A key part of your retirement planning is knowing how much your pension is worth and what you need to consider when you submit your retirement request.
A pension for life
Your benefits give you a pension for life, based on:
- your Final Pensionable Salary (your salary near the date you retire or stop paying into the Scheme), and
- your Pensionable Service (when you were paying into the Scheme).
If you’ve worked part time at any point, you’ll be treated as if your Final Pensionable Salary was what you’d have earned if you were full time, but your Pensionable Service will be reduced based on your part-time hours.
Please contact the Scheme Administrators for more information about your benefits if you’ve worked part time.
A cash lump sum
You can normally take up to 25% of your total pension benefits as a cash lump sum. As long as your lump sum is less than £268,275 it will be paid free of tax. There are different tax rules if you take a cash lump sum due to serious ill-health. See the government's website for further details.
In most sections, choosing this option means you give up part of your pension – so your monthly pension in retirement will be smaller. This won’t affect pensions paid to your dependants in the future as these are worked out from your total pension before taking cash.
Depending on which section you’re in, you may be able to take any Additional Voluntary Contributions (AVCs) you’ve paid as part or all of your cash lump sum, instead of reducing your pension.
Check the Whenever you choose to retire section your member guide to find out what the options are for taking your benefits.
Things to think about
Do you want to take a cash lump sum? If so, how much cash do you want to take?
- Taking a cash lump sum is likely to make your pension smaller, unless you have AVCs you can use for the cash.
- On the other hand, up to £268,275 of your cash lump sum is usually tax free whereas your monthly pension will be taxed as income. This is one of the few times in life you can receive a large sum of money without it being liable for tax. To find out more about the Government's Lump Sum Allowance go to the government's website.
Check your member guide to find out what your options are when it comes to cash lump sums.
What does your spouse or partner receive when you die?
In most cases, the Scheme will pay a pension to your spouse or civil partner. The amounts of these depend on which section of the Scheme you’re in.
What if you don’t have a spouse or partner?
The Trustees may be able to pay a pension to anyone who was financially dependent on you when you died. If the Scheme rules covering your benefits include this option, the Trustees will decide the size of the pension and how long it will be paid for.
What about children?
If you have children, they may qualify for children’s pensions after your death. This depends on which section of the Scheme you are in.
Check who you’ve named to get benefits when you die
While you’re planning for retirement, it’s a good idea to check your beneficiary nomination – that is the people you have named to receive any benefits payable when you die. Log in to the member portal and go to See> Expression of Wish. Or, ask the Scheme Administrators for an Expression of Wish form.
Go to Benefits payable after your death for more about the benefits that are paid if you die.
Check your member guide for more details about the benefits from your section.