The right choice for me?
When thinking about taking your pension benefits, whether you are retiring or not, there may be a number of different options available to you. Making the right choice will depend on your personal circumstances and you’re the type of pension scheme you are in.
Your pension is very valuable and when it comes to thinking about taking your benefits you have some important choices to make. The right choices will depend on your needs and circumstances.
Taking benefits from a defined benefit scheme
If you’re a member of a defined benefit scheme, you need to think about:
- when you may be able to take your benefits and how that might affect the benefits you get (i.e. will your pension be reduced); and
- if you have the option to take a tax-free cash sum with a lower pension, how much you want to take as a tax-free cash sum, if any (up to the maximum permitted by the scheme).
- All schemes have different rules so you should ask your scheme administrator for details of your options.
- You can contact the Pensions Advisory Service to help guide you through your options and any questions you may have.
Because this decision is so important, you may find it helpful to take some regulated financial advice. To find out more about how to choose a regulated financial adviser, please click here.
Taking benefits from a defined contribution scheme
If you’re a member of a defined contribution scheme you need to think about:
- when it’s best for you to access your pension pot;
- will your pension pot be penalised if you take money from it; and
- how much (if any) cash you wish to take from the pension pot. 25% of the pension pot will normally be tax free and the remainder will be taxed at your marginal rate.
- Pension Wise, a government service, offer a free 45 minute appointment for those age 50 above and give impartial guidance on your options
- You can still contact the Pensions Advisory Service with any questions you have to help you with your decision
To contact Pension Wise, please see click here for their website.
Because this decision is so important, you may find it helpful to take some financial advice. Click here to read about choosing a financial adviser .
Where can I find out more?
If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.