Your circumstances and priorities
Short / Long life expectancy
When making your decision, you should consider your spending needs for the estimated length of your retirement and the implications of death for your beneficiaries.
Predictability / Flexibility
When making your decision, you need to consider whether you prefer the comfort of knowing that you will have a regular income or the flexibility to withdraw funds according to your needs.
Main source / Part of retirement income
If you have multiple sources of income that provide you with financial security, such as other Defined Benefit (Final Salary) pensions, you could take more risk with your pension. The opposite may apply if this is your only source of income
Short-term / Long-term Income
When making your decision, you need to consider which option best suits your current and future spending needs, and ensure that you are managing your income throughout retirement.
Security / Opportunity
When making your decision, you need to consider the level of risk you are comfortable with as well as your ability or desire to manage your funds throughout your retirement.
Which option is right for you? – Compare your options
Understand the features of the retirement options you have and see what’s important to you. This will help you make your dream a reality.
| Take your benefits from the Scheme | Transfer out and buy a regular income for life (an annuity) | Transfer out and withdraw cash as and when you need it (drawdown) | Transfer out and take a single cash lump sum | |
|---|---|---|---|---|
| 1. Your Scheme may feature a guaranteed period where a lump sum could be paid to any dependants if you die within a certain time period after you’ve started taking your benefits. | ||||
| 2. If you have a shorter life expectancy you are likely to be entitled to a higher income | ||||
| Option:Main source of retirement income | Take your benefits from the SchemeYes | Transfer out and buy a regular income for life (an annuity)Yes | Transfer out and withdraw cash as and when you need it (drawdown)Yes | Transfer out and take a single cash lump sumNo |
| Option:Part of my retirement income | Take your benefits from the SchemeNo | Transfer out and buy a regular income for life (an annuity)No | Transfer out and withdraw cash as and when you need it (drawdown)Yes | Transfer out and take a single cash lump sumYes |
| Option:Predictability | Take your benefits from the SchemeYes | Transfer out and buy a regular income for life (an annuity)Yes | Transfer out and withdraw cash as and when you need it (drawdown)No | Transfer out and take a single cash lump sumNo |
| Option:Flexibility | Take your benefits from the SchemeNo | Transfer out and buy a regular income for life (an annuity)Yes | Transfer out and withdraw cash as and when you need it (drawdown)Yes | Transfer out and take a single cash lump sumYes |
| Option:Security | Take your benefits from the SchemeYes | Transfer out and buy a regular income for life (an annuity)Yes | Transfer out and withdraw cash as and when you need it (drawdown)No | Transfer out and take a single cash lump sumNo |
| Option:Opportunity | Take your benefits from the SchemeNo | Transfer out and buy a regular income for life (an annuity)No | Transfer out and withdraw cash as and when you need it (drawdown)Yes | Transfer out and take a single cash lump sumYes |
| Option:Short-term income | Take your benefits from the SchemeNo | Transfer out and buy a regular income for life (an annuity)No | Transfer out and withdraw cash as and when you need it (drawdown)Yes | Transfer out and take a single cash lump sumYes |
| Option:Long-term income | Take your benefits from the SchemeYes | Transfer out and buy a regular income for life (an annuity)Yes | Transfer out and withdraw cash as and when you need it (drawdown)Yes | Transfer out and take a single cash lump sumNo |
| Option:Short life expectancy | Take your benefits from the SchemeYes1 | Transfer out and buy a regular income for life (an annuity)Yes1, 2 | Transfer out and withdraw cash as and when you need it (drawdown)Yes | Transfer out and take a single cash lump sumYes |
| Option:Long life expectancy | Take your benefits from the SchemeYes | Transfer out and buy a regular income for life (an annuity)Yes | Transfer out and withdraw cash as and when you need it (drawdown)No | Transfer out and take a single cash lump sumNo |
Some example members
Here are a few examples of people who thought about how to pay for life after work. Each example member picked a different option, we’ll explore why and what their own priorities were. What they picked is colour coded just like the options throughout this site e.g. Scheme pension, annuity, drawdown and cash.
These are just examples to help explain the different options. They should not be read as suggesting or indicating which particular option could be right for you.
SALLY’S CHOICE
For Sally, a pension that could provide a regular income for life for her, and her husband Jim if she died first, and which provided protection against future increases in the costs of living gave her the peace-of-mind she needed. So, she decided not to transfer out and took the Scheme pension.
HAROLD’S CHOICE
What was important to Harold was a regular income each month, similar to the Scheme pension, but tailored to better suit his circumstances. Harold took financial advice and was recommended to transfer out of the Scheme and buy an annuity from an insurance company.
PRIVANI’S CHOICE
Privani wanted flexibility to take her money a bit at a time, changing how much she took and when. After taking financial advice and confirming that this was the right thing to do, she transferred out of the Scheme and took Drawdown.
Privani is used to making investment decisions and knows about the ongoing investment charges. She has a guaranteed income, from other sources to meet her basic needs.
BEN’S CHOICE
Because Ben had other retirement savings, which would provide him with more than sufficient income in retirement, he wanted to take this pension as a cash lump sum. So, after taking financial advice, he transferred out of the Scheme, cashed out and used the money, after tax, to enjoy his hobbies.
