New flexibilities for retiring members

Our ‘Budget 2014’ news article, published in May 2014, explained the significant flexibilities being introduced from April 2015 for retiring members of defined contribution (DC) plans like the Experian Retiring Savings Plan (ERSP).

As a reminder, these changes mean that from April 2015 you will be able to use your ERSP retirement account to:

• Provide a cash sum of up to 100% of your account, 25% of which is tax-free and the remaining 75% of which is taxable, some or all of which may be at the higher tax rates (currently 40% and 45%) known as ‘uncrystallised funds pension lump sums’ or ‘UFPLS’;
• Buy a regular income for the rest of your life from an insurance company, known as an ‘Annuity’;
• Draw smaller cash sums from your account as and when required, known as ‘flexi-access drawdown’ or ‘drawdown’ or
• Take a combination of all 3.

The Trustees are still considering to what extent members will be able to access all of the above options directly through the ERSP, as currently very few retirement providers have developed practical and affordable solutions.

Until the Trustees have made their decision, ERSP members can continue to elect a tax-free cash sum of up to 25% and an annuity through the Experian Pensions Team using the annuity broking services of Hargreaves Lansdown.  In the meantime, members wishing to take a higher cash sum or drawdown will need to transfer to an external pension with a provider who can facilitate these options, such as a self-invested personal pension (SIPP).  The Trustees continue to monitor the position and expect to make a decision within the next year or so, so we’ll keep you updated.

Helping you through the retirement maze

‘Pension Wise’ is a free and impartial government service introduced to help you understand your new pension options from April 2015. You can get guidance on your pension options from the Pension Wise website or, if you prefer to speak to someone, you’ll be able to talk to an impartial guidance specialist on the phone or face to face. They’ll talk about the steps you can take to turn your pension pot into income for your retirement.  Visit www.pensionwise.gov.uk for further details. If you require financial ADVICE based on the details of your individual financial circumstances rather than GUIDANCE you’ll 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.

Plan charges

Following a detailed review by the ERSP Trustees the ERSP charging structure has changed from the 2015/16 Plan year. This ensures consistent, fair charges for all members in line with regulations set out by the Pensions Regulator, and that overall charges comply with guidelines set out by the Department of Work and Pensions.

Although this is a significant increase in percentage terms for former Experian employees, it is the first increase in Plan charges since April 2006 and introduces a uniform charging structure across the Plan. The Trustees have also removed the transfer out charge which was previously deducted from members’ funds on transferring to an alternative plan.

Further information

We’re in the process of updating the Plan website at www.experian.co.uk/retirementplan in respect of the above changes, but further information about the new flexibilities for retiring members can be found at www.moneyadviceservice.org.uk or by contacting the Experian Pensions Team at Capita on 0114 229 8273 or at experianpensions@capita.co.uk