Scottish Life has launched a plan to allow customers to release pension funds before retirement.
The provider says Income Release, which it offers within its Pension Portfolio, responds to demand from the baby boomer generation for free access to savings and takes advantage of A-Day legislation changes on pension flexibility.
The plan allows customers to take a tax-free lump sum after age 50, or 55 from April 2010, while still building up their pension fund.
Keith MacPherson, head of individual business at Scottish Life, says: “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 income, within a single plan.”
Income Release requires a £40,000 minimum fund and a £100 charge for policies below £40,000, excluding self-investments. The plan has a 0.7% basic annual management charge. Customers receive a 0.25% rebate when funds reach £20,800.
Customers with new plans or existing Pension Portfolio and individual policy holders can take out Income Release at no extra cost. Scottish Life does not place additional charges on taking income or cash and does not require a minimum sum for cash withdrawals.
Clients can also invest non-pension savings such as ISAs, stocks and deposit savings, in Income Release.
Income Release also allows IFAs to track their clients’ plans online and rebalances investments automatically to reduce the administration burden.
Scottish Life will take new business for Income Release from December 3.
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