BONUS TIME
Major pension firm to give 2.3million eligible customers a share of £181million profit in days
Find out whether you're eligible and how to get the bonus
A MAJOR pensions company is giving millions of customers an average of £90 each as a bonus.
Royal London has said it will share a whopping £181million of its profits among 2.3million customers.
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The payments will be made on April 1 - meaning they'll land in customer accounts next week.
It's part of the company's ProfitShare scheme, which is awarded annually if the business has done well.
Royal London is customer-owned, so some of its profits go to customers rather than to shareholders.
The pensions provider says the amount each person will get is based on the value of the pension savings they have invested.
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If the £181million pot were shared equally, this would mean each customer gets about £90.
You could boost your bonus payment further by making a one-off contribution to your pension pot.
However you'll need to do this by 6pm on Monday if you want it to count towards your bonus this year.
If you make it after this time, it will count towards a potential ProfitShare bonus next year.
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It's worth bearing in mind, though, that it's not guaranteed the ProfitShare will run next year.
Ultimately it will depend on how well the company does over the next 12 months.
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Am I eligible for the bonus?
You should be eligible if you have taken out a pension plan with Royal London since July 1, 2001.
Your plan must also have been in force on December 31, 2024.
If this applies to you, you will automatically have a ProfitShare account set up under your plan.
This means you won't need to do anything at all.
However, you should make sure you keep your account open until April 1 as this is when the bonus will be given out.
If you're a member of an occupational scheme, your eligibility is based on the date your scheme began rather than the date you joined.
Anyone unsure about the date their scheme began should speak to their employer or the scheme trustees.
You won't be able to qualify if you have a Crest Secure or Retirement Account contract, or if you have self-invested retirement savings.
Any plans set up with The Co-operative Insurance Society Limited (CIS) also won't qualify.
If you're eligible for the payment, you can see what's been applied to your plan with the Royal London mobile app.
How can I get the payment?
As we mentioned, you won't need to do anything if you're eligible.
The award will be added to a separate ProfitShare account within your plan.
That means it's going into your pension pot rather than being handed out as a cash reward.
You will see the value of your ProfitShare account in your yearly statement, which you can access by logging into the online service or downloading the mobile app.
You can take the value of your ProfitShare account with the rest of your pension savings any time after the age of 55.
This will increase to age 57 from April 6, 2028.
The ProfitShare award doesn't count as a contribution so it doesn't affect your annual allowance and the contributions you can make to your plan each year.
The bonus will be invested in the same investment choice as the rest of your pension savings.
Few pension providers seem to offer similar awards.
However Hargreaves Lansdown currently has a deal giving customers between £100 to £3,000 in cashback if they transfer a certain amount into their SIPP account.
A self-invested personal pension (SIPP) is a pension "wrapper" that gives you more control over your investments.
To get the cashback, you would need to transfer pensions worth over £10,000 into your SIPP.
The offer ends on April 5 and you must already have a SIPP with Hargreaves Lansdown to qualify.
You must also keep your money in your SIPP until March 31, 2026.
The payment will be made by April 30, 2026, or later if a transfer hasn't completed by then.
The amount you get in cashback will depend on how much you transfer over.
These are the amounts:
- £10,000 to £99,999 = £100 cashback
- £100,000 to £249,999 = £250 cashback
- £250,000 to £499,999 = £500 cashback
- £500,000 to £999,999 = £1,000 cashback
- £1million-plus = £3,000
Pensioners facing tax hit
The good news comes as over nine million state pensioners are set to be hit with a "retirement tax" next year.
This is due to a combination of a rising state pension and frozen income tax thresholds.
Forecasts by Deutsche Bank predict the triple lock will rise by £600 (5.5%) in April 2026 to £12,631, breaching the personal allowance, The Telegraph reported.
This means people whose only income is the full new state pension will pay tax on it for the first time.
Some nine million pensioners in total are forecast to pay tax from April 2026.
This is because you are also taxed on income outside of your state pension, including any that comes from a job or private pension.
What is the personal allowance?
THE personal allowance is the amount you can earn each year tax-free.
In the current tax year - which runs from April 6 2024 to April 5 2025 - the figure is £12,570.
Any earnings above this threshold are taxed at different rates, depending on the income bracket.
However, this amount may be larger if you claim certain allowances, including a blind person's allowance, marriage allowance and child tax credit.
Income tax also applies to money you make outside your job, not just your earnings.
But there are also some tax-free allowances on top of the personal allowance for these other sources of income.
If you are self-employed, you don't have to pay tax on savings interest, dividends and the first £1,000 of income.
The state pension is set to rise by 4.1% on April 6, meaning a full state pension will increase from £11,502 currently to £11,973.
Thanks to the triple lock, the state pension will go up by whatever is the highest out of inflation, 2.5% or wages.
The CPI measure of inflation for the previous September is used or wages for the previous May to July.
Weekly earnings are forecast to reach 5.5% in July, higher than the predicted inflation rate for September.
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This would mean pensioners on a full new state pension will have to pay tax on £61 (£12,631 - £12,570) at 20%, equalling around £12.
Those whose income is higher than this will obviously have to pay more tax.
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