Your pension
questions answered

Planning for retirement can be overwhelming, so if you have a question on your mind, we’re here to help. We’ve put together answers to the most common questions that our pension experts are asked on a daily basis. If your question is about your workplace pension with Scottish Widows and isn’t answered below, you can call us on 0345 755 6557.

Our telephone lines are open Monday to Friday 8am-6pm and Saturdays 9am to 12:30pm.

Starting your pension

If you’re at the beginning of your pension journey, these answers might be relevant to you.

What is the state pension, how much will I receive and when can I access it?

The State Pension is a weekly payment made to you by the government in retirement. From 6 April 2020 the new State Pension is £175.20 per week.

Visit to find out more.

What is tax relief?

A pension is one of the best ways to save for retirement because of the tax benefits that come with it. For example, every 80p you pay into a personal pension or your workplace pension is topped up to £1 in tax relief by the taxman. *

* If you are a Scottish or Welsh taxpayer the relief you will be entitled to will be at the Scottish or Welsh rate of income tax as applicable. If you are a higher or additional rate tax payer you may be able to claim back more tax.

What is salary sacrifice?

Salary exchange or salary sacrifice is where you agree to exchange part of your gross salary (that’s your pay before it is taxed) for a non-cash benefit, like a pension contribution.

How much should I be contributing to my pension plan each month?

The minimum amount you and your employer are required to contribute to your pension pot is at least 8% of your income. This might look like 3% from your employer, 4% from you and 1% tax relief. For a comfortable retirement, our research has shown that people feel they should save at least 12% of their gross income, if possible. This can include anything your employer pays into your pension scheme, as well as your own contributions. If you get a pay rise, a bonus or have spare cash left over each month, topping up your payments by even a small amount could really add up over time, especially when you add in tax relief.

Use our calculator to see the difference an increase to your monthly contributions could make to your overall pot.

Where is my pension invested?

If you haven’t made an active choice on where you want to invest your pension, it’s likely that you pension will be invested in the ‘default investment option’. This is managed for you by your pension provider. Most of these investment options are designed to follow a particular path the closer you get to retirement – with your investments becoming less risky in the years approaching retirement. To find out more about your default investment option, ask your employer or pension provider for details. Or if you’d like to be more actively involved in managing your Scottish Widows pension investments, we have a wide range of funds separate to the default investment option that you may like to invest in.

Funds & investing in a nutshell

Why does my pension rise and fall?

The value of your pension is affected by the value of the assets it’s invested in. Your pension will rise and fall in line with fluctuations which can be caused by things such as interest rate changes, political events and economic news at home and abroad.

What is the maximum amount I can pay into my pension each year (annual allowance)?

For most people the maximum amount you can put in your pension per year (as of Tax Year 2020/21) is set at £40,000 and this is known as the Annual Allowance. The Annual Allowance is the limit the Government places on pension savings you and your employer can make each year before a tax charge applies that wipes out some of the tax benefits. In certain circumstances, this allowance may be reduced, for instance if you’re 55 or over and have started to take your benefits on a flexible basis. In this instance, a lower limit called Money Purchase Annual Allowance (MPAA) may apply. For high earners, a lower limit called the Tapered Annual Allowance (TAA) may apply. You can find out if either of these affect you by visiting the HMRC website. If you don’t use all the allowance in one tax year, you can normally carry it forward for up to three tax years. Please note that tax rules may change.

Tapered annual allowance factsheet

Money purchase annual allowance factsheet

What is the lifetime allowance?

The Lifetime Allowance is the maximum amount that you can take from your pension pots without paying any additional tax charges. The current limit is £1,073,100 (tax year 2020/21).

Understanding more about your existing pension

If you have been saving for some time or have multiple pension pots, check out our most frequently answered questions below.

I've got lots of pensions from different employers. Can I combine them?

Yes, depending on the types of pension pots you have, you may be able to transfer all of them into your Scottish Widow pension.

Before combining your pots you should consider whether it’s right for you.

Transferring pensions

If I change jobs, do I lose my pension?

No, your pension remains with you regardless of the job you have. It’s worth keeping track of where all your pensions are and you may like to combine them into one depending on the type of pension(s) you have.

How do I find a lost pension?

If you’ve lost track of your pension, you can try the Government pension tracking service at This is a free service and they will be able to provide you with the address of your scheme provider, if they have a record of them. Alternatively, you can contact them by phone or by post.

Thinking about retiring

If you’re approaching retirement, it’s helpful to know as much as you can about your next steps. Below you can find our most frequently asked questions about the stage you’re at.

What age can I take my pension?

You can normally start taking pension benefits from age 55. In certain circumstances, you may be able to start earlier, for example if you’re in ill health. You don’t have to stop working to access your pension, however bear in mind your pension counts as income so when added to your earnings, it may mean paying more income tax.

What are my pension options?

There are four main options when it comes to deciding what to do with your pension and it’s really worth comparing the features and benefits of each.

Pension options