Find out about your options

Keeping your savings invested with us

You can take your retirement savings from your pension policy at any time from the age of 55 (57 from April 2028). It is important to consider all your options before doing so. Reaching age 55 or the age you agreed with us is not a deadline to act. Not taking your savings until you really need to do so may give them a chance to grow, but they could go down in value too.

If you have a former Equitable Life policy there is no maximum age by which you need to take your pension. If you have a former Reliance Life policy, you must make a decision by the age of 75.

Use your savings to buy an income drawdown policy

You can choose to move your retirement savings to a policy which allows you to take an income from it, known as flexi-access drawdown. You can either choose to purchase an Utmost Drawdown policy, or you can choose to transfer to a different pension provider to do this.

  • How will my savings be taxed?

A quarter of your retirement savings can usually be taken as a tax free lump sum. The residual amount will be invested in the flexi-access drawdown.

When you set up flexi-access drawdown, you can choose whether or not to take an income from it and any money left remains invested, which may give your retirement savings a chance to grow, but they could go down in value too. Any income taken is subject to income tax which we will deduct based on your tax code provided to us by HMRC.

  • Will this product affect my future pension contributions?

Once you take an income payment, the tax relief you are entitled to each year on any future pension contributions will be restricted to the amount of the ‘Money Purchase Annual Allowance’ (MPAA), currently £4,000 per annum, and you’ll be charged additional Income Tax on contributions in excess of this. Your future pension savings to which the limit applies, include contributions paid by you and/ or your employer into a defined contribution pension also known as a money purchase arrangement. You should consider this carefully if you intend to continue saving for your retirement.

  • What happens when I die?

On death, there will be a range of options available to your beneficiary(ies) in regard to any money left in your policy. If you die before age 75, this will be paid without deduction of income tax, provided the money is paid within two years of us being notified of your death. If not, or if you die at or after age 75, the untouched part of your policy will be added to the beneficiary’s other income and subject to Income Tax.

  • Shopping around

It is important that you shop around to find the best deal for you, as you would with any other purchase. The MoneyHelper website provides more information on how to shop around and compare providers www.moneyhelper.org.uk

Use your savings to buy an annuity - a guaranteed income for life

An annuity is a guarantee to pay you a regular income for the rest of your life.

  • How is the annuity taxed?

A quarter of your retirement savings can usually be taken as a tax free lump sum and the remainder will be used to purchase the annuity that will provide your guaranteed income for life. Depending on your policy, you could either buy your annuity through Utmost Life and Pensions or with another provider.

The income paid to you is subject to income tax which your chosen provider will deduct based on your tax code provided to them by HMRC.

  • Are there different types of annuity?

There are various types of annuities in terms of the level of income, whether it increases or decreases. The death benefits will vary depending on whether you choose to have it on a joint life basis or single life. Your chosen annuity provider will be able to provide further information on the options available to you.

  • Enhanced annuities

Your health and lifestyle could also affect the amount you can receive as an income for life. If you smoke, or have a medical condition, you may be eligible for ‘enhanced terms’ for your income for life. Enhanced terms tend to mean a higher income, because the income is expected to pay out over a shorter time. If you might qualify for enhanced terms, it is even more important for you to shop around to obtain the best deal.

We do not offer an Enhanced Annuity so, if you have a former Reliance Life policy you can complete our Retirement Health Form and we will use the information to generate an indicative illustration for comparison purposes. If you have a former Equitable Life policy, Canada Life will be able to discuss with you whether they can provide you with an enhanced annuity.

  • Shopping around

It is important that you shop around to find the best deal for you, as you would with any other purchase. The Money Helper website provides more information on how to shop around and compare providers www.moneyhelper.org.uk

Take some of your savings as cash

From age 55, this allows you to take lump sums from your retirement savings as and when you need. You can decide when and how much to take out. Any retirement savings left in your policy remain invested, which may give them a chance to grow, but they could go down in value too.

  • Can I take partial payments from all pension products?

It is possible to take partial payments from most of our pension policies but if you have a former Reliance Life pension or a former Equitable Life pension with a form of Guarantee, this option is not available to you through us. You would need to transfer your pension to another provider to access your savings this way but you will need to think carefully before giving up any form of Guarantee.

  • How will the lump sums be taxed?

Each time you take a lump sum, normally a quarter of it is tax-free and the rest will be subject to income tax which we will deduct based on either the emergency tax code or your tax code if HMRC have provided this to us. You will need to contact HMRC direct if you believe that you have paid too little or too much tax on this claim.

  • Will taking partial payments affect my future pension contributions?

Once you take a payment in this way, the tax relief you are entitled to each year on any future pension contributions will be restricted to the amount of the ‘Money Purchase Annual Allowance’ (MPAA), currently £4,000 per annum, and you’ll be charged additional Income Tax on contributions in excess of this. Your future pension savings to which the limit applies, include contributions paid by you and/or your employer into a defined contribution pension also known as a money purchase arrangement. You should consider this carefully if you intend to continue saving for your retirement after you start taking your retirement savings as a number of lump sums.

If you need to take regular lump sums you may want to consider if a drawdown or a guaranteed income for life is a better option for you.

  • What happens when I die?

On death, any untouched retirement savings will pass to your beneficiary(ies) or estate. If you die before age 75, the savings will be paid without deduction of income tax, provided the money is paid within two years of the provider being notified of your death. If not, or if you die at or after age 75, the untouched part of your policy will be added to the beneficiary’s other income and be subject to Income Tax. If it is paid to your estate a 45% tax charge, known as a Special Lump Sum Death Benefit Charge, will be deducted.

Take all your savings as cash

This option allows you to take your whole pension policy in one go as a lump sum. However, if your retirement savings with us are in more than one policy, you can treat each policy separately. You do not have to take the benefits from all of your policies in the same way or at the same time.

  • My retirement savings in this policy are less than £10,000 – are there different rules for these?

You might be able to take this as a small fund lump sum. Unless your savings are in an occupational pension scheme, you can normally do this three times in your lifetime.

  • Will taking cash lump sums affect my future pension contributions?

If you are not taking your retirement savings as a small fund lump sum, the tax relief you are entitled to each year on any future pension contributions will be restricted to the amount of the ‘Money Purchase Annual Allowance’ (MPAA), currently £4,000 per annum, and you’ll be charged additional Income Tax on contributions in excess of this. Your future pension savings to which the limit applies, include contributions paid by you and/ or your employer into a defined contribution pension also known as a money purchase arrangement. You should consider this carefully if you intend to continue saving for your retirement.

  • How will the lump sum be taxed?

When you take a lump sum, normally a quarter of it is tax-free and the rest will be subject to income tax which we will deduct based on an emergency tax code. You will need to contact HMRC direct if you believe that you have paid too little or too much tax on this claim.

Taking your pension policy in one go as a lump sum could result in you paying a large amount of tax. For most people, especially those with larger values in their pension policy, it may be more tax efficient to take their savings as income drawdown, a number of lump sums, a guaranteed income for life, or a mixture of these. We recommend that you take advice or guidance before making this decision. Click here to find out where to go for help.

Mix your options

You can also choose to take your pension benefits using a combination of some or all of the options over time. If you have more than one policy, you may be able to use a different option for each policy.