The retirement benefits that have accumulated during the course of a pension scheme can be paid as:
- Pension Commencement Lump Sum
- An amount of 25% of the pension fund can be taken as a tax free cash lump sum. Special arrangements exist for members of pension schemes whose tax free cash was higher than 25% of their funds before 6 April 2006.
- Flexi-access Drawdown
- Members have the freedom as to how benefits are taken from the pension fund. The whole fund can be paid as cash in one go, smaller lump sums can be paid or regular income. Some payments will be subject to income tax.
- Lifetime Annuity
- The whole fund is moved out of the pension scheme to an Insurance Company or Annuity provider in return for a promise of a guaranteed income for life
- Capped Drawdown
- Income is paid direct from the scheme.
- Can be paid for life.
- Amount of income is calculated by the Government Actuary’s Department (GAD) rates.
- Income levels must be reviewed every 3 years, but can be review at earlier intervals.
- This option only continues to be available if you were taking capped drawdown before 6 April, 2015.
For more information about the pension changes introduced in April 2015, visit our Pensions Freedom page. If you are planning to take your retirement benefits we recommend you seek regulated financial advice and/or guidance from the government free Pension Wise service. For more information about Pension Wise visit www.pensionwise.gov.uk or call 030 0330 1001.
The amount of death benefit available depends on the age of the member on death. The benefit must be nominated within 2 years of the Scheme Administrator becoming aware of the death.
- Under the age of 75
- Under age 75 the pension fund can be left to anybody completely tax free regardless if any benefits have already been taken. The beneficiary will be able to take the pension fund as a lump sum or draw the fund as an income. Both options are tax free.
- Over the age of 75
- Over age 75 the beneficiary will be taxed at their marginal rate of tax if the funds are taken as either a lump sum or income.
For more information about death benefits visit out Death Benefits page.
This information reflects the regulatory and taxation situation as it affects pensions at the time of publication in April 2017 and is provided to the best of our knowledge. It is not a complete representation of the pensions legislator landscape and is for guidance and information purposes only. We cannot be held responsible for any errors, omissions or subsequent legislative changes.
CLient Liaison Helpdesk
For further information on your pension scheme administered by Morgan Lloyd, or any enquiry, please do not hesitate to call and one of our team members will be happy to help