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Approaching retirement

As you get closer to retirement, you will need to start thinking about the decisions you will soon have to make regarding your pension savings.

If you have legacy benefits with the Defined Benefit (DB) Section, you can find out more information in the DB Section of the website.

When can I retire?

The DC Section's normal retirement date is age 65. With Lloyd’s Register’s consent you can choose to take your benefits anytime between the ages of 55 and 75 if HMRC requirements are met. You need to consider whether this is the right time for you to retire and if you will have enough money to maintain a good standard of living. Please note the earliest age that you can take your benefits may be 57 or higher from 2028, due to Government legislation.

What options do I have?

Your benefits in the DC Section are 'flexible benefits', meaning you have the following options at retirement:

  • Buy a pension (an annuity). An annuity is like an insurance policy that guarantees you an income for a fixed period of time or for the rest of your life. As there are a number of different types of annuity to choose from, it’s important to shop around and choose one that best suits your circumstances. You have the option to take up to 25% of your account tax free upon purchase of the annuity (you would be taxed at your marginal rate on any income from the annuity itself).
  • Transfer to a flexi-access drawdown arrangement. With this option your pension account remains invested to help it continue to benefit from investment growth. It’s more flexible than an annuity as you can take an income as and when you like. However, as your money is invested, there is a risk your fund may decrease in value, and may not last you for the whole of your retirement. You have the option to take up to 25% of your pension account tax free upon purchase of the drawdown product (you would be taxed at your marginal rate on any amounts you subsequently ‘draw down’).
  • Take a cash lump sum. Transfer out of the DC Section and take your whole pension account. The first 25% of each payment would be tax free, with the rest taxed at your marginal rate of income tax for the year (20%, 40% or 45%).
  • A combination of the options above

All of these options will be available by transferring your pension account to an external provider including the current provider Standard Life. Different providers will offer different options and different options will have different features, different rates of payment and different tax implications.

Try using the retirement pathfinder to see what options might suit you best.

You can also use the retirement calculator to make an action plan and explore what options you have when it comes to taking your pension pot and how to boost it.

Please note that there are limits on the amount of tax-privileged savings you can build up throughout your career known as the Lifetime Allowance (LTA). For more information about what your choices are and how they work visit Pension Wise.

The retirement process

A summary of the retirement process and the guidance and advice available is highlighted below:

  • You choose when you would like to retire and take your benefits from the DC Section.
  • With the consent of Lloyd's Register, you have the option to retire earlier or later than the DC Section’s default retirement date (age 65).
  • Your benefits on retirement depend on the level of contributions, the performance of your investments and your circumstances and choices upon retirement.
  • Visit Pension Wise for free and impartial guidance about the new flexible options available to you.
  • Attend a Pre-Retirement Seminar.
  • Review your selected retirement date and request a quote from Standard Life.
  • You have flexibility when it comes to taking your benefits and there are several options to choose from.
  • In order to benefit from the new flexibility options available, you will need to use your DC benefits on the open market, i.e. you will need to transfer your benefits out of the DC Section.
  • If you have DB benefits you can contact XPS to produce a combined quotation for you.

Your State Pension

Once you reach retirement, if you have made enough National Insurance contributions over your working life, you will receive the State Pension from the Government.

The State Pension is a useful benefit but it shouldn’t be relied upon as your main source of income in retirement.

The full new State Pension is £164.35 per week. The actual amount you get depends on your National Insurance Record. To qualify for the full amount, you must have accumulated at least 35 years’ National Insurance contributions.

State pensions are paid when you reach State Pension age. You may find this is different from your selected retirement age in the DC Section (the default age is 65).

For more information about the State Pension, whether you qualify, and to find out your State Pension age, visit gov.uk.