Approaching retirement
As you approach retirement, you'll need to start thinking about how to take your Scheme pension.
You are currently in the Defined Contribution (DC) section of the website. If you have legacy benefits in the Defined Benefit (DB) Section, you can find more information in the DB Section of the website.
When can I retire?
The Normal Retirement Age in the DC Section is age 65, but you can retire earlier. With the agreement of Lloyd's Register, you can take your benefits any time between the ages of 55 (rising to age 57 in 2028) and 75 if you meet various HMRC requirements.
Before you decide when to retire, you need to consider whether you'll have enough money to afford the lifestyle you want.
What options do I have?
When you retire, you can take your benefits in the DC Section as:
- A pension (an annuity). An annuity is a type of insurance policy that is designed to provide you with an income for the rest of your life, although you can also buy them to cover a fixed period of time. There are several different types of annuity, so it's important to find one that's right for you and your circumstances. You can also take up to 25% of your account as tax-free cash when you buy your annuity. You'll be taxed on your annuity at your marginal rate once you start using it as income.
- A flexi-access drawdown arrangement. Take money flexibly from your account as and when you need it, but leave the balance invested with the aim of growth. Remember that investments can go down as well as up. You'll also need to manage your account carefully to ensure it lasts for the whole of your retirement. You can take up to 25% of your account as tax-free cash. Any income you withdraw after that will be treated as taxable earnings in the tax year you took them.
- A cash lump sum. Take your whole account as cash. The first 25% you take is tax free and you'll pay Income Tax at your marginal rate (20%, 40% or 45%) on the rest.
- A combination of the options above.
Whichever option you select, you'll need to transfer your Scheme account to an external provider - this can include pension products provided by the Scheme's current provider, Standard Life. Different options will have different features, different rates of payment and different tax implications.
Use the retirement pathfinder to see which options might suit you best.
You can also use the retirement calculator to explore your retirement options and how to boost your pension pot.
There is a limit to the amount of pension savings you can build up throughout your career without triggering a tax charge. This is known as the Lifetime Allowance (LTA). Find out more about the LTA.
For information and guidance about your retirement options, visit Pension Wise.
A summary of the retirement process
- Choose when you would like to retire and how you take your benefits from the DC Section.
- With the agreement of Lloyd's Register, you can retire earlier or later than the DC Section's Normal Retirement Age of 65 years.
- Your benefits will depend on how much you and Lloyd's Register have paid into your account, how your investments have performed, and how you decide to access your benefits when you retire.
- You can find out more about your options at Pension Wise.
- Attend a Pre-Retirement Seminar.
- Review your selected retirement date and ask for a retirement quote from Standard Life.
- You'll need to transfer your benefits out of the DC Section and purchase a retirement product on the open market to benefit from the flexibility options outlined above.
- Make sure you shop around to find the right product at the right price for you and your circumstances.
- If you have DB benefits, contact XPS for a combined retirement quote.
Your State Pension
The State Pension is a useful benefit but you shouldn't count on it as your main source of income in retirement.
The amount of State Pension you get depends on your National Insurance record. To start receiving any State Pension, you must make National Insurance contributions (NICs) for a minimum of 10 years. To qualify for the full amount, you must make NICs for at least 35 years.
You can start receiving your State Pension when you reach State Pension age. This might be different from the Normal Retirement Age in the DC Section, which is age 65.