Questions and answers
Starting your pension
Important note: The answers here are based on pensions legislation and known future changes as at April 2014. Remember the Government has announced proposals to simplify the tax rules from April 2015 to allow unrestricted flexible access to your pension savings. Also they are consulting on possible further changes to the rules and tax rates used here.
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 2014/15), 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.
If you are a non-taxpayer, you will receive tax relief on contributions up to a maximum of £3,600 (gross) per tax year.
Can I pay in more than £40,000 in one year?
Yes, but any contributions above this will normally be taxed.
You may be able to avoid this by carrying forward any unused annual allowance from previous tax years. There are some rules around this, you can only go back three years, you must have been a registered member of the scheme in the tax year you are carrying forward from and you can only carry forward up to the £40,000 limit in each tax year.
Don't forget this includes any contributions from an employer and increases in value of any other pension savings you may have.
If you’d like to find out more about this, check the latest information on the HM Revenue & Customs website and seek advice from a tax specialist or financial adviser before investing – to ensure you don’t incur tax charges you weren’t expecting.
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 start a pension if I plan to retire within five years?
Yes, you can. But if you haven’t started a pension yet and are hoping to retire within five years time, we strongly recommend you seek independent financial advice, so you can decide on the best options available to you at this time.
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.
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.
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.
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.
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.
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 I retire?
They will be paid to the beneficiaries you named on your application. If you need to update your beneficiaries at any time, please contact us.
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.
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.
Where can I find out more about an annuity?
You can buy your annuity from the company of your choice. We've teamed up with annuities specialists, Partnership, to provide a Pension Annuity service which lays out your options clearly to help you choose the right provider and retirement income for you. However, it is important to note that the current rules will change from April 2015 when the Government plans to allow unrestricted access to your pension savings from the age of 55 (57 from 2028) although you will pay tax on amounts withdrawn, at your marginal rate of tax.
Will the recent government pension reform affect my pension in the future?
Yes, there will be a number of further changes that will come into effect from April 2015:
- The tax rules change allowing people to access their defined contribution (DC) pension savings as they wish after the age of 55 (57 from 2028).
- Under the new arrangements, drawdown of pension income will be taxed at your marginal rate of tax that depends on your individual circumstances, rather than the current flat rate of 55% for unauthorised payments.
- The 25% tax-free pension lump sum will continue to be available.
- The new flexibility means you can still purchase an annuity if it suits you, extract all of your pension savings in a lump sum, or keep your pension invested and access it over time or any combination of these options that you want to choose.
- To help you make the right decision, from April 2015 everyone approaching retirement with a defined contribution pension will be offered free and impartial face-to-face guidance on the range of options available to them.
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