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Scottish Life launches income release plan

Scottish Life has launched an income release plan that allows clients the freedom to access their pension fund before retirement.

The plan provides a traditional income drawdown facility but also allows customers to withdraw tax-free lump sums without the need to take income and then continue to save for retirement.

Illustrations for the new product will be available to IFAs from November 5 with new business being written from December 3.

The product also allows a client who elects to take planned income payments access to an “income tap” facility which transfers an agreed amount of money into a low risk fund, while the remainder of the portfolio continues to be invested for longer-term income and growth.

Scottish Life head of individual business Keith MacPherson says: “Technically speaking, Income Release provides an integrated unsecured pension option which allows the adviser and client to consider fully or partially crystallising the pension fund to provide a pension commencement lump sum and/or income, within a single plan.

“Put more simply, Income Release allows individuals to get a tax-free lump sum from their pension plan after the age of 50 (age 55 from April 2010) while still building up their pension fund.  It means that a pension is no longer ‘locked up’ until you stop working.

“We believe that the very competitive annual management charge, often as little as 0.5 per cent, will make Income Release particularly attractive to IFAs and their clients.”

Income Release is available both for new plans and for existing Pension Portfolio and individual policyholders. 

There is no minimum for the amount that can be taken in cash.  There is no designation charge to take income or cash if the initial fund value is over £40,000. 

Further charges would be deducted from the plan to cover the advice costs for Income Release, where a customer has agreed a commission remuneration payment with their adviser.

Clients can also invest the proceeds of other, non-pension, savings in the Income Release plan (such as ISAs, stocks and shares, deposit savings). 


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