GOVERNMENT CHANGES TO PENSIONS...
MADE SIMPLE

Intro

Do I need to keep reading?

The 2014 Budget introduced changes that give you more choice in the future, and there may therefore be changes to your pension savings that you wish to make straight away to set yourself up to take advantage of this freedom. So it’s worth reviewing this information now, even if you are not planning to retire for several years or more.

Important note

Throughout this site, we talk about defined contribution (DC) schemes (also known as ‘money purchase’ schemes) and defined benefit (DB) schemes (which include ‘final salary’ schemes).

In a DC scheme, you and your employer pay into your pension fund and the amount your fund is worth at retirement depends on the level of contributions and how your chosen investments have performed.

In a DB scheme, you pay a fixed amount each year but the amount you receive at retirement is worked out as a proportion of your earnings (depending on the number of years you have been in the scheme).

This site looks in detail at the choices for members with DC pension savings however we have referenced DB benefits in places. If you require further information on the choices open to you as a result of being a DB member, then we recommend you consult an IFA.

How did pensions work before the 2014 Budget?

Individuals with DC pension savings could, from age 55, generally take up to 25% of their fund as a tax-free cash sum. Then, there were three options to access the balance:

The option used by the vast majority of people was to buy an annuity. This is a form of insurance that provides a guaranteed monthly income that lasts until death. A 65-year-old with a £100,000 pension fund can obtain around £5,800 a year from an annuity today, unless he or she suffers from medical conditions which increase the yearly payout.

If you had less than £18,000 in total pension savings, the entire lump sum could be taken as cash (this is called “trivial commutation”).

If you had £2,000 or less in pension savings in any pension scheme, you could take these very small pension pots as cash lump sums.
If those pots were from personal pensions, a maximum of two small lump sums could be taken.

You also had the option to leave the pension invested and take a gradual income out of your fund. This is called “income drawdown”.

Unless you could show £20,000 a year of guaranteed pension income from other sources (for example, the State pension, final salary pensions or another annuity), there was a limit on the amount you could withdraw each year. This is called "capped drawdown".

Individuals with at least £20,000 a year of income from other pension sources could make unlimited withdrawals. This is called "flexible drawdown".

The income from any of these three options would generally be taxed as income. The income tax that you pay will depend on your total income in each tax year. The higher your income, the greater the amount of income tax you pay.

These options apply to DC pension savings only.

The changes will give people with DC pension savings significantly more choice at retirement. If you have DB pension savings, the changes will also affect you if you have DC additional voluntary contributions (AVCs) in the same pension scheme or have pension savings in another DC scheme, such as a personal or stakeholder pension. Even if you only have savings in a DB scheme, you will still have these options but you would need to transfer to a DC scheme to take advantage of them.

The Government has decided that the limited options for taking DC pension benefits may not suit everyone’s circumstances – hence the changes announced in the Budget. Click here to see the current choices at retirement.

Important note

This section talks about the changes in general terms. Every pension scheme is different and the way in which the rules are applied in each specific pension scheme may be different. If you have any questions then please refer to the ‘Further Information’ section.

The changes are being introduced in two stages. Select from the two tabs below for more information.

Further changes are coming into effect on 6 April 2015, so you may wish to consider delaying any decisions until after this date in order to take advantage of the increased flexibility. Most significantly, from 6 April 2015:

  • You will no longer have to buy a pension for life (annuity) with your DC pension savings or face any restrictions on how you take any income drawdown, but can instead choose to withdraw your money as you please (either all in one go or over time). You will still be able to take 25% of your pension savings tax-free, but normal income tax rules will apply to the rest.
  • Free and impartial guidance will be available at retirement for members with DC pension savings to take you through the options available.

Select from the drop down menu below to find out more about all of the changes coming into effect on 6 April 2015.

What is changing?

From 6 April 2015, if you have DC pension savings you will have more choice over what you can do with your pension fund at retirement. There will be three options:

Cash

You will be able to take some or all of your pension savings as a cash lump sum and then decide yourself how to spend, invest or save it.

Pension

You will be able to buy a pension for life (annuity) where you will receive a guaranteed monthly income until death.

Income drawdown

You will be able to enter into an income drawdown facility where you can leave your pension savings invested and withdraw money as and when you like (see Change 2 for more details). You will also be able to do a mixture of all of the above!

The Government is also planning to change the rules relating to the retirement products that providers are able to offer, meaning that you will be faced with a wide range of choices in the future.

With all three options, 25% of the pension savings you are taking can be tax-free, with the remainder subject to income tax rules.

Who will be affected?

Anybody who has DC pension savings after 5 April 2015 will have this flexibility once they reach age 55. If you have DB pension savings, you will be able to access the same options but you will need to transfer your pension benefits to a DC pension scheme (see Change 5 for more details).

What is changing?

Until now, people reaching retirement have been able to draw an income directly from their pension fund, but unless you had at least £12,000 of guaranteed pension income there have been restrictions in place such as the amount you can draw out on an annual basis. This is all changing. From 6 April 2015, you will be able to draw as much income as you want. Income drawdown works as follows:

  • You have a DC pension fund
  • You decide, based on the value of your fund, how much income you would like to draw out each year
  • Your DC pension fund will reduce as a result but the outstanding balance will remain invested and under your control for the future

One thing to keep in mind is that you need to ensure you keep sufficient money for the duration of your retirement, so drawing out too much, too soon could leave you with not enough money in future years. Receiving financial advice will help to ensure you make a decision that takes into account your short and longer-term needs.

Who will be affected?

Anybody who has DC pension savings after 5 April 2015 will be able to enter into an income drawdown facility (although you may need to transfer to a different DC pension scheme). If you are in a DB pension scheme, you will be able to do the same but you will need to transfer your pension savings to a DC pension scheme (see Change 5 for more details).

Important note – If you are already in an income drawdown facility before 6 April 2015, then you will be able to move across to the new unlimited approach but there will be some changes to how much you can contribute to your pension in the future (see Change 3 for further details).

What is changing?

You can currently pay up to £40,000 a year into your pension fund without being required to pay a special tax charge. This limit will still apply after 5 April 2015. However, if you take any money out of your DC pension fund other than as an annuity (such as through income drawdown as referred to in Change 2), then your contributions to any DC pension savings could be limited to £10,000 per year.

Who will be affected?

Anybody who has a DC pension fund and takes income from it after 5 April 2015 will be affected. There are, however, three exceptions to this limit:

  1. Your pension fund does not exceed £10,000 and is cashed out under the small sum rules
  2. You were in a ‘capped drawdown’ facility before 6 April 2015 and your withdrawals AFTER 5 April 2015 remain within your current limit
  3. You take your pension as a lifetime annuity or scheme pension (rather than a cash lump sum or entering into an income drawdown facility)

Important note – This £10,000 contribution limit does not apply to any benefits you may be building up in a DB pension scheme. Furthermore, if you were already in a ‘flexible drawdown’ facility before 6 April 2015 then you will benefit from being able to make contributions of up to £10,000 a year after 5 April 2015 (currently anyone that falls into this category is not allowed to make any contributions).

What is changing?

When approaching retirement, if you have DC pension savings then you will have free guidance to support you in making the best decision for your future retirement needs.

This guidance will be provided by organisations such as The Pensions Advisory Service (TPAS) or the Citizens’ Advice Bureau (CAB). There will be absolutely no charge to you for receiving this guidance, and it will be offered to you through a range of different channels, such as online, over the phone or face to face.

Your pension provider will be able to tell you about your options.

Who will be affected?

Anyone taking their DC pension savings after 5 April 2015.

What is changing?

If you have DB pension savings then you will be able to take advantage of the new rules and make unlimited withdrawals from your pension savings. However, at present, in order to be able to do this you will first need to transfer your DB pension savings into a DC pension scheme. (The Government will be considering offering the same flexibility to members of DB schemes in the future without the requirement to transfer, but the timing of this is not yet known.)

If you decide to go down this route, then you could lose valuable benefits that you may not be aware of so you will have to receive financial advice before any decision is taken if your DB pension savings are worth at least £30,000.

Who will be affected?

Anybody who has DB pension savings worth at least £30,000 and wishes to transfer them to a DC pension scheme.

What is changing?

As things currently stand you can start to take your pension savings from the age of 55 (the ‘Minimum Retirement Age’). In 2028 the Minimum Retirement Age will increase to age 57 and from then on will increase in line with, but set 10 years below, the State Pension Age.

Important note – This will not apply to Public Sector Pension Schemes or Firefighters, Police and Armed Forces. There are also some members who have a ‘protected’ Minimum Retirement Age for historical reasons and your scheme should inform you if this is the case.

Who will be affected?

Everyone apart from those that fall into the categories referred to above.

What is changing?

As it currently stands, if you are already in an income drawdown facility, have an annuity or you are 75 years of age or older and still have money in your DC pension fund, any lump sum paid to your beneficiaries after your death is taxed at 55%. From 6 April 2015 this tax rate will be reduced to 45% (if you die after reaching age 75). No tax will be payable if you die before reaching age 75.

Who will be affected?

Anybody who has either DC pension savings in a drawdown facility, has purchased an annuity or still has money in their pension fund after the age of 75. This applies to DC pension savings only. For information on how it impacts any DB benefit, please contact your pensions team or administrator.

  • If you are aged 60 or over with pension savings from all sources worth less than £30,000, you may be able to take the whole lot as a lump sum. Previously, the limit was £18,000. You can normally take 25% of this amount tax-free, with tax payable on the remainder.
  • If you are aged 60 or over, with pension savings from a single pension scheme worth less than £10,000, you may be able to take the value of that fund as a lump sum. Previously, the limit was £2,000. You can do this as many times as you like within employers’ pension schemes and you can now do this for up to three personal pension funds (previously you could only do it for up to two funds). You can normally take 25% of this amount tax-free, with tax payable on the remainder.
  • If you are already drawing a pension (including State pensions) of more than £12,000 a year (previously £20,000) you will have the option to withdraw money from your DC pension savings over time using ‘flexible drawdown’. Generally 25% of any withdrawals will be tax-free, with income tax payable on the remainder.
  • If you are already drawing a pension (including State pensions) of less than £12,000 a year, then you can still choose to withdraw money from your DC pension savings over time but the amount you can withdraw each year is limited (this is known as ‘capped drawdown’). Generally 25% of any withdrawals will be tax-free, with income tax payable on the remainder.

As a member of a DB pension scheme you will have access to the increased flexibility offered by these changes. However, this is only available to you if you transfer your DB pension benefits to a DC scheme. If you wish to go down the transfer route after 5 April 2015, then you must receive financial advice first to ensure it is the right thing for you to do (if your pension savings are worth at least £30,000). See Change 5 in 'What is Changing' for more details on this. In the future, the Government may offer DB scheme members the same level of flexibility as DC scheme members without the need to change their pension scheme, but we do not know at this stage when the timing of such a change will be made. Keep your eyes and ears open in case this changes.

It’s important for you to note that the flexible access to your pension savings as described in Change 1 of 'What is Changing' will only be available to you once you’re 55 years of age or older. If you are thinking of taking your pension savings in the near future, you may wish to delay retirement until after 5 April 2015 so that you are able to access the flexibility outlined here.

As someone who has both DB and DC pension savings, you have more things to consider when it comes to making your retirement decisions.

For your DC pension savings, you will have access to much greater flexibility in terms of what you can do with your pension pot when you come to retire. To help you make the right decisions, you will have access to free, impartial guidance which your pension provider will tell you about. All of the options available to you are explained in greater detail in 'What is Changing'. You should also consider if your current approach to investing is right for how you wish to take your benefits at retirement – see 'What happens next'.

As for your DB pension savings, you will also have access to the increased flexibility offered by these changes. However this is only available to you if you decide to transfer your DB pension benefits to a DC scheme. If you wish to go down the transfer route after 5 April 2015, then you must receive financial advice first to ensure it is the right thing for you to do (if your DB pension savings are worth at least £30,000). See Change 5 in ’What is Changing’ for more details on this. In the future, the Government may offer DB scheme members the same level of flexibility as DC scheme members without the need to change their pension scheme, but we do not know at this stage when the timing of such a change will be made. Keep your eyes and ears open in case this changes.

It’s important for you to note that the flexibility as described in Change 1 of 'What is Changing' is only available to you once you're 55 years of age or older. If you are thinking of taking your pension savings in the near future, you may wish to delay retirement until after 5 April 2015 so that you are able to access the flexibility outlined here.

As someone who has DC pension savings, you now have more things to consider when it comes to making your retirement decisions.

You will have access to much greater flexibility in terms of what you can do with your pension fund when you come to retire. To help you with this, you will have access to free, impartial guidance which your pension provider will tell you about. All of the options that will be available to you are explained in greater detail in 'What is Changing'. You should also consider if your current approach to investing is right for how you wish to take your benefits at retirement – see 'What happens next'.

It's important for you to note that the flexibility as described in Change 1 of ’What is Changing’ is only available to you once you’re 55 years of age or older. If you are thinking of taking your pension savings in the near future, you may wish to delay retirement until after 5 April 2015 so that you are able to access the flexibility outlined here.

Even if you’re not currently a member of a pension scheme, it’s worth knowing about the significant changes that are coming into effect from 6 April 2015.

If you do join a pension scheme in the future, the odds are that it will be a DC pension scheme. The recent changes announced by the Government now mean that you will have access to much greater flexibility in terms of what you can do with your pension fund when you come to retire. All of the options that will be available to you, should you become a pension scheme member in the future, are explained in greater detail in 'What is Changing'.

Important note

This section talks about the changes in general terms. Every pension scheme is different and the way in which the rules are applied in each specific pension scheme may be different. The 'What Next?' section gives you more information on what is happening with your Company pension scheme.
  1. Take time to read all of the information provided in Sections ‘What is Changing?’ and ‘What does it mean to me?’ so that you fully understand what your options will be when you reach retirement and how it might impact you on a personal level.
  2. Make sure you fully understand exactly what provision you are currently making for your future retirement.
  3. Consider what what action, if any, you may need to take to help you secure the income that you need for retirement.
  4. If you are already a member of your Company pension scheme, take time to read your annual pension statement. You should read this document and think to yourself ‘do I need to be making any changes in order to meet my financial needs in retirement'?
  5. Make sure you read and understand any announcements issued by your Company pension scheme, as these may contain important information about your options and the choices you need to make.
  1. If you are already drawing retirement benefits through income drawdown, then the changes will create additional options for you to consider. These changes could make a difference to your future retirement so you need to understand what the implications could be of increasing any drawdown.
  2. Until you reach age 55 the changes should be carefully considered and reviewed by you because it may influence how you plan for your retirement. If you are already 55 years of age or you will be after 6 April 2015, then the changes will definitely be relevant to you now as you will soon be required to make your retirement decisions.
  3. As a minimum you should put careful consideration into the following:
    • Investment Review
    • Review of contributions
    • Consider the age at which you plan to retire
    • If a DB member, transfer value restrictions/review

Investment fund choices

If your DC pension savings are currently invested in the default investment fund, this may no longer be an appropriate choice for you, depending on how you plan to take your pension savings when you retire. This is because we selected the default investment fund based on the fact that the majority of people use their fund to buy an annuity at retirement (after taking 25% as a tax-free cash sum). After 5 April 2015, more people are expected to take their pension savings entirely as cash, to draw them out of their fund over time (using an income drawdown facility), or to use a combination of the three options. We are therefore reviewing the scheme’s investment options and will write to you separately to let you know what changes we plan to make.

Please look out for this announcement as there may be important decisions you need to make about where your pension savings are invested.

Small pension pots

One of the temporary measures introduced by the Government was to change the rules for pension pots that can be taken entirely as cash, and these rules will continue to apply for DB scheme members after 5 April 2015. This means that many more people may now fall into the category of having a ‘small’ pension pot. We are currently reviewing your pension savings within the Company pension scheme to see if you are eligible for this option. If you are, we will write to you to let you know what to do if you wish to go down this route.

If you are not a member of your Company pension scheme, consider joining now before it’s too late. The fact that you will have full control over how you take your pension savings when you retire should make a pension a very attractive investment for you. And don’t forget, for a minimum investment of X% of salary from you, the Company will pay in an additional X% of your salary. If you don’t pay into your Company pension scheme, then you are losing out on this extra money that the Company is willing to pay to you! Visit www.xxxxxxxxxx to find out further information on the benefits and options available to you.

Please keep in mind that before making any changes to your pension savings, you should speak to a financial adviser to help you make the right decisions. Go to www.unbiased.co.uk for a list of financial advisers in your area.

The purpose of this section is to answer some of the common questions about the Government changes, and to help you understand what they mean for you. The questions are grouped under three difference sections; questions relevant to both DB and DC, questions for just DB and questions for just DC.

Important note

This section talks about the changes in general terms. Every pension scheme is different and the way in which the rules are applied in each specific pension scheme may be different. However, if you are in a DC pension scheme that does not offer the full flexibility as outlined here, from April 2015 you will have the right to transfer your pension savings to another pension scheme that does. Section 3 gives you more information on what is happening with your Company pension scheme.

You will need to ask the administrator of your scheme, but it is unlikely you will be able to change any pensions currently being paid to you, unless you would now qualify for one of the small pot pensions (pension savings in one scheme worth no more than £10,000).

You can’t usually get access to your pension savings until you reach age 55. You should be very wary of people offering you ways to “unlock” your pension savings earlier than age 55 as this is usually heavily penalised and you could lose a lot of money. As part of the changes to be introduced in April 2015, the Government has stated that the minimum age at which pension savings can be taken will increase to age 57 in 2028. The Government’s intention is to have a Minimum Pension Age which is 10 years below State Pension Age. As such, the Minimum Pension Age is likely to increase again in future.

No; if you take all of your savings out of your pension pot then there will not usually be any benefits left for your dependants. This is different from taking part of your savings from a DB scheme as a tax-free cash sum, which does not usually change the spouse’s pension that would be paid on your death.

You will need to think carefully about this when making any decisions. If you need any help understanding what this could mean for you and your family, we recommend you get help from an Independent Financial Adviser.

Exactly that, if you are in a DC scheme, from April 2015 you can take all of your pension pot as cash when you retire. The first 25% of your pension pot is payable tax free, but the remainder will be taxed as income when you receive it.

You can use your savings in a DC scheme to:

  • buy a pension payable for the rest of your life (known as buying an “annuity”),
  • take regular amounts or take it out as and when you need it. This is known as “drawdown”. However, many pension schemes don’t currently offer drawdown and may still not do this after 5 April 2015, so you might need to transfer your benefits to another arrangement if you want to do this.

If you have not yet retired, the scheme administrators will normally contact you when you reach your normal or target retirement age to let you know if you could be eligible to take your entire pension as a cash sum under the “small pension” rules. If you are already aged 55 or over and would like to know more about this, please contact the administrator of your pension scheme.

If you have already retired and your pension is being paid from a DB scheme, you might be able to give up your pension for a cash sum if it is small enough (possibly as much as £1,500 per annum of pension but generally less than a few hundred pounds each year). Again, if you think you may be eligible for this then please contact the administrator of your pension scheme.

If you had savings in a DC scheme and have already used these to buy a pension from an insurance company then you are unlikely to be able to use the new rules.

If you have pension savings worth no more than £10,000 and you are aged 60 or over, you might be able to take all of that pot as cash.

Other than this you have four options after 5 April 2015:

    • You can buy a pension for life.
    • You can take the cash out over time – leaving the rest invested in your pot (known as “drawdown").
    • You can leave your pot invested and decide what to do with it at a later date.
    • You can transfer your DC savings to another pension scheme.

Drawdown is not available in DB schemes. Even in DC schemes it is not very common for drawdown to be directly available through the scheme itself, so you may need to transfer your savings to another pension arrangement that allows it.

If you buy an annuity then the provider who you buy it from will pay you a pension for the rest of your life. You might also decide to add in pension increases each year or a pension for your spouse/partner on your death. The most important feature of this is that it will be payable for as long as you (and your spouse/partner if you choose this type of pension) are alive.

If you choose to use drawdown, then you will decide how much money to take out of your pension pot each year. Drawdown gives you much more flexibility to take your pension savings as and when you need them, but it does leave you open to the risk of running out of money. You are responsible for deciding how much of your pot to take at any time. Once your pension pot has run out, you will not be able to take any more money from it, so you will need income from other sources. If you die before you have taken all of your pension pot, the drawdown can normally be continued by a dependant or other beneficiary (although a tax charge may be applied in certain circumstances).

The combination of some guaranteed income from an annuity (or a DB scheme) plus some drawdown flexibility, might be attractive to some people. However, everyone’s situation is different and you should take independent financial advice to decide what is best for you.

Yes, the rules on tax-free cash are not changing. This means that you are generally able to take 25% of the value of your pension savings in each scheme in which you have benefits as tax-free cash when you retire, but have to pay income tax on the rest when you withdraw it. The tax free amount available is subject to an overall maximum limit in place of 25% of the Lifetime Allowance. See the answer to Do the changes impact on the maximum amount of pension savings I can build up each year? below, for further details.

No, the maximum total pension savings you can build up over your working life without paying a tax penalty, known as the Lifetime Allowance, is currently £1.25 million (unless you are eligible for a higher amount and have elected for one of the alternative forms of pension protection). The maximum value of pension savings you can receive tax relief on each year, known as the Annual Allowance, is £40,000. Both of these amounts are correct for the 2015/16 tax year (6 April 2015 to 5 April 2016) but may change in future.

However, for individuals who have chosen to withdraw their pension savings in one go or over time (using a “drawdown” facility) but wish to continue building up pension savings, there will be a limit of £10,000 on the amount of DC pension savings you can receive tax relief on each year. The limit will not apply if you have only taken pension savings under the small sums rules.

All DC savers will be offered free and impartial guidance when they retire after 5 April 2015. This guidance will be provided by organisations such as The Pensions Advisory Service or the Citizens’ Advice Bureau. This is intended to help people understand their choices, which will include a far wider range of possible alternative options from 6 April 2015, and to make sure you know where to turn to for further advice and information.

It is important to understand that this guidance is not intended as a substitute for professional independent financial advice, which many people managing their own pension savings through their retirement will need.

If you are retiring before 6 April 2015 and want some help with understanding your pension options then we suggest you speak to a financial adviser. Although they will usually charge a fee for personalised advice, it is very important that you make the right decisions about your income in retirement and we recommend you get advice to help with this. You can find an Adviser in your local area by going to www.unbiased.co.uk or visit www.moneyadviceservice.org.uk or www.citizensadvice.org.uk for further guidance.

You will need to ask the administrator of your scheme, but it is unlikely you will be able to change any pensions currently being paid to you, unless you would now qualify for one of the small pot pensions (pension savings in one scheme worth no more than £10,000 or pension savings across all schemes - including any tax free cash you may have taken - worth no more than £30,000).

You can’t usually get access to your pension savings until you reach age 55. You should be very wary of people offering you ways to “unlock” your pension savings earlier than age 55 as this is usually heavily penalised and you could lose a lot of money. The Government has stated that the minimum age at which pension savings can be taken will increase to age 57 in 2028. The Government’s intention is to have a Minimum Pension Age which is 10 years below State Pension Age. As such, the Minimum Pension Age is likely to increase again in future.

If you have pension savings worth no more than £10,000 in a defined benefit scheme and you are aged 60 or over (or aged 55 or over from 6 April 2015), you can usually take all of those savings as cash.

If your total pension savings across all pension schemes (excluding State pensions) are worth no more than £30,000 and you are aged 60 or over (or aged 55 or over from 6 April 2015), then you can usually take all of your pension savings as cash, even if you have savings worth more than £10,000 in one scheme.

If you don’t qualify for either of the two tests above and you are aged 55 or over, you can usually take up to 25% of the value of your pension savings in any defined benefit pension scheme as a tax-free cash sum. The rest of your pension savings in the defined benefit scheme will be paid as a pension.

The Government will consider whether defined benefit scheme members should be offered the same flexibility as defined contribution scheme members.

Most pension scheme members are able to transfer their pension savings from a DB scheme to a personal pension arrangement. From 6 April 2015, it will be compulsory to take independent financial advice before transferring your savings, if they are worth at least £30,000.

In general, the intention is for the same flexibility to apply to DC Additional Voluntary Contributions (AVCs) as for all other DC savings. However, different schemes will have different rules about taking AVCs, so you should speak to the administrator or trustees of your scheme to find out your options.

Words to know

Pensions can be a complicated subject with lots of words you may not be familiar with, so we have included a few definitions here to help you.

Any contributions you choose to make above the standard level of contributions within your pension scheme.

An insurance contract that you can enter into at retirement to buy a pension for life (regular guaranteed income) with your Defined Contribution pension savings.

A type of income drawdown facility whereby you can only withdraw money up to a set limit each year; this will no longer be available for those who start to take benefits from 6 April 2015

A type of pension scheme where you pay a fixed amount each year but the amount you receive at retirement is worked out as a proportion of your earnings (depending on the number of years you have been in the scheme).

A type of pension scheme where contributions are paid into your pension pot and the amount your pot is worth at retirement depends on the level of contributions and how your chosen investments have performed.

A type of Defined Benefit scheme.

A type of income drawdown facility whereby you can withdraw as much money as you choose each year; before 6 April 2015 this is only available to members who meet certain criteria.

A facility that you can enter into at retirement which allows you to keep your pension pot invested as you choose, but you can still have access to it and withdraw money from it over time.

The earliest age from which you can start to take your pension benefits (unless you are retiring due to ill health).

See Defined Contribution scheme.

A type of DC pension scheme which some companies offer, although you can also start one yourself. They have low minimum contributions and must meet certain standards set by the Government.

The extra tax that you may be liable to pay if you have paid more than the prescribed limits into your pension pot over the year for a Defined Contribution scheme (or if the value of your pension has increased by more than the prescribed limits, for a Defined Benefit scheme).

Where to go for Further Information

If you have any specific questions in relation to your pension benefits, please contact the scheme administrator:

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If you have any questions about your pension scheme more generally, please contact the scheme trustees:

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If you need advice based on your personal circumstances, you should speak to an Independent Financial Adviser. A list of local advisers can be found on www.unbiased.co.uk

If you would like to read more detailed information about the Budget changes, go to https://www.gov.uk/government/topical-events/budget-2014 for the most up-to-date Government publications on the subject.

For more general information on pension benefits, you can visit www.moneyadviceservice.org.uk

Important note

This site does not constitute legal or financial advice. It is based on Mercer’s current understanding of the proposed changes and further developments are expected over the short term. You should seek financial advice before making any changes to your pension savings.

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