YOUR OPTIONS AT RETIREMENT
Whether you’re getting ready to take your Scheme Pension, or only just starting to think about retirement, you have more options for using your retirement savings than you might think.
From in-Scheme options with or without tax-free cash up front to getting more flexibility by transferring your pension out of the Scheme, we’ll talk through your options below, linking to detailed factsheets and short animated videos.
YOUR RETIREMENT OPTIONS – WATCH OUR 3-MINUTE VIDEO
Get a quick overview of all your available options in just 3 minutes. Then you can explore your options with confidence.
YOUR IN-SCHEME RETIREMENT OPTIONS
Whether you’re getting ready to take your Scheme Pension, or only just starting to think about retirement, you have more options for using your retirement savings than you might think.
From in-Scheme options with or without tax-free cash up front to getting more flexibility by transferring your pension out of the Scheme, we’ll talk through your options below, linking to detailed factsheets and short animated videos.
STANDARD PENSION
A regular, guaranteed income for life which typically increases in value to help protect against increases in the cost of living (inflation). It provides an income for your spouse, partner, or financial dependant if you die before them and you have the option to take a smaller monthly pension in exchange for a tax-free cash lump sum.
OR TRANSFER OUT
By transferring out and giving up your right to a pension from the Scheme you’ll get a pot of cash (a transfer value) to secure a retirement income outside of the Scheme which can be tailored to suit your needs. You can read more about this and the options available below.
IF YOU TRANSFER YOUR BENEFITS OUT OF THE SCHEME
Please be aware that if your transfer value is over £30,000 (excluding any AVCs) you will need to take financial advice before you can transfer out to a DC arrangement. You should ensure that the financial adviser you use is registered with the Financial Conduct Authority (FCA).
If you transfer out, you will receive an amount of money called a transfer value in return for giving up your right (and the right of your dependants) to a pension from the Scheme. You can use that transfer value to buy a guaranteed regular income (an annuity), take it a bit at a time (drawdown), take it all as cash, or mix and match. Regardless of the option you choose, you’re able to take up to 25% of your transfer value, as a tax-free cash lump sum.
Transferring out cannot be reversed so make sure you understand the risks and benefits, this FCA webpage and FCA video provide additional information that can help you understand the option and what you could be giving up. You should also be aware of potential pension scams (you can read more here) and only transfer out to a reputable provider. Speaking to an FCA-Registered Financial Adviser can help.
The MoneyHelper website also provides some tools to help with your options, including a pension calculator and annuity comparison tool along with additional information on your options.
A REGULAR INCOME FOR LIFE (AN ANNUITY)
Buying an Annuity from an Insurance Company is like your Scheme Pension, but you can choose the level of benefits to match your priorities. You could also get a possible higher income if you have health issues.
Read the Annuity factsheet
WITHDRAW CASH AS AND WHEN YOU NEED IT (DRAWDOWN)
With Drawdown, your transfer value is invested, giving it a chance to grow, with you being able to withdraw money as and when you need it. You will need to take on investment risk and pay ongoing charges.
TAKE IT ALL AS A CASH LUMP SUM
You can take all of your transfer value as a cash lump sum. You’ll be taxed on 75% of the amount you take, possibly at a higher level than you’re used to, and you’ll have no guaranteed income for your retirement, so you’ll need to ensure your money lasts as long as you need it to.
GETTING FINANCIAL ADVICE
Choosing how to take your retirement benefits is a big decision and depends on what is right for you. We strongly recommend that you get advice on your options. Here you can find out more about advice.