Your pension options

Whitby Abbey, North Yorkshire

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. Click here if you are unsure 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.

Option 3

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.

Option 4

To take advantage of the flexibilities available for DC pension arrangements, you would need to transfer your benefits to another provider.

If your total pension value is more than £30,000, we may need to see evidence that you have taken independent financial advice before a transfer is made.

Please note: If you joined the MP03 section prior to 6 April 2016 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 transfer value in excess of £30k will require regulated financial advice and there will be a cost to receiving this transfer advice. Please click here to find out more.

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

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. You can also visit the MoneyHelper website to find an independent financial adviser in your area.

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