As a member of the Plan, you have a variety of options at retirement.
What happens when you reach retirement in the Plan?
The options below are available to both Defined Contribution (DC) and Defined Benefit (DB) members of the Plan. If you are unsure, you can find out which section you are in.
Around six months before your retirement age, we will send you a pension statement providing details of your benefits and options.
You can request a pension statement at any time by contacting our pensions team.
Your options at retirement
You could decide to:
Receive a monthly pension from the Plan (unless you are a member of the AE Section). If you are a member of the AE Section you may purchase an individual pension (known as an annuity) from an insurance company.
Give up some of your pension in exchange for a tax-free lump sum. This means your monthly pension would be reduced.
If the total value of all your pension benefits (not just from the Plan) is under £30,000 you may be entitled to take it as a lump sum, 25% of which is tax-free.
To take advantage of the flexibilities available for DC pension arrangements, you would need to transfer your benefits to another provider.
If the transfer value of your pension in the Plan is more than £30,000, we may need to see evidence that you have taken independent financial advice before a transfer can be paid. This is relevant to members with safeguarded benefits in the Plan, which includes Defined Benefit (DB) section members and members of the MP03 Section who joined the Plan before 6 April 2016. There will be a cost to receiving the regulated financial advice and certain adviser checks will need to be made. You can read more if you’re thinking of moving your pension in the Knowledge Hub.
Tax implications at retirement
When you take your benefits from any pension arrangement, they are checked against HMRC’s Lifetime Allowance (LTA). The LTA is the total amount you can have in all your pension arrangements without paying an additional tax charge. The LTA for the 2021/22 tax year is £1.073 million. If the total of your pension benefits is more than the LTA, you are charged tax on the excess.
Financial guidance and advice
MoneyHelper offers money and pensions advice and is provided by The Money and Pensions Service which is sponsored by the Department for Work and Pensions. Pension Wise is a free and impartial guidance service also provided by the government which aims to help you understand your pension choices and how they work. You can find out more on the Pension Wise - This link opens in a new browser window website and by telephone 0800 138 3944. You can also visit the MoneyHelper - This link opens in a new browser window and Money and Pensions Service - This link opens in a new browser window websites for more information.
When you apply to take retirement benefits from the Plan, the Trustee is required by law to refer you to the Pension Wise service for guidance. You can opt out of receiving this guidance, but you will need to tell the Trustee about your decision. You can read more about these additional checks and complete the Guidance confirmation form.
You should access the pensions guidance services and consider taking independent financial advice to help you understand the choices available and decide which option is most suitable for you. Information about financial advisers in your area is available on the MoneyHelper website - This link opens in a new browser window.