Your questions answered

Here you can find the answers to frequently asked questions about retirement and the options available to you at retirement. We may add to these from time-to-time so it is worth checking back. If your question is not answered, you might wish to call the administrator of your pension scheme for more information.

General retirement-related questions

Can I access my pension savings now even if I am still working or haven’t retired yet?

Yes, you can access your pension savings from age 55, regardless of whether or not you are still working.

However, you should be aware that once you have received any taxable cash from Drawdown or a taxable cash lump sum (other than from a small pot), this will restrict the amount of future pension savings that you or your employer can make on your behalf into a defined contribution pension without incurring a tax charge. This is known as the Money Purchase Annual Allowance (MPAA).

What if I live overseas or move overseas?

You can still take your pension from the Scheme if you live overseas. Your pension will normally be paid by bank transfer and can be paid to a non-UK bank if you wish.

The pension will be calculated in Sterling, so if you wish your pension to be paid in local currency, there may be a cost to do this from the bank. If you are resident for tax purposes in a country outside the UK, you will need to consider any local tax issues which may arise due to your new income.

You may also be able to transfer your benefits to an overseas approved pension arrangement provided that you have taken advice from a UK registered financial adviser if your transfer value is more than £30,000.

How is my pension income taxed?

You can usually take up to 25% of your pension savings tax-free. However, any pension income above this (whether from an annuity, drawdown or taxable cash) is taxed in the same way as earnings. However, unlike earnings you do not make National Insurance contributions on your pension income. You will pay tax at your marginal tax rate, which will depend on the amount of income you receive from all sources. Please note if you are currently employed and receiving a salary, taking your pension could potentially mean that you move up to a higher tax band. In addition, if you decide to take all of your RSA pension schemes savings as a cash lump sum in one go, this could mean that you end up paying more tax, as you may move up to a higher tax band.

This video by HUB Financial Solutions explains how tax works.

What is the Money Purchase Annual Allowance?

An Annual Allowance applies to all savings you make into a registered pension arrangement, which restricts the amount that you (and your employer) can save each tax year without incurring a tax charge. The standard Annual Allowance for 2019/20 is £40,000, although this reduces to as low as £10,000 if you have a ‘high’ income.

A separate Money Purchase Annual Allowance will apply to you, irrespective of your income, if you access your pension savings flexibly and take a taxable income. This includes taking taxable income from a Drawdown fund, as well as the taxable part of a cash lump sum, known as an Uncrystallised Funds Pension Lump Sum or UFPLS. It doesn’t apply if you buy an annuity. Once the Money Purchase Annual Allowance is triggered, this restricts the amount that you (and your employer) can save into a money purchase (defined contribution) pension arrangement each tax year without incurring a tax charge. The Money Purchase Annual Allowance for 2019/20 is £4,000.

Therefore, if you are planning to continue working and/or saving into a pension arrangement after taking your pension savings, you should take the Money Purchase Annual Allowance into account when deciding which option to take.

Who regulates UK pension schemes?

The Pensions Regulator is the UK supervisory body for occupational pension schemes. The regulator is responsible for monitoring the running of occupational pension schemes to ensure the protection of member benefits. You can contact the Regulator on 0845 600 0707 or go to thepensionsregulator.gov.uk.

My Scheme pension savings are small. What can I do with them?

If your RSA pension schemes savings are less than £10,000 you may be able to take this as a ‘small pot’ lump sum. This means that you can take your entire Scheme pension savings as cash. Up to 25% of the lump sum would be tax-free, with tax paid on the remainder. Taking a cash lump sum in this way would not trigger the Money Purchase Annual Allowance; you would need to let the Scheme administrators know that you are taking a ‘small pot’ lump sum rather than an Uncrystallised Funds Pension Lump Sum (UFPLS).

If you have pension savings in more than one plan, and your total savings are worth less than £30,000, you may also be able to take all of your pension savings as a one-off lump sum. Please contact the Scheme’s administrators if you believe this could be the case for you.

What if something goes wrong or I have a complaint?

We hope that the retirement process runs smoothly for you. However, if you do have an issue or complaint, please contact Scheme’s administrators and they will let you know how to take the matter further.

If you are unable to resolve your issue through the Scheme’s administrators, having followed the Trustees’ dispute resolution procedure where relevant, then you can contact The Pensions Advisory Service (TPAS) by calling 0800 011 3797. They should be able to assist you and answer any questions you may have. You could also go to their website at www.pensionsadvisoryservice.org.uk/.

If your concern cannot be satisfactorily resolved, you can then refer it to the Pensions Ombudsman. The Pensions Ombudsman is an impartial organisation set up to investigate complaints about how a pension scheme is run. If you wish to contact the Pensions Ombudsman, you’ll need to download a form from www.pensions-ombudsman.org.uk/ and send the completed form to:

Pensions Ombudsman Service
10 South Colonnade
Canary Wharf
London
E14 4PU.

What State benefits will I receive in addition to my Scheme pension savings?

In addition to any pension savings you have built up in the Scheme, you will also receive a State Pension payable from your State Pension Age. Your State Pension Age will depend on when you were born.

Use the Government’s State Pension Checker to find out how much State Pension you can get, and from what age.

If I were to transfer, do I need to be careful where I transfer to?

You should be aware that individuals are being approached by “unregulated” providers suggesting that they transfer their pension benefits in exchange for seemingly tempting investment opportunities and/or cash. This type of offer could be a scam. You could lose most or all of your pension savings as a result of tax charges, scammers’ fees and losses on fake or unsuitable investments. The Pensions Regulator has produced a booklet to help members protect themselves from scams. This can be accessed here.

If you believe you have been approached with such an offer, contact Action Fraud on 0300 123 2040 or visit: www.actionfraud.police.uk/reporting-fraud-and-cyber-crime.

Illustrator tool related questions

How up to date are these figures?

Please see your retirement quote letter for the date of your pension figures and your transfer value. For the illustration of a regular income, an assumption has been made regarding the annuity rates available to purchase in the open market. The rate used is updated monthly and is based upon annuity rates as provided by HUB Financial Solutions.

Is my data secure?

We appreciate members’ concern around providing detailed personal data. The information you provide is not stored anywhere on our systems once you close the Illustrator tool. We ask you to input the information in the Illustrator tool and we only request relevant information. For more information please see the Data and Privacy Policy.

I have a technical problem using the Illustrator tool – where do I get help?

Please contact the Scheme’s administrators, Willis Towers Watson, on 01737 227547 or by email at rsapensions@willistowerswatson.com

Are the figures in the Illustrator tool guaranteed?

No. The tool provides an illustration of what you could receive in the future, rather than guaranteed payments. In practice, if you choose to transfer your benefits out of the scheme then the amount you will receive each year will depend on how your savings are invested and how these investments perform over time, or the annuity rates on offer at the time if you choose to purchase a pension in the future. Your financial adviser can help to choose the right option for you.

Your retirement quote letter will be able to tell you if the benefits from the RSA pension schemes – or the transfer quote provided – is guaranteed.

What assumptions are used in the Illustrator tool?

There are a number of assumptions underlying the Illustrator tool. These assumptions are detailed in the printable output. For more information about these, we recommend discussing this with your financial adviser.

  • The illustrations do not take into account the impact of any tax, in particular, income tax and the Lifetime Allowance.
  • For the purposes of this comparison, we have not shown how you might take your AVCs at retirement. The options are similar to those set out above. For more information about your AVC savings, please refer to your retirement quote letter.
  • If you are female under age 60 – or a male under age 65 – you may be entitled to a step increase in your pension in the Scheme at age 60 or 65 which has not been shown above.
  • The annual increases on your Scheme pension, shown in the graph view, are based on the rules of the RSA pension schemes and in some cases assumptions have been made. Therefore the actual annual increases you receive each year are set in accordance with the Scheme Trust Deed & Rules.

Does the Illustrator consider the Lifetime Allowance

No, the illustrator does not take in to account the Pensions Lifetime Allowance (LTA) or any tax impacts as a result of exceeding that allowance.

It is worth noting, for some members, taking your pension from the Scheme won’t trigger the LTA but taking a transfer value of that same pension and receiving income from it might trigger the LTA, and a tax charge later on. This is a feature of the Government’s legislation and not of the Scheme.

You can read more about the LTA on the Money and Pensions Service website and if you’re considering taking a transfer value, you should consider talking to an FCA registered financial adviser. In fact, if your transfer value is over £30,000 you cannot proceed without talking to a financial adviser first.