Flexible Retirement Plan
As the name suggests, the Flexible Retirement Plan offers a wide range of solutions to meet your changing needs.
It is designed to help you save towards your retirement in a tax efficient way and, with average life expectancy increasing, it could help in funding the lifestyle you want in retirement.
- Contributions to a Flexible Retirement Plan qualify for tax relief.
- Access to a wide range of investments.
- Access to the Self-Investment Personal Pension (SIPP) option and the flexi-access drawdown option
Risks and considerations
- This product is only available through a financial adviser.
- The value of any investment can go down as well as up and so you may not get back what you put in.
- Tax relief will depend on your individual circumstances and is subject to change in the future.
There are various reasons why you could consider saving into a Flexible Retirement Plan. For example:
- You can make flexible payments - regular or one-off payments or a combination of both. Invest as little as £100 each month or a £5,000 initial contribution.
- There is a wide range of investments to choose from - you'll have access to our:
- Core multi-asset funds, including With-Profits and PruFund, with guarantees available. See the latest PruFund expected growth rates below.
- PruSelect range, chosen by independent research company, Morningstar OBSR.
- Five Dynamic Portfolios targeting different levels of risk and potential return and our unique combination of experts - Prudential's Portfolio Management Group for asset allocation and Morningstar OBSR for fund selection and recommendation.
- There is also a lifestyle option to help you manage risk by automatically switching into funds with lower risk profiles as you approach your selected retirement age.
- Tax relief - your contributions are paid into your plan after your income has already been taxed. Subject to HM Revenue & Customs (HMRC) limits, for every £80 you invest in your pension, the government will pay an extra £20 tax relief. If you earn above the basic rate of tax, you can claim additional tax relief through your tax self-assessment form. Note that pensions in payment are taxed as earned income.
- SIPP options - if you invest in our SIPP options you have an even greater choice of investments through our SIPP fund range. You can choose from over 1,300 funds through the Cofunds supermarket with our lower cost Fund SIPP (up to 20 funds) or the full range of investments through the Full SIPP. The SIPP option can be switched on or off at any time so you pay only for what you use.
- Flexi-access Drawdown option - this lets you take an income from your pension fund from age 55 as and when you want to. You can also choose how the rest of your fund remains invested.
Tax relief limits
You can get tax relief on every penny you contribute, up to 100% of your annual earnings, with an upper limit of £40,000 (known as your annual allowance) in 2016/17. The government limits the amount that can be paid each year, to all pensions, before incurring a tax charge. If you exceed this 'annual allowance' you may be liable to a tax charge and must tell HMRC through a tax return.
From the 2016/17 tax year, if your income exceeds certain thresholds in any tax year your annual allowance for pension savings in that tax year will be reduced – this is known as tapered annual allowance.
If you have flexibly accessed pension benefits on or after 6th April 2015 then your tax relief limits will be reduced. This is known as the Money Purchase Annual Allowance.
Further information on pension allowances can be read in this flyer. This is a complicated subject and you may wish to speak to a financial adviser or further information may be obtained from HMRC.
Choice of how to take your benefits
If you are age 55 or over, you can take up to 25% of your pension savings as tax-free cash and there are three main options for how you draw the rest of your pension savings. They can also be used in combination.
- Flexi-access drawdown - you can take an income as and when you want it while the rest remains invested.
- An annuity - this guarantees to pay a secure income for the rest of your life, regardless of how long you live.
- Cash option - You could take your pension pot as cash, either in one lump sum or as a series of smaller lump sums over a period of time.
To learn more about the Flexible Retirement Plan please see the following:
- FRP/SIPP Key Features
- FRP Transfer Key Features
- PruFund Range of Funds: Guarantee Options
- Full Fund Guide
- Investment Alteration Form
- FRP Personal Pension Technical Guide
- FRP Client Brochure - A guide to your Flexible Retirement Plan
Are you an existing customer?
If you are an existing customer please visit our dedicated Flexible Retirement Plan page in the customer section of our website.
Stakeholder pensions are similar to personal pensions. Providers cannot charge more than 1.5% of the fund value each year in the first 10 years, after which the maximum annual charge is 1%. Minimum contributions are low and you can stop and start them when you want.
The government limits the amount you can build up in all your pension plans before incurring a tax charge. This is called the Lifetime Allowance. If you exceed this amount, (currently £1 million in tax year 2016/17), a tax charge may be payable on the excess.
The State Pension is payable from state pension age, which is currently 65 for men born before 6 December 1953, and for women born after 5 April 1950 but before 6 December 1953, is between 60 and 65. Further increases in state pension age are planned.
The amount you'll receive will depend on the amount of National Insurance contributions you've paid or deemed to have paid. For more information visit the gov.uk website.
These are schemes run by a company or an organisation for its employees. Employers generally make contributions. There are two types of company schemes, final salary and money purchase. The options on how you take your pension on retirement may vary depending on what type of scheme you are in. If you don't join your employer's scheme you'll miss out on any contributions your employer may make.
The options available at retirement may vary by scheme. If you need more information please check with your employer/scheme provider, or you can read more about company pensions online in our pension guide.
Advice from The Man from the Pru
Meet with a Prudential financial adviser in your area. We can review your retirement plans, advise on where to save your money and help make your finances more tax efficient. We can recommend options for you from a range of carefully selected products from Prudential and other providers.Meet with The Man from the Pru
A specialist product that allows more flexibility over where your money is invested. These pensions suit people who want to make their own investment decisions and are comfortable with taking on the higher associated risk.
The UK government encourages you to save for your retirement by giving you tax relief on pension contributions. Tax relief works by reducing your tax bill or increasing your pension fund.
We are not recommending one product over another. We recommend you seek financial advice if you’re unsure about what product could be right for you. The information above is based on our understanding of current taxation, legislation and HM Revenue & Customs practice, all of which is liable to change without notice. For more information please visit www.hmrc.co.uk.