Your retirement options

 

The options you have when you retire, depend on what type of pension you have.

This could be either:

  • A defined benefit (DB) pension – where the amount you will get is based on your salary, how long you’ve worked for your employer and what membership you have in the Scheme. This type of scheme will pay you a pension for life when you retire, so your pension (benefit) is known (defined) upfront.
  • A defined contribution (DC) pension – where you and your employer pay in money that is then placed into investment funds. The amount you will get is based on how much is paid in and the performance of the funds it’s invested in. This means that the amount you pay in (contributions) is known (defined) upfront but your pension (benefit) is not.  In the RPS our DC pension arrangement is the Industry-Wide Defined Contribution (IWDC) section.

If you’re unsure which type of pension you have, please refer to your Member Guide. This is available in the library section once you have logged in to your  myRPS account. Or you can contact us for more details.     

If you have a DB pension

You can usually start taking your defined benefit pension between the ages of 60 and 65. This is known as Normal Retirement Age (NRA).  And it varies depending on the rules of the particular section you’re a member of.

Once you reach your NRA you can choose to:

  • Take part of your benefits as a cash lump sum and the rest as regular pension payments. You decide how you portion this eg

    Graphic showing that you can either take a larger lump sum and less pension OR a smaller lump sum and more pension

  • Take your entire benefits as regular pension payments. This is only possible if the rules of your particular pension section allows and you don’t make any Additional Voluntary Contributions (AVCs) to BRASS
  • Take your entire benefits as a cash lump sum, if the rules of your particular section allow
  • Transfer your entire benefits to an alternative pension provider, if the rules of your particular section allow. 

Generally, for any lump sum you take, the first 25% of the value of your benefits will be tax free and you’ll pay income tax on the rest

Other options may be available, following the introduction of the pension freedoms, which were brought in by the Government in 2015.  In order to access these, however, you would need to transfer your pension from a DB scheme to a DC scheme.  This carries risks, and is likely to require independent financial advice.

You might also have to seek financial advice by law if the value of your DB benefits is more than £30,000 and you are looking to transfer to a Defined Contribution/Personal Pension Arrangement. Please click here for more information.

A range of planning tools are available within your myRPS account to help you consider your options. For DB members this includes a pension planner and retirement budgeting calculator. Login or register here to find out more.

Once you’re ready to apply for your pension, you can find out how to do that here 

If you have a IWDC pension

You can usually start taking your IWDC Defined Contribution pension between the ages of 60 and 65. This is known as Normal Retirement Age (NRA).

If you have invested in a Lifestyle Strategy you can choose a Target Retirement Age (TRA). This is typically from age 55 up to the age of 75. Unless you have a Protected Pension Age of 50.

In line with pension freedoms introduced by the Government in 2015, you may be able access your PRA from age 55, or as early as 50 if you have a Protected Pension Age, even without a TRA.

You can also decide to delay taking your pension right up until your 75th birthday.

The money you have built up in your IWDC pension is known as your Personal Retirement Account (PRA).

You have three main options of what to do with it:

  • get a flexible income, taking it a bit at a time. This is known as drawdown   
  • get a regular, secure income, known as an annuity
  • take all of the money as a cash lump sum.  We call this total encashment

Whichever option you choose you could also take up to 25% of your PRA as a tax-free lump sum, and the rest of your PRA which will be subject to tax. Different rates of income tax apply depending on the type of income and how much it is.

e.g

Graphic showing how you can use your PRA by taking up to 25% as a tax free lump sum and taking the rest as either drawdown, annuity or total encashment

This wide range of options come as a direct result of pension freedoms, introduced by the Government in 2015 to give people more scope with their pensions. 

Other options may be available in line with pension freedoms. And you may be able to combine these options. However this is not offered directly by the RPS and would need to be facilitated by another provider.

A range of planning tools are available within your myRPS account to help you consider your options. For DC members this includes a retirement modeller and a retirement budgeting calculator. Login or register here to find out more.

Once you’re ready to apply for your pension, you can find out how to do that here  

Making a decision

Deciding how, and when, to claim your pension can depend on a wide range of factors.  Please click the relevant link at the top of this page to find out more.