Meet Sally

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.

A pile of polaroid images

Sally’s choice is just an example and does not suggest a particular option that you should choose yourself. Please look at all of the options available to you and consider seeking independent financial advice before making any decisions about your own benefits.

Does this option meet your needs?

We don’t regularly think about the financial implications of getting older, such as the possibility of needing care or how long you’ll live for. But as you approach later life and need to make a decision about your retirement income, it is important to think ahead.

Only you know your financial circumstances – for example, whether loans or mortgages still need to be paid off and the sort of needs you may have later on.

On average people in the UK, aged 65 now are expected to live until*:

Average life expectancy - Women: 86; Men: 84

Work out your life expectancy with the Government's calculator here

Things to consider

Here are some things to consider. Think about which statement represents you most accurately, and see if taking your benefits from the RSA pension schemes is right for you:

Your RSA pension schemes benefits are your main or only source of retirement income

You may prefer to take your RSA pension schemes benefits if you:

  • Are reliant on a regular income for your retirement; and/or
  • Cannot afford to take risk; and/or
  • Appreciate the security and predictability of a set, regular income.

Or, you have other sources of retirement income in addition to your RSA pension schemes benefits

Instead of taking your benefits from the RSA pension schemes, you may prefer one of the other options if you:

  • Are not reliant on your RSA pension schemes benefits; and/or
  • Are able to afford to take more risk; and/or
  • Would prefer to tailor your income to your personal circumstances.

You prefer predictability

You know how much income you’ll receive, for the rest of your life. You also know how that income will increase over time, in line with the Scheme Rules.

Or, you prefer flexibility

  • Your RSA pension schemes pension does not give you flexibility to change your pension income and/or benefits to suit your personal circumstances, such as your health or marital status
  • Your only choice is whether to take a tax-free cash lump sum.

You prefer security

  • The RSA pension schemes will provide you with a secure, regular income for life
  • However, if for any reason your employer is no longer able to support the RSA pension schemes, your benefits may be protected by the Pension Protection Fund (PPF).

Or, you prefer opportunity

Your pension income and benefits are fixed, based on the Scheme Rules, so there is no opportunity to grow them any further through investments.

You prioritise short-term income

  • While you have the option to exchange part of your RSA pension schemes benefits for a tax-free cash lump sum, you cannot access all of your pension income upfront
  • If you take a tax-free cash lump sum upfront, your long-term income will be lower to take this into account.

Or, you prioritise long-term income

  • You will receive a regular, secure income for the remainder of your life
  • Your RSA pension schemes benefits will increase throughout retirement, in line with the Scheme Rules.

You have a short life expectancy

  • If you (and your spouse or civil partner) die early, your RSA pension schemes benefits would be lost and your pension benefits would not normally be passed onto the next generation
  • If you have a diagnosed medical condition, smoke or have a poor lifestyle, this, and therefore any enhanced terms, will not be reflected in your pension income.

Or, you have a long life expectancy

Your RSA pension schemes benefits will provide you (or your spouse or civil partner, in the event of your death) with a steady income for life, and normally has some increases to protect it against inflation (defined in the Scheme Rules).


Tax-free cash lump sum

  • You can take some of your RSA pension schemes benefits as tax-free cash (usually up to 25% of the benefit value)
  • The amount of the tax-free cash lump sum depends on the terms offered by the RSA pension schemes and is subject to the Lump Sum Allowance (see below).

Income (subject to tax)

  • Your annual income will be taxed at your marginal rate of income tax for that year
  • As your pension income is stable, you can expect to pay a similar level of tax each year (subject to any other income you have).

Lump Sum Allowance (LSA)

The most you can usually take as a tax-free lump sum from all pension arrangements of £268,275 – this is known as the lump sum allowance (LSA). If you have lifetime allowance protection, the amount of tax-free cash you can take may be higher.

If you take a lump sum that goes above your LSA, you’ll need to pay Income Tax, at your marginal rate on the extra amount.

There is also a maximum tax-free amount, currently £1,073,100, called the lump sum and death benefit allowance, that applies to you and your beneficiaries in certain circumstances. This amount includes any tax-free lump sums payable at retirement and certain lump sum death benefits.

For further information about these lump sum allowances, visit the Government website here.

Remember the lump sum allowances are set by the Government and could change.