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Taking your benefits

When you can take your benefits

Currently, the earliest age most people can take any pension benefits is age 55, this is increasing to age 57 from 6 April 2028.

Your Normal Retirement Date (NRD) with the Scheme is the date of your 65th birthday and this is usually when you're able to retire and take your Scheme benefits.

Retiring before your NRD

If you are thinking about taking your benefits before your NRD please contact the Pensions Team for details about your options.

Retiring after your NRD

If you choose to defer taking your benefits until after your NRD, your benefits will be increased to take the later payment date into account.

Your Final Salary and Cash Balance benefits must be taken at the same time.

If you retire early, your Final Salary pension is calculated in the same way as for normal retirement (i.e. based on your Pensionable Service within the Final Salary section and Final Pensionable Earnings at your date of leaving the Scheme or 31 December 2012, whichever is earlier). Whilst your pension is revalued in line with statutory requirements between the date of leaving the Final Salary section and retirement, there will be a reduction applied to your pension. The reduction accounts for the fact that your pension is being paid early and will be expected to be paid for a longer period. If you need further information, please get in touch with the Pensions Team.

Your Cash Balance Retirement Account will also be lower, as there are fewer years for revaluation to have built up. Also, the cost of buying a lifetime annuity will typically be more expensive at earlier retirement ages.

Are you thinking about retiring in the next few years? Read about the retirement process on our Approaching retirement page.

How you can take your benefits

The Pensions Team will provide you with a quotation of your benefits approximately six months before your Normal Retirement Age, or earlier upon request. When you retire, your Final Salary benefits will be paid by the Scheme and the lifetime annuity you purchase with your Cash Balance benefits will be paid by an insurance company.

What is a lifetime annuity?

A lifetime annuity is a product sold by insurance companies, which provides you with a regular guaranteed income in retirement.

When you retire from the Scheme, you must buy a lifetime annuity which will pay you (or you and your spouse/registered civil partner) an income for life.

Taking a cash lump sum

When you retire, you have the option to receive a tax-free cash lump sum of up to 25% of the value of your Final Salary benefits in addition to 25% of your Cash Balance benefits.

Any Cash Balance benefits not paid to you as part of your tax-free cash lump sum must be used to purchase a lifetime annuity.

Shortly before you retire, you'll be sent details of the maximum tax-free cash lump sum you can choose to take.

The formula for calculating maximum tax-free cash is decided by HM Revenue and Customs and the amount of pension you give up in exchange for your cash lump sum is determined by the Trustees on the basis of advice from the Scheme's Actuary. Different factors for converting pension into tax-free cash apply at different ages and the factors are subject to change and cannot be guaranteed.

Purchasing a lifetime annuity

When you take your benefits from the Scheme, the Trustees provide the services of a financial adviser to help you get the best lifetime annuity rates. You'll need to give the Trustees permission in order to share your information, and then you'll receive a phone call from the financial adviser. Alternatively, you can use your own financial adviser if you wish to do so, however, the Trustees will not reimburse you for any fees they may charge.

It's your responsibility to purchase a lifetime annuity with the value of your Retirement Account.

Taking your benefits in other ways

If you'd like to access your benefits in a different way, you would have to transfer them out of the Scheme to another provider offering the flexibility required, before taking any benefits. You can transfer the Cash Balance or Final Salary benefits independently of each other or both together.

This comes with a number of risks and it's important to think carefully about this option and seek financial advice before taking action.

Read more about transferring out of the Scheme on our Transferring out of the Scheme page.

How much pension you'll get

Your Final Salary pension at your Normal Retirement Date will be based on your:

  • Pensionable Service up to the date of your move to Cash Balance; and
  • Final Pensionable Earnings at your date of leaving the Scheme or 31 December 2012, whichever is earlier.

Your Final Salary pension will be revalued in line with the statutory requirement from your date of leaving the Final Salary section and retirement.

You may also have Cash Balance benefits, in which case the credits that you built up in your Retirement Account while you were a member will be used to buy a lifetime annuity when you retire. This will provide you with an income in retirement.

The amount of income you can expect to receive at retirement depends on a number of factors. These include:

  • How much you have built up in your Retirement Account (this depends on your Pensionable Earnings in each year of membership, your Pensionable Service and the rate of inflation)
  • Whether you choose to take up to 25% of your Retirement Account as tax-free cash, and
  • The cost of buying a lifetime annuity on the open market (as determined by annuity rates at the time).

Don't forget, when you're planning for retirement and thinking about how much money you'll have, it's important to consider any income you may get from elsewhere. This means thinking about any savings you may have in other pension schemes as well as any State Pension.

You can find out more about the State Pension on the government website.