In April 2015 the government introduced much more flexibility in how you can draw your retirement savings when you retire.  You can now take your defined contribution (money purchase) retirement savings as a cash sum(s), income drawdown, an annuity or a combination of all three (see below for a detailed description of each option).

A cash sum(s) at retirement – you can take a single cash sum of up to 100% of your savings (25% being tax-free and the remaining 75% being taxable, some or all of which might be at the higher tax rates) or smaller, multiple cash sums (where 25% of each cash sum is tax-free with the remainder being taxed). This option is known as uncrystallised funds pension lump sum(s) or ‘UFPLS’;

Income drawdown – you can leave your retirement savings invested and draw a regular income in the form of smaller multiple taxable cash sums as and when required, with the option of taking up to 25% of your retirement savings as tax-free cash at retirement. This option is known as ‘flexi-access drawdown’ or ‘drawdown’; or

An annuity – you can buy a taxable income for the rest of your life from an insurance company, with the option of taking 25% of your savings as tax-free cash at retirement. This option is known as an ‘annuity’. The amount of your annuity will depend on the value of your retirement savings and the type of annuity you buy depending on your circumstances. Options include annual increases and dependant’s pension payable on death. 

You can also select a combination of cash, income drawdown and an annuity if you wish.

Drawdown is not currently available directly from the Plan. If you would like to utilise drawdown you will need to transfer your savings to a suitable personal pension arrangement.

Pension Wise is a free and impartial government service which has been launched to help you understand the options available to you at retirement. If you are aged 50 or over you can get guidance on your options or, if you prefer to speak to someone, you will be able to talk to an impartial guidance specialist on the phone or face-to-face. They will talk about the steps you can take to turn your retirement savings into income for your retirement. Visit www.pensionwise.gov.uk or call 0300 330 1001 for further details.

Members who require financial advice based on the details of their individual financial circumstances instead of general guidance, will need to speak to an independent financial adviser (IFA), who is likely to charge for their services. Visit www.unbiased.co.uk to find an IFA near you.

You should note that neither the Trustees, the Company nor the Experian Pensions team are able to provide you with financial advice.

For further information, visit our June 2015 news item on the new DC Flexibilities.

Make sure you try out the retirement modeller to find out what you might get when you retire and whether increasing your contributions may be beneficial to you. Click here to use the modeller now. If you are already part of the Plan, login to your online account and use the modeller found here for a more detailed forecast.