that’s right for you.

Pension Wise is a new government service that will offer people approaching retirement free, impartial guidance about their choices. You can receive Pension Wise guidance online, over the phone or face to face.

Pension Wise will provide tailored guidance to explain what options you have and help you think about how to make best use of your pension savings. It will offer information about the tax implications of different options and other important things you should think about, as well as tips on how to get the best deal, including how to shop around.

Pension Wise can help you make the decision that is right for you.

To receive free, impartial guidance from the government, go to www.pensionwise.gov.uk

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