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:
Option 1
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.
Option 2
Give up some of your pension in exchange for a tax-free lump sum. This means your monthly pension would be reduced. You can normally take up to 25% as a tax-free lump sum, subject to the Lump Sum Allowance (LSA) and Lump Sum and Death Benefit Allowance (LSDBA).
Option 3
If the total value of all your pension benefits (not just from the Plan) is under £30,000, subject to you having available Lump Sum Allowance (LSA), you may be entitled to take it as a lump sum, 25% of which is tax-free.
Option 4
If the total value of all your benefits in the Plan is under £10,000 you may be able to take it as a small pots lump sum, 25% of which is tax-free.
Option 5
To take advantage of the flexibilities available for DC pension arrangements, you would need to transfer your benefits to another provider.
Tax implications at retirement
When you take your benefits from the Plan, any tax-free lump sum that you take is tested against the Lump Sum Allowance (LSA) and Lump Sum and Death Benefit Allowance (LSDBA). See HMRC limits and Allowances page for more information - This link opens in a new browser window.
If the value of your tax-free lump sum exceeds your available LSA and the Trustee permits you to take the whole amount as a lump sum, the value of the lump sum in excess of the LSA will be taxed at your marginal rate.
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.
