People retiring have greater choice than ever. Recent changes to legislation mean that there are several options available when taking pension benefits.
If you are ready to retire, ordinarily, you can access your pension when you are aged
55 and over, unless you have a protected Normal Minimum Pension Age of 50.
If you are planning to retire, let your employer know your chosen date as soon as
possible. They will arrange for a retirement notice to be sent to us and we will
forward your final retirement figures to you including options forms. Once received,
we will arrange for payment to be made.
Defined Contribution (DC) Options
You now have greater choice over how you access your pension savings because of
changes to legislation that came into effect in April 2015.
Six months before your Target Retirement Age (TRA), we will contact you with a
retirement pack, setting out the retirement options available to you. Your TRA is 65
unless you have notified us of an alternative age at which you wish to retire.
You have several options available.
Take the Whole Pot as Cash
You can exchange your entire defined contribution (DC) pension fund (including a DC AVC fund) for a single lump sum. Any amount over the tax-free cash allowance usually 25%) will be subject to income tax at your marginal rate.
You might prefer to buy a regular retirement income – called an annuity. We have a selected annuity provider, JLT’s Pension Decisions Service (who can be contacted on 0345 072 6774), or you may choose to do this through your own Independent Financial Adviser. Prior to purchasing an annuity, you can still take up to 25% of the pension fund as a tax-free lump sum.
Have a Flexible Income
You may choose to take income directly from your pension pot as and when you need it. Your pension pot stays invested, so its value can go up and down. The income received is taxed as normal. Or you may choose to take a series of cash lump sums. Each lump sum would be paid 25% tax-free and the remainder at marginal rates.
Mix and Match
You also have the opportunity to combine these options.
For example, you might purchase a fixed term annuity for 15 years and leave the
remainder invested to enable drawdown during the fixed term (for one off expenses
such as holidays and cars).
You may choose to leave your money invested until a time when you need it. You
may wish to review your investment choices if you decide to leave your money