Get ready to retire
Normal retirement from the Scheme is at age 65, although you can choose to retire earlier from age 55 (rising to age 57 in April 2028). If you retire early, between ages 55 and 59, your benefits will be reduced for early payment. In most cases, you can retire from age 60 without any reduction.
My Retirement Planner is a secure, online tool that you can access via Clarity from BW. It shows you a range of projected values for your Scheme pension depending on your personal circumstances and when you want to retire. We’ll send you an invitation to register for it when you’re within a year of your earliest retirement date (usually age 54). The My Retirement Planner guide provides more details.
YOUR OPTIONS AT RETIREMENT
When you retire from active service, you can take your full Scheme pension in the usual way. Alternatively, you can choose from the following options:
Lump sum option
You can choose to exchange some of your pension for a tax-free cash lump sum of up to 25% of the value of your benefits. This is known as a Pension Commencement Lump Sum (PCLS) and, while not an issue for most people, the amount is capped by the Lump Sum Allowance at £268,275. If you’ve previously applied to HMRC for ‘pension protection’, your PCLS may be higher.
If you take a lump sum, the amount you receive will be worked out depending on your age at retirement. This is because the amount you’re exchanging for a lump sum is multiplied by a factor that varies according to age.
Taking a lump sum at retirement doesn’t affect the pension payable to your partner/dependant.
If you’ve been paying Money Purchase Additional Voluntary Contributions (MPAVCs), your MPAVC fund will first be used to provide all or part of your tax-free lump sum before giving up any pension.
Bridge the gap option
If you take your pension before State pension age (SPA), you could bridge the gap in your income by choosing to receive a larger pension from the Scheme up to your SPA, and a smaller one afterwards. This option is not available if you take ill-health early retirement.
You can find out more about this levelling option in the Bridge the Gap booklet.
TRANSFER OUT OF THE SCHEME
The alternative to taking your pension from the Scheme is to transfer your benefits to another HMRC-registered pension arrangement, where you might have more flexible options for accessing them.
Transferring to an alternative pension provider is a significant financial decision which is irreversible. While a transfer may be suitable for some members, it’s not always in everyone’s best financial interests, and you must take independent financial advice before going ahead.
You can transfer your benefits to:
- another occupational pension scheme
- a personal pension, e.g. a self-invested personal pension (SIPP) or other individual pension arrangement
- a recognised overseas scheme (ROPS).
You have a legal right to apply for a transfer value at any time up to one year before your pension is due to start. If you’re within one year of your normal pension start date, or if you’re over normal Scheme retirement age, you’ll need Trustee approval.
Find out more
If you’re thinking about transferring out and want a more detailed understanding of what this means for you, you should log in to Clarity from BW and go to My Retirement Planner under Your Services.
It will provide your Scheme retirement figures and an illustrative transfer value. This represents the equivalent cash value of the Scheme benefits you’ve earned so far. If you’re made redundant, My Retirement Planner might not show your latest figures until after your redundancy date.
As well as exploring your options, My Retirement Planner provides links to additional support and guidance, including access to dedicated and independent financial advice.
Getting Financial Advice
When you start thinking about your retirement options, you may find it helpful to speak with an independent financial adviser (IFA). An adviser can help you understand your choices and how they relate to your personal circumstances. If you decide to seek financial advice, you are free to appoint any IFA of your choice, and you will be responsible for any costs involved.
You can search for an authorised financial adviser at unbiased.co.uk.
Stay Alert to Pension Scams
Pension scams are increasingly sophisticated, and many people have lost some or all of their pension savings to fraudulent schemes. It’s important to stay vigilant.
For up to date guidance on how to protect yourself, visit the Financial Conduct Authority (FCA) website for information on spotting and avoiding scams.