Making the right decision

How to make a decision that's right for you

Deciding when to retire and how to take your pension pot, also known as your Personal Retirement Account (PRA), can seem overwhelming. It may help to break things down using the steps below.

Think about what your costs will be when you retire
Consider how you will pay for your costs when you stop work
See if you're on track and understand the options available
Look at what you can do if the numbers don’t add up
Get advice before taking action

Read on for more details.

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1. Think about what your costs will be when you retire

First, think about how much you might need to spend on things like bills, hobbies, holidays and medical expenses for instance, in order to have the retirement you want.

You can use the Retirement Budgeting Calculator to get a personalised forecast.

2. Consider how you will pay for your costs when you stop work

You may have several sources of income when you retire.

Find out what each of them are likely to be worth and add them together to see how much income you might have in total.

Some of your money may come from:

your Railways Pension Scheme pension – check your annual benefit statement or log in to your myRPS account to use the DC Retirement Modeller in the Planning for the Future area of your account. It will show the current value of your pot and what it could be worth when you take it.
your State Pension – the amount you receive is set and paid by the Government. You can request an estimate of your State Pension on the government website. You can also read more on the State Pension page.
other pensions – you may have a private pension or pensions linked to previous employment. You’ll need to speak to each of the providers individually for estimates of the values of those pensions . If you’ve lost their contact details, the Pensions Tracing Service may be able to help. It’s a free, Government-backed service available online and over the phone on 0800 731 0193. Other companies offer a similar service but many charge a fee. Visit the Pensions Tracing Service online now.
savings and investments – if you have savings outside your pension, get those statements from your bank or other provider.

Bear in mind the amount of income you might need could be affected by things, such as:

life expectancy
changes in the law, including tax allowances
rates of inflation

Retirement Budgeting Calculator

Use the Retirement Budgeting Calculator to work out how much you might need when you stop work.

Try the calculator!

3. See if you're on track and understand the options available to you

How much you need in retirement

Check if you’re on track to have enough money to pay for the lifestyle you want when you retire by comparing your income target from the Retirement Budgeting Calculator with the amount you expect to have in your IWDC pot and any other income sources, such as those mentioned above.

These figures may change depending on how and when you decide to take your pension pot, so it’s important you understand the options available to you and what impact they might have on how much you get.

Options for taking your pension pot

As a member of the IWDC Section, you have the following options for taking your pension pot:

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 in your PRA as a cash lump sum. This is known as total encashment

It's important that you understand the impact of each of these options before making a decision.

Other options may be available 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.

The DC Retirement Modeller is designed to show you what your pension pot might be worth when you retire and the different ways you can choose to use that money. It’s quick and easy to use and you can access it by logging in to your myRPS account and looking in the Planning for the future area of your account.

Retirement Modeller

Use the Modeller in your myRPS account to get an idea of what your pension pot might be worth and what you can do with the money when it's time to take it.

Try the Modeller!

Remember, the Retirement Living Standards and Retirement Budgeting Calculator figures are based on the income you may need after tax, whereas the Retirement Modeller, available in your myRPS account, gives you an estimate of what you might receive from your IWDC pot before tax.

Video: use your DC Retirement Modeller

Watch this short video to understand how to use the DC Retirement Modeller.

4. Look at what you can do if the numbers don’t add up

If you’re worried that the income you will have when you stop work won’t cover your expected lifestyle costs when you retire, there are a number of things you can do now to boost your income after you stop work. This includes:

Topping up your pension savings – think about paying more into your pension if you can. This is known as making Additional Voluntary Contributions (AVCs). These contributions are tax-free up to certain tax limits. You can make regular payments or make a one-off payment. If you no longer pay into the IWDC Section then this won't be an option for you. Visit the saving more page for information about AVCs.
Taking your pension pot later than you intended. This would give you more time to build up the money in your pension pot. This is an important decision and we recommend you consider speaking to an Independent Financial Adviser first. You can find out more about when you can take your pot on the when to retire page.
Clearing your debts – if possible, pay off any debts you owe before you retire. You can use the MoneyFit tool in your myRPS account for ideas on how to improve the way you manage money. This includes a personal action plan with helpful tips and advice to possibly free up more money to save into your pension pot for the future.

5. Get advice before taking action

You may want to get independent advice before making any changes or taking your pension pot. Visit the guidance and advice page for details on who to speak to for support.

If you’re ready to start taking your IWDC pot you can find out what to do next on the applying to take my IWDC pot page.

What to read next...

How much I'll need for retirement

Find out how to check if your pension savings are on track to give you the lifestyle you want when you retire.

How I can take my IWDC pot

Find out more about the different ways you can take your IWDC pot.

Guidance and advice

Where to go for further support on your options.

I'm here to help.

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Each of Railpen Limited (registered in England and Wales No. 2315380) and Railway Pension Investments Limited (RPIL) (Registered in England and Wales No. 1491097) is a wholly owned subsidiary of Railways Pension Trustee Company Limited (Registered in England and Wales No. 2934539). Registered office for each company: 100 Liverpool Street, London EC2M 2AT. RPIL is authorised and regulated by the Financial Conduct Authority for some of its activities. The administration of occupational pension schemes is not a regulated activity. Full details about the extent of RPIL's authorisation and regulation by the Financial Conduct Authority are available from us on request.