DC benefits

If you have benefits in the DC Section, there’s a lot of flexibility in how you manage your retirement income. To start with, you’ll need to find out how much your pension fund is worth.

Step 1: get a retirement quote

You can request a retirement quote online or by calling Premier Pensions, the Plan administrator. Premier Pensions will send you a retirement pack explaining your options together with your personalised Statement of Plan Retirement Benefits.

Step 2: think about your options and decide how much tax-free cash to take

You can take up to 25% of the total of your pension fund as a tax-free cash lump sum, if you wish to. You can then use the remainder to provide a taxable retirement income in the way that best suits your own circumstances:

  • Use flexible income drawdown

You’d need to transfer your pension fund to an arrangement where it remains invested and you withdraw cash sums from it as and when you want to.

You’ll need to plan carefully to make sure you don’t run out of money in retirement, but any money that is left in your drawdown arrangement after your death can be passed on to your beneficiaries.

  • Buy an annuity

This is a type of insurance policy that guarantees you an income for the rest of your life.

You can shop around for the best deal, much as you would with your car or home insurance. You can choose different types of annuity – do you want one that’s just for you or one that provides income for your spouse after your death? Do you want a fixed annuity or one that increases with inflation?

  • Take it all as cash

You can take the whole value of your pension fund as a single cash lump sum, subject to income tax.

If you have other sources of retirement income, a cash lump sum may be appropriate. Do you have large purchases to pay for or debts to pay off? Don’t forget that only 25% is tax free and the rest is taxed as income. When added to any other income you have for the year, you may find you’re pushed into a higher tax band.

  • A combination of these options

You can mix and match your choices to suit your personal circumstances.

You don’t have to choose just one of these. You may decide to take some cash on retirement and transfer the rest to an income drawdown arrangement or buy an annuity. Alternatively, you might want the security of a regular income from an annuity but not immediately on retirement and you’d like to time the purchase of an annuity later into your retirement.

Step 3: tell the Company and the Plan administrator

There will be a few administrative things to do and forms to complete to put your pension fund into payment.

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