Retirement Age
You can draw retirement benefits from
your plan at any time after age 55. Until 6 April
2011, the latest date you could draw your benefits was your
75th birthday. Some schemes may still have this restriction
in place. Click here to read more about
minimum retirement ages.
You can take retirement benefits
from your plan even if you continue to work.
It may be possible to draw your
retirement benefits before age 55 if you are in poor health and
unable to work. Click here to read more about ill
health retirement.
Retirement Options
Your plan provider will send you a retirement pack in the post
if you request one by phone or in writing. The pack will tell
you what options are available. Usually, you can
take up to 25% of your fund (including protected rights) as a tax-free
lump sum. The balance can be used to provide an income in
the form of an annuity. Click here to read about annuities.
Alternatively, if you want to draw an income from your
retirement savings but do not want to purchase an annuity just
yet, you may want to look at income drawdown. Click here to read about income
drawdown.
Open Market Option (OMO)
Included in the retirement pack you receive from your provider
will be the opportunity to use the OMO.
The OMO gives you the option to transfer your
fund and get an annuity from another provider. This
allows you to shop around the annuity market for a better
deal. It may be possible to increase your income by up to 30%
by using the OMO.
The Consumer Financial Education Body (CEFB) provides an online
service for comparing annuity providers. By entering some
basic information, you can get a table showing the best providers
for your needs. Click here for the CEFB's comparative
tables.
An independent finnancial adviser (IFA) may be able to help you
search the market for the best deal. If you have more than
one plan and are looking to merge them into one annuity, an IFA may
also be able to help co-ordinate this. Click here to
find IFAs in your local area.
Further Reading
Both the FSA and the Pensions Regualtor have produced leaflets
to help policyholder consider their retirement options.
Click here to dowload the FSA's leaflet - Your
pension: its time to choose
Click here to download the Pensions Regulator's
leaflet - Making your retirement choices: think before you
choose
Q & A's
Yes, you can do this (subject to the rules of your provider
allowing it) and take the rest at a later date. You will also be
able to take 25% of your fund as a tax-free lump sum.
Yes, from 6 April 2006, new rules allow you to take 25% of the
contracted out fund (known as protected rights) as a tax-free lump
sum.
Also, you are no longer restricted to not being able to access
your protected rights fund before age 60. You can now do this from
age 55.
At present, those in special employments, e.g. sportsmen,
ballerinas, etc., have the right to take their benefits at an age
earlier than 50. That right will be protected but only for those in
such schemes as of 6 April 2006.
When benefits are taken they must be tested against the Lifetime
Allowance. The Lifetime Allowance in this case is reduced by 2.5%
for every year between the date of crystalisation and age 55.
No, you can take your money to any other insurance company who
will give you a higher annuity. There is a very active and
competitive market for pension annuities. You could find a
difference of as much as 30% or 40% between one insurance company
and another.
The facility to buy your annuity from the company that will give
you the largest pension is known as the Open Market Option. Your
existing insurance company should tell you of this option when you
come to retire. Failure to do so would be maladministration.
You may need to get professional advice from an Independent
Financial Adviser to find out the best deal available. If you want
to do this on your own, Money Advice Service has a website which
gives comparative rates. The web address is
http://tables.moneyadviceservice.org.uk/Comparison-tables-home
