Your options
at retirement
It’s time to choose what you want to do with your pension savings.
This brochure explains:
• The full range of options that the law allows from April 2015
• The options B&CE can offer you
• How you can choose other options
• Where to find help to make a decision
45730 B&CE] Your options at Retirement brochure one column AW.indd 1
For people,
not profit
23/03/2015 11:44
Planning your retirement
Get ready to take your pension
As you get closer to retirement, you need to decide what you want to do with the money in your B&CE pension pot. Your savings don’t
automatically turn into a regular income or get sent to you as a lump sum. You need to tell us how you want to take your money.
This guide walks you through your options and what you need to know.
There’s no time limit to making a decision. If you stop work completely, or go part-time, you may want to replace your salary as you
retire, but you won’t be forced to make a decision now.
You don’t have to take your money now
If you decide not to take your pension pot now, just give us a call and we’ll move your retirement age back. This means your money will
stay in your pension pot and remain invested until you want it. If you have pension pots with The People’s Pension or EasyBuild, you can
change your selected retirement age yourself using your online account at www.bandce.co.uk/onlineaccount
It’s up to you
New laws allow you to take your pension in a range of ways, but not all these options are available from us. However, you can still
choose them if you transfer your pension pot to another provider who offers the option you want. Providers are not obliged to offer all
options available.
• Defer taking your pension pot
• Cash it all in
• Take smaller lump sums as you need them
• Take a guaranteed income
• Take a flexible income
Help to choose
To help you choose the option that’s right for you, the government have set up a service, called Pension Wise, that offers free, impartial
guidance. More details can be found on page 7.
Details of all the options allowed by law can be found on page 4.
Find out what we offer on page 8.
Page 2 Your Options at Retirement
45730 B&CE] Your options at Retirement brochure one column AW.indd 2
23/03/2015 11:44
Countdown to retirement
Getting organised to take your money may take a while so give yourself plenty of time to get your paperwork in order. Here’s our
checklist of things you’ll need.
Retirement paperwork checklist
Pension statements for all your pensions
Much of the information you’ll need to complete your pension claim form can be found
on your pension statements. When you want to take your B&CE pension pot we will also
ask you about any other pension savings you hold. So if you have other pension savings,
you’ll need these statements to hand as well.
Pension valuation
Confirm the date you want to take your
money
Check what type of pensions you have
Read all the information about your
options
Book a Pension Wise guidance session
It’s useful to have up to date valuations of all your pension savings and a State Pension
forecast so you can see exactly how much money you will have when you retire. You can
get valuations from your pension provider. You can get a State Pension forecast online at
www.gov.uk/state-pension-statement.
Although you can usually get access to your pension savings from age 55, most pensions
have a selected retirement age. This is often the same as your State Pension age and it’s
used to work out your pension valuation. If you take your money early, this can affect your
pension valuation.
Not all pensions are the same. Some pensions have special rules that may affect when
you can take your money or charges if you cash in early. Others may provide certain
guarantees that you may want to keep.
Make sure you’ve read and understood the information sent by your pension providers.
If you have any questions, give them a call. You can contact us about your B&CE pension
savings on 0300 2000 555.
When you have all your pension details together, you’re ready to book a free Pension
Wise guidance session. Visit www.pensionwise.gov.uk for more details.
Pension transfers
If you have several pension arrangements with different providers, it may be easier to keep track of your income during retirement if all
your savings are in one place. With some pension arrangements it’s possible to transfer them to the same provider.
If you want to transfer your other pensions to B&CE, call us on 0300 2000 555. Transfers can take some time to achieve, so allow time
for this to take place.
Beware of scams
If you’re offered early access to your pension or enticed to transfer to a scheme that seems too good to be true – it probably is. You can
find out more by reading the enclosed leaflet or visiting www.pension-scams.com Your Options at Retirement Page 3
45730 B&CE] Your options at Retirement brochure one column AW.indd 3
23/03/2015 11:44
An overview of the options allowed by law
B&CE do not offer all the options outlined here, so your pension pot may need to be transferred to another provider to take advantage
of some of the options.
HM Revenue & Customs (HMRC) also impose restrictions on the options outlined, so not all of them may be available to you, even if you
transfer to another provider. You can check if any restrictions apply when you decide to transfer.
What does it mean?
What about tax?
Leave your pension where it is
Take a Small Pot Lump Sum
You don’t have to decide now what you
want to do with your pension pot. You can
leave it invested until you’ve chosen what’s
best for you.
From age 55, (or earlier if you are retiring due to
incapacity), and if your fund is worth £10,000 or
less you can cash in your whole pension pot and
use it however you want.
Your pension pot could grow further,
which means there could be more money
available when you decide to take it.
Though the value of your pot could go down
as well as up.
If you cash in your pension pot completely, you
may not be able to carry on contributing to it in
the future. Check with your pension provider.
Your pension pot will continue to grow taxfree until you need it.
You’ll receive 25% tax-free and the remaining
75% will be taxed as income at the highest rate
you pay.
Depending on your pension arrangements,
you may continue to benefit from pension
tax relief on your contributions up to the
Annual Allowance.
Where can I find out more
Your Pension – it’s time to choose booklet
provided by the Money Advice Service
Your Pension – it’s time to choose booklet
provided by the Money Advice Service
www.bandce.co.uk/your-retirement
www.bandce.co.uk/your-retirement
This information does not constitute advice or guidance and must not be taken as an authoritative statement of the law or the basis for
retirement planning.
Providers are not obliged to offer all options available and different providers offer different options as to what you can do with your
pension pot, including the option to buy an annuity. These different options have different features, different rates of payment, different
charges and different tax implications.
Charges can reduce the money received. Check whether a provider makes any charges or other reductions to a pension pot when
deciding what to do with your pension savings. Charges will continue to be taken from any money left in your pension pot, so it’s
important to consider the impact of these charges.
Page 4 Your Options at Retirement
45730 B&CE] Your options at Retirement brochure one column AW.indd 4
23/03/2015 11:44
Take one large or small cash
sums in stages
Take a guaranteed income
– an annuity
Take a flexible income –
flexi access drawdown
From age 55, (or earlier if you are retiring
due to incapacity), you can take out cash
sums from your pension pot as and when
you need them. Such cash sums are
known as Uncrystallised Funds Pension
Lump Sums (UFPLS).
You can create a regular income
from your pension pot by buying an
annuity.
You can take a variable income from your
pension pot and leave the rest of your
pot invested. This is called ‘Flexi Access
Drawdown’.
If you do not take all your pension pot,
the rest will remain invested, so could
continue to grow. Though the value of
your pot could go down as well as up.
You can take further cash sums from it
when you want to.
Taking cash sums from your pension pot
will reduce how much you have available
to provide you with a regular income if
you want one in the future.
You’ll receive 25% of each cash sum taxfree and the remaining 75% will be taxed
as income at the highest rate you pay.
You might want to buy an annuity that
pays you a guaranteed income for
life. You can also buy an annuity for a
fixed number of years.
These can also be set up to provide
an income for a dependant or other
nominated beneficiary after you die.
Once you have bought an annuity,
you can’t change your mind, so think
carefully before you commit.
As your pension pot remains invested
the amount of income available to you
may rise and fall depending on how your
investments perform.
Different providers offer different products,
so it is worth shopping around and getting
advice.
Different providers offer different
products, so it is worth shopping
around and getting advice.
You can take up to 25%* of your
pension pot as a tax-free lump sum
(known as a Pension Commencement
Lump Sum (PCLS)) and use the
balance to buy an annuity.
The income you receive is taxable at
the highest rate you pay.
You can take 25% of your pension pot as a
tax-free cash sum and then pay income tax
on any income you receive at the highest
rate you pay. Or you can take 25% of each
income payment as a tax-free cash sum
with the income from the remainder taxed
at the highest rate you pay.
*You may be entitled to a greater
tax-free PCLS if you registered such a
right with HM Revenue & Customs by
5 April 2009.
Your Pension – it’s time to choose booklet
provided by the Money Advice Service
www.bandce.co.uk/your-retirement
Your Pension – it’s time to choose
booklet provided by the Money
Advice Service
Your Pension – it’s time to choose booklet
provided by the Money Advice Service
www.bandce.co.uk/your-retirement
www.bandce.co.uk/your-retirement
Your Options at Retirement Page 5
45730 B&CE] Your options at Retirement brochure one column AW.indd 5
23/03/2015 11:44
Your pension options and tax
Don’t skip this bit – it’s important
The basics
You receive tax relief on your pension savings up to
the Annual Allowance, but you will pay tax on your
pension income.
If you take your pension pot as a small pot lump sum payment or as an Uncrystallised Funds Pension Lump Sum (UFPLS), 25% of the
cash sum is paid tax-free but the remainder is taxed at your highest income tax rate.
You can choose to cash-in your pension pot fully as one UFPLS payment or a small pot lump sum payment or as part of a series of
partial cash-in UFPLS payments. Remember, only 25% of each cash sum is paid tax-free.
Here’s how it works:
If you opt for an UFPLS and you pay 20% income tax
From a cash sum of
£30,000 You get
£7,500
£22,500
tax-free will be taxed at 20%
You pay tax of
£4,500
Total cash sum you receive
after tax
£25,500 Remember to allow for tax when you’re cashing
in a pension pot, at your highest income tax rate.
If you take a Pension Commencement Lump Sum (PCLS) then turn the balance of your pension pot into an income and you pay
20% income tax
From a pension pot of
£20,000
You may receive
£5,000
£15,000
tax-free lump sum*
remains to buy your
annuity income
You receive say
£600**
a year annuity income
which is taxed at 20%
Income you receive
after tax
£480
a year
*You may be entitled to a greater tax-free PCLS if you registered such a right with HM Revenue & Customs by 5 April 2009.
**Example for illustration purposes only, and not a guarantee of what you might receive. The Money Advice Service provides an online tool for you to input your own details
and receive an illustration of what amount you may receive as an annuity. Visit www.moneyadviceservice.org.uk/en/tools/annuities.
Page 6 Your Options at Retirement
45730 B&CE] Your options at Retirement brochure one column AW.indd 6
23/03/2015 11:44
You also need to know
Annual Allowance
The Annual Allowance is the amount of money you can save into your pension and receive tax relief on. At the moment, the standard
Annual Allowance is the lower of £40,000 (2015-16 tax year) and your annual salary. If you put in more than this amount, the
government won’t add any tax relief to your payments, and you will incur an Annual Allowance charge.
However, if you take cash sums from your pension pot as Uncrystallised Funds Pension Lump Sums (UFPLS) or you opt for Flexi Access
Drawdown, you will be subject to a reduced Money Purchase Annual Allowance of £10,000 (2015 -16 tax year) for future savings made into
a defined contribution pension, like The People’s Pension and EasyBuild. Payments over this amount will incur an Annual Allowance charge.
Lifetime Allowance
The Lifetime Allowance is the total amount of all your pension savings that can be built up over your entire working life without triggering
an extra tax charge. For the 2015-16 tax year it is £1.25 million. If you have not registered for protection with HM Revenue & Customs,
a Lifetime Allowance charge will be levied when your pension savings go over this limit. If you think you may breach this limit, we
recommend that you take financial advice.
How your pension pot is taxed if you die
If you die before you reach 75 and some, or all, of your pension remains invested, your beneficiaries can receive this money tax-free (as
a cash sum or as income) provided the overall value of your pension savings is less than the Lifetime Allowance.
If you die after you reach 75, your beneficiaries will pay tax on any lump sum payments made. Until April 2016 the tax rate is 45%. Any
amounts they take out after April 2016 as a lump sum or as income will be taxed at their highest income tax rate.
Help to choose
Remember that the pension pots you have built up over your working life are designed to provide you with an income during your
retirement. It may be tempting to cash them in and use them for other things, but you may be left with only with the State Pension to live
on and any other savings you may have.
Choosing what to do with your pension savings is an important and irreversible financial decision. Pension Wise is a new service backed
by government that can help you choose what to do with your pension funds.
If you haven’t already received any guidance or advice from a financial adviser who specialises in retirement planning, we strongly
recommend that you contact Pension Wise for free, impartial guidance about your options.
Pension Wise offers you:
• Tailored guidance (online, over the telephone or face to face) to explain what options you
have and help you think about how to make the best use of your pension savings;
• Information about the tax implication of different options and other important things you should think about; and
• Tips on getting the best deal, including how to shop around.
Choosing what to do with your pension savings is an important financial decision; you can often get more for your money by shopping
around.
To find out more, visit www.pensionwise.gov.uk
Financial Advice
Pension Wise won’t be able to offer you actual advice about what’s best for your circumstances. To get financial advice, you need to
speak to a professional adviser who may charge for their time.
You can find an independent financial adviser at www.unbiased.co.uk.
Your Options at Retirement Page 7
45730 B&CE] Your options at Retirement brochure one column AW.indd 7
23/03/2015 11:44
Your options at retirement with B&CE
The options available depend on the type of pension arrangement you hold with us.
In some circumstances, HM Revenue & Customs impose restrictions on the use of your pension pot and it may not be possible for us to
arrange a particular option for you. We will let you know if your choice is affected.
Your covering letter will list all the pension pot(s) you have with B&CE.
What type of pension arrangement do you hold with us?
What can I do with my pension pot?
The People’s Pension
EasyBuild Stakeholder
Pension
Stay invested and defer
taking your pension
Cash in fully as a small pot
lump sum payment
Transfer your pension to
another provider
Stay invested in your existing
choice of funds or switch to
different funds.
Each pension pot must be
£10,000 or less.
If you wish to cash-in fully as
an UFPLS, take UFPLS partial
payments, a guaranteed
income or a flexible income,
we can help you transfer
your pension pot to your
chosen provider.
EasyBuild - S2P
The TUTMAN B&CE
Contracted out Pension
Scheme
Stay invested.
Take 25% tax-free.
Remainder is taxed as
income at your highest tax
rate.
If you are transferring to
arrange a guaranteed
income (annuity), you can
take a tax-free Pension
Commencement Lump Sum
(PCLS) from your pension
pot before transferring the
balance to your chosen
provider.
If you decide to use your
PCLS to pay a further
contribution into a registered
pension scheme there may
be tax consequences. Please
contact us if you think this
may affect you.
We plan to increase our range of options, so you may be able to take Uncrystallised Funds Pension Lump Sums with us
from July 2015.
Page 8 Your Options at Retirement
45730 B&CE] Your options at Retirement brochure one column AW.indd 8
23/03/2015 11:44
Lump Sum Retirement Benefit (LSRB), LSRB Additional Voluntary Contributions (AVCs) and LSRB
Employer’s Additional Voluntary Contributions (EAVCs)
These pension funds are normally taken together at age 65 (whether or not you are still employed). You must be over 60 to take them
earlier, except where you are either retiring on medical grounds after age 50, or you are totally and permanently incapable of work of
any kind (regardless of age). Satisfactory medical evidence will be required to support your claim if you are retiring early on either of
these grounds.
What can I do with my pension pot?
Take a one-off tax-free lump sum
Transfer your pension pot to turn it into
a guaranteed income (annuity) with
your chosen provider
Lump Sum Retirement Benefit (LSRB)
You will receive a one-off tax-free lump
sum at retirement.
Not available
LSRB Employer’s Additional Voluntary
Contributions (EAVCs)
You will receive a one-off tax-free lump
sum at retirement.
LSRB Additional Voluntary Contributions
(AVCs) –first started payment pre 8th
April 1987
This is subject to a limit imposed by HM
Revenue & Customs, and any EAVCs /
AVCs over this limit can be used to buy
an annuity.
The balance of your EAVCs / AVCs over
the limit imposed by HM Revenue &
Customs can be used to buy an annuity.
LSRB Additional Voluntary Contributions
(AVCs) -first started payment post 8th
April 1987
Due to HM Revenue & Customs
restrictions, your AVCs cannot be paid to
you as a one-off tax-free lump sum.
Your AVCs can be used to buy an
annuity. You can choose to take up
to 25%* of your AVC pot as a tax-free
Pension Commencement Lump Sum
(PCLS) before transferring the balance to
your chosen provider.
*You may be entitled to a greater
tax-free PCLS if you registered such a
right with HM Revenue & Customs by
5 April 2009.
You can also transfer the total of your LSRB Additional Voluntary Contributions (AVCs) and LSRB Employer’s Additional Voluntary
Contributions (EAVCs) to another provider to take advantage of some of the other options available from 6 April 2015 not offered by
B&CE. You should call us on 0300 2000 555 if you want to transfer.
Your Options at Retirement Page 9
45730 B&CE] Your options at Retirement brochure one column AW.indd 9
23/03/2015 11:44
How to take your pension savings with B&CE
How to take your pension savings with B&CE
Your covering letter will tell you which pension pots you hold with us and how much they are currently worth. If you have more than one pension
pot with us, each pension pot claimed will be considered separately and not all options may be available to you for all pots you hold with us.
To claim you will need to complete and return a claim form. If you hold a pension pot with The People’s Pension or
EasyBuild, you can complete it online at www.bandce.co.uk/onlineaccount by logging in to your account.
Warning!
Your pension pots are meant to provide you with an income during your retirement. It may be tempting to cash them in and use them
for other things, but you may be left only with the State Pension to live on and any other savings you may have. If you haven’t already
received any guidance or advice from a financial adviser who specialises in retirement planning, we strongly recommend that you
contact Pension Wise for free, impartial guidance about your options.
Taking lump sums
Small pot lump sum
If you have £10,000 or less in one of our pension arrangements (other than Lump Sum Retirement Benefit (LSRB), LSRB AVCs and LSRB
EAVCs) you may be able to take this as a single cash small pot lump sum. Taking a small pot lump sum payment will not affect your
Annual Allowance for future savings into a defined contribution pension.
You can take up to three personal pension pots as small pot lump sum payments in your lifetime as long as you are over 55. EasyBuild
and EasyBuild S2P count as separate personal pension pots for this purpose. The number of occupational pension scheme pots – such
as The People’s Pension - you can take is unrestricted.
If you are retiring early due to incapacity, you can claim small pot lump sum payments before you reach 55. More details can be found
below.
It may not be possible for us to pay you a small pot lump sum in certain circumstances due to restrictions imposed by HM Revenue
& Customs (HMRC). The rules imposed by HMRC for payment are complex and we will let you know if we cannot pay you a small pot
lump sum for any reason.
If you have other income added to the amount you cash in, it could push you into a higher tax band and you could end up paying more
tax. It could also affect any means tested benefits you receive.
Retiring early due to incapacity
You can usually only take a small pot lump sum payment if you are aged 55 or over. However, sometimes it may be possible to receive
a lump sum earlier if you are retiring due to incapacity.
Incapacity is defined by HM Revenue & Customs and means that you are or will continue to be medically incapable, (either physically or
mentally) as a result of injury, sickness, disease or disability of continuing in your current occupation and as a result of your incapacity
you do stop working in that occupation. However, your arrangement may operate a stricter definition of incapacity. Medical evidence
of your incapacity will be required before we can pay out a lump sum. If you indicate in your claim form or online that you wish to claim
incapacity retirement, we will contact you for further information to help us assess your claim.
Taking a lump sum when seriously ill
If you are under the age of 75, suffering from serious ill health, and are expected to live for less than one year, you can usually choose
to take your pension pot as a tax-free lump sum. If you take your lump sum on or after your 75th birthday it will be taxed at 45%.
HM Revenue & Customs impose conditions on the payment of these lump sums and medical evidence of your illness will be required
before we can pay out. If you indicate in your claim form or online that you wish to claim a serious ill health lump sum, we will contact
you for further information to help us assess your claim.
Page 10 Your Options at Retirement
45730 B&CE] Your options at Retirement brochure one column AW.indd 10
23/03/2015 11:44
Other options
Annuity
Buying an annuity converts your pension pot into a guaranteed regular taxable income, normally for life. The income is taxable at your
highest rate of tax. There are many different types of annuity and you can shop around to find one that’s suitable for you, this is known
as the Open Market Option.
The amount of annuity income you receive is based on several factors:
• The size of your pension pot used to buy your annuity
• Annuity rates and market conditions when you buy your annuity
• Your age
• Your health and lifestyle
• The type of annuity you want, for example if the annuity is just for you or your partner as well, or if you want an inflation-proofed income
Take your time and shop around for the best annuity deal. Once you’ve bought your annuity you can’t change your mind,
so think carefully before you commit.
Shopping around
You can buy your annuity from any company that offers them. Annuity rates vary from one company to another, so you will find that
different companies offer you different incomes. You can ask for annuity illustrations from any number of annuity providers.
Bear in mind:
• When you’re comparing annuity providers, make sure you’re comparing like with like. Use the same information when requesting
illustrations.
• If you have a small pension pot, you may not be able to find an annuity provider to offer you an annuity. Sometimes you can merge
your pension pots to create an annuity.
• You can take up to 25%* of your pension pot as a one-off tax-free lump sum known as a Pension Commencement Lump Sum (PCLS)
before you buy your annuity.
• Make sure you tell the annuity provider about any health or lifestyle issues. You can often get a better income if you smoke or are in
poor health. This is called an ‘enhanced annuity’. So be sure to opt in to health and lifestyle questions and answer them honestly.
• You can provide an income for your partner or another dependant when you die.
*You may be able to receive a greater tax-free lump sum if you were entitled to a lump sum of more than 25% of your pension pot at 5 April 2006 and registered this right
with HM Revenue & Customs by 5 April 2009.
The Money Advice Service provides an online tool to help you understand and compare annuities. You can input your own details and
receive an illustration of what amount you might receive as an annuity. Visit www.moneyadviceservice.org.uk/en/tools/annuities
Contact Pension Wise for free impartial guidance before you decide whether or not to buy an annuity
www.pensionwise.gov.uk
Your Options at Retirement Page 11
45730 B&CE] Your options at Retirement brochure one column AW.indd 11
23/03/2015 11:44
Uncrystallised Funds Pension Lump Sum (UFPLS)
These are a new kind of cash lump sum available from some providers following regulations introduced in April 2015.
B&CE do not currently offer these types of payments, but we can help you transfer your pension pot to a provider who does.
If you transfer your pension pot to another provider and take a payment as an UFPLS, the Annual Allowance for any future savings into a
defined contribution pension will be reduced to £10,000 (2015 -16 tax year). Payments over this amount will incur an Annual Allowance
charge. This may affect how you build your pension pot back up if you continue saving in to your pension.
You should let us know if you claim a UFPLS from another provider.
An UFPLS can only be paid if you have sufficient Lifetime Allowance available. The exact rules differ depending on whether you are aged
under or over age 75. Your new provider will be able to give you further details.
Flexible income drawdown
You can take a variable income from your pension pot and leave the rest of your pot invested. This is called ‘Flexi Access Drawdown’. We
do not offer this type of product, but we can help you transfer your pension pot to a provider that does.
With Flexi Access Drawdown your pension pot remains invested so the amount of income available to you may rise or fall depending on
how your investments perform. You can decide where to invest and how often you wish to take your money.
You can take any income you like, within the limits of the plan, and vary when you receive the income, which can help with tax planning.
You pay tax on the income you receive at your highest tax rate.
You can take up to 25% of your pension pot as a tax-free lump sum either when you first set up your drawdown plan or in stages
alongside the flexible income.
If you take out a Flexi Access Drawdown product your Annual Allowance is limited to £10,000 (2015 -16 tax year) for savings made into
a defined contribution pension. Payments over this amount will incur an Annual Allowance charge. This may affect how you build your
pension pot back up if you continue saving in to your pension pot.
Taking lump sums and income directly from your pension pot will reduce the amount you have available in the future. You should keep
your investments under close review so you can make sure they meet your needs for the future.
Contact Pension Wise for free impartial guidance before you decide whether to transfer your pension savings
www.pensionwise.gov.uk
Defer taking your pension pot
If you don’t need your pension pot straightaway you can leave it invested. This gives your money more time to grow and a better
opportunity to provide more income when you do want to take your money.
You can choose to keep your money in the same funds, or may be able to switch to different funds.
If you want to defer taking your pension call us on 0300 2000 555. If you have pension pots with The People’s Pension or EasyBuild, you
can change your selected retirement age yourself online at www.bandce.co.uk/onlineaccount You can also go online to switch your
money to different investment funds.
Page 12 Your Options at Retirement
45730 B&CE] Your options at Retirement brochure one column AW.indd 12
23/03/2015 11:44
Useful terms
Annual Allowance
The Annual Allowance is the amount of money you can save in to your pension across all of
the schemes you belong to and receive tax relief on. At the moment, the standard Annual
Allowance is the lower of £40,000 (2015-16 tax year) and your annual salary. If you put in
more than this amount, the government won’t add any tax relief to your payments and you
will incur an Annual Allowance charge. If you take cash sums from a pension pot, known
as Uncrystallised Funds Pension Lump Sums (UFPLS) or you opt for Flexi Access Drawdown,
your Annual Allowance for future defined contribution pension savings is limited to £10,000
(2015-16 tax year). You may see this referred to as the Money Purchase Annual Allowance.
Payments over this amount will incur an Annual Allowance charge. Your pension provider
will tell you if you are affected by the Money Purchase Annual Allowance. You will be
responsible for notifying the pension providers of any other schemes that you are a member
of that you have flexibly accessed your pension pot and the date from which you did so
within 31 days of the day you receive the notification.
If your pension savings exceed the Annual Allowance in any year, you will be issued with
a Pension Savings Statement to help you assess if you have to pay an Annual Allowance
charge. HM Revenue & Customs have also created an Annual Allowance calculator to help
you. www.hmrc.gov.uk/tools/pension-allowance/
Annual Allowance charge
This is a tax charge levied on an individual where pension savings exceed the Annual
Allowance. In some cases, any unused Annual Allowance in the previous three tax years
can be carried forward and can help lessen the effect of an Annual Allowance charge.
If the Annual Allowance charge exceeds £2,000, you may be able to choose for your
pension arrangement to pay it on your behalf, and for your pension pot to be reduced
accordingly.
Annuity
This is a contract taken out with an insurance company, designed to provide an income,
which is usually paid for the rest of your life. Once an annuity has been bought you can’t
change your mind so you need to think carefully before you commit.
Defined contribution
pension
With this type of pension, you and/or your employer contribute to your pension pot, which
is invested to build up a pot of money that you use to provide an income in retirement. Your
income when you retire depends on factors including the amount paid in and the fund’s
investment performance. In contrast, defined benefit pensions provide a specific income at
retirement.
Enhanced annuity
If your health or lifestyle is expected to reduce your life expectancy, you could qualify for an
enhanced annuity and receive a better income than someone without health problems.
Illustration
This shows you how much you can expect to receive as an income from an annuity.
Your Options at Retirement Page 13
45730 B&CE] Your options at Retirement brochure one column AW.indd 13
23/03/2015 11:44
Lifetime Allowance
The Lifetime Allowance is the total amount of all your pension savings that can be built up
over your entire working life without triggering an extra tax charge. For the 2015-16 tax-year
it is £1.25 million. If you have not registered for protection with HM Revenue & Customs, a
Lifetime Allowance charge will be levied when your pension savings go over this limit. If you
think you may breach this limit, you should take financial advice.
Pension Commencement
Lump Sum (PCLS)
With certain types of pensions you can take a one-off tax-free lump sum in connection with
an arising entitlement to a pension benefit. You can normally take a tax-free lump sum of
up to 25% of your pension pot. However, if at 5 April 2006 you were entitled to a PCLS of
greater than 25%, you may still be entitled to this higher amount, as long as you registered
this right with HM Revenue & Customs by 5 April 2009.
Pension Savings
Statement
This is a statement that is sent to you by your pension provider if your pension savings
exceed the Annual Allowance in any particular period. You can ask for a statement if you
are not sent one automatically.
Pension Wise
A new free and impartial service, backed by government that offers guidance about what to
do with your pension funds. Contact details are given in ‘More information’ below.
Small pot lump sum
payment
You may be able to take a pension pot of £10,000 or less as a single cash lump sum without
it affecting your Annual Allowance. This is known as a ‘Small pot lump sum payment’.
You can take up to three personal pension pots as small pot lump sum payments in your
lifetime. The number of occupational pension scheme pots you can take is unrestricted.
Uncrystallised Funds
Pension Lump Sum
(UFPLS)
These are a new kind of lump sum payments you may be able to take from your pension
pot from 6 April 2015. When you take one of these payments, your Annual Allowance
for future defined contribution pension savings is reduced to £10,000 (2015 -16 tax year).
Payments over this amount will incur an Annual Allowance charge.
Any right you registered with HM Revenue & Customs before 5 April 2009 to a tax-free
lump sum in excess of 25% of your pension pot will not apply in relation to a full cash-in
as an UFPLS. Taking an UFPLS as a partial cash-in of your pension pot will mean that you
irrevocably lose the protection of the higher tax-free lump sum for which you registered with
HM Revenue & Customs.
To find out more:
Money Advice Servicewww.moneyadviceservice.org.uk
Pension Wisewww.pensionwise.gov.uk
B&CEwww.bandce.co.uk
Page 14 Your Options at Retirement
45730 B&CE] Your options at Retirement brochure one column AW.indd 14
23/03/2015 11:44
Your Options at Retirement Page 15
45730 B&CE] Your options at Retirement brochure one column AW.indd 15
23/03/2015 11:44
For people, not profit
B&CE is a not-for-profit organisation, which operates for the benefit of its
members and their dependants. Established in 1942 and founded in
construction, B&CE’s current offerings include a workplace pension,
employee accident cover, employee life cover and employee healthcare.
Today it manages assets of £2.3 billion, with 2.8 million members and
provides financial benefits to over 1,000,000 active individuals on behalf of
over 14,000 corporate accounts. (Information correct as of 31 January 2015.)
For over 30 years, B&CE has been providing workplace pensions to
employers with transient, low to moderate earning workforces, both large
and small. B&CE has been operating a form of automatic enrolment for over
ten years through its stakeholder product. In November 2011, B&CE
announced details of The People’s Pension, as an additional product to
assist employers in complying with their automatic enrolment duties.
The People’s Pension is a flexible and portable workplace pension scheme
designed for people, not profit and is suitable for any organisation, large or
small, in any sector.
B&CE has won a number of awards, as the provider of The People’s Pension,
including DC Provider of Year at the UK Pensions Awards 2014, Best Master
Trust Provider at the 2014 Pension and Investment Provider Awards (PIPAs),
Auto-Enrolment Provider of the Year at the UK Pensions Awards 2013 and
best ‘DC Master Trust’ at the 2013 PIPAs.
Registered in England and Wales No. 2207140. To help us improve our service, we may record your call.
B&CE Financial Services Limited is authorised and regulated by the Financial Conduct Authority. Ref: 122787.
It is the administrator for the B&CE EasyBuild Stakeholder Pension which is a personal pension scheme.
The company is also a distributor of, and an administrator for, The People’s Pension Scheme and the
Employee Life Cover from B&CE which are occupational pension schemes to which different law and
regulation applies. Further details can be found on our website www.bandce.co.uk/legal
45730 B&CE] Your options at Retirement brochure one column AW.indd 16
1009/0315
B&CE Financial Services Limited
Manor Royal, Crawley, West Sussex, RH10 9QP. Tel 0300 2000 555 Fax 01293 586801.
23/03/2015 11:44