Overview of options available at retirement
As a member of a defined contribution pension arrangement, you have a variety of options for what you can do with your Pension Pot now you are approaching retirement.

You could use your Pension Pot to purchase a monthly income for the rest of your life.

You can also take 25% of your Pension Pot as a tax-free lump sum and use the rest to buy a pension. We will tell you more when you get closer to retirement.

See the MP03 section booklet or the AE Section booklet for full details on your retirement options.

The options you could access if you transferred your Pension Pot out of the Plan to another provider include:

Single lump sum
You could take all your Pension Pot as a one-off lump sum. 25% of this would be tax-free and the rest would be taxed as income. Please consider this option carefully, especially if you have a large amount of pension savings.

Flexible drawdown
This option allows you to dip into your Pension Pot and withdraw smaller lump sums when you need them. This means that you could benefit from further investment growth. You would still get 25% of your Pension Pot tax-free.

Financial guidance and advice
Pension Wise is a free and impartial guidance service set up by the government, which aims to help you understand your choices and how they work. You can find out more on the Pension Wise website at www.pensionwise.gov.uk. You can also visit the Money Advice Service at www.moneyadviceservice.org.uk to find an independent financial adviser in your area.


What happens when I reach my selected retirement age?

Around six months before you reach your selected retirement age the pensions team will contact you with details of your options based on the current value of your Pension Pot.

You then need to decide how you want to use your Pension Pot. We recommend that you speak with an independent financial adviser before making any decisions to ensure that the decision you make is the best one for you. You can find one in your area at www.moneyadviceservice.org.uk

Tax implications at retirement

Your contributions are paid free of tax, providing you are under HMRC’s Annual Allowance (AA). The AA is the limit on pension contributions you can make tax-free in any tax year. The AA for the 2019/20 tax year is £40,000, although a lower limit of £4,000 may apply if you have already cashed out more than your maximum tax-free cash sum. For higher earners the AA may be reduced, down to a minimum of £10,000.

The Lifetime Allowance (LTA) is the limit on the total value of your pension savings from all sources that can be drawn without triggering an extra tax charge. The LTA for the 2019/20 tax year is £1.055 million. The total value of all your pension benefits, excluding State Pension, cannot exceed the LTA, without attracting a tax charge on the excess.

If you think you may be affected by either the AA or the LTA, please speak to an independent financial adviser. You can find one in your area at www.moneyadviceservice.org.uk


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