Your pension pot is used to provide you with benefits at retirement and we will write to you providing a personal illustration of your benefits, and asking you to make some important decisions, either on request, or six months before your retirement date.
If you were a member of the Money Purchase 2003 Section prior to 6 April 2016 you were contracted out of the State Second Pension up to that date. This means that the Plan has to provide you with a minimum level of pension (the “Underpin”). If your pension pot at retirement provides less than the minimum level, the Plan will pay a top-up to ensure the correct level of pension is paid. In this case, as an Underpin member, you will not be eligible to take early retirement from the Plan before age 62. To find out if this applies to you the Reference Scheme Test (RST) is used.
If you are an Underpin member and you decide to transfer your pension pot out of the Plan the transfer must be treated as if it were a Defined Benefit (DB) to Defined Contribution (DC) transfer. The means that any Underpin transfer value in excess of £30k will require regulated financial advice and there will be a cost to receiving this transfer advice. Members should therefore weigh up the advantages and disadvantages before proceeding. A regulated adviser will always disclose the costs of their service at the outset. Go to the MoneyHelper website - This link opens in a new browser window to find an independent adviser in your area.
Visit the Your pension options page for more information.
To find out more about the RST, download the The Reference Scheme Test PDF (PDF 243KB).