How and When Benefits Can Be Taken

The new pension rules brought in on 6 April 2006 have given pension holders a greater choice about how and when benefits can be taken.

Now you have four options:

  1. Buy an annuity;
  2. Take a scheme pension;
  3. Draw an income directly from your pension fund from age 75, as an Alternatively Secured Pension
  4. Draw an income directly from your pension fund before age 75, as an Unsecured Pension

Receiving a Lump Sum

The maximum tax-free lump sum that can be taken from your pension plan at retirement is set at 25% of the value of your benefits, with a maximum of 25% of the Lifetime Allowance. However, tax-free lump sums are not available once you reach age 75, so it is a good idea to check how much your pension plan will allow to be withdrawn immediately on retirement.

Taking Semi-Retirement

If you are a member of an occupational (company) pension scheme, the new rules mean that you don't have to leave your job to draw a pension anymore. You can now choose to draw some (or all) of your pension whilst still working for the same employer. However, it is also depending on your individual pension scheme rules.

Remember!
The payment of all benefits is subject to individual pension scheme rules, so it is essential to check with your pension administrator to find out what your pension scheme allows.