Blog
A deep-dive into a variety of pension topics to help you understand and learn more about your pension and the Scheme.
15/9/2021
Editorial
<p><span style="background-color: rgba(0, 0, 0, 0); font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; font-family: inherit; color: inherit">How much you’ll get is based primarily on:</span></p><ul><li>how long you’ve paid into the Scheme (your membership) and</li><li>your final average pay </li></ul><p>While knowing this in advance can help take away some of the worry, there are still 2 decisions you need to make. These are: </p><ol><li><a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/when-to-retire" style="font-family: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; font-size: inherit" data-sf-ec-immutable="" data-sf-marked=""><strong>When to retire with a DB pension</strong></a></li><li><a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/ways-to-take-my-pension" data-sf-ec-immutable="" data-sf-marked=""><strong>How to take your DB pension</strong></a><strong> </strong></li></ol><p>You can find a summary of your options for each point below. </p><h3><strong>When to retire with a DB pension </strong></h3><p>Many members in a DB pension scheme will stop work once they reach <strong>Normal Retirement Age (NRA)</strong>. This is usually between 60 and 65 years old, depending on the section of the Scheme you’re a member of. </p><p>You can check your NRA in your Member Guide. This can be found in the library section once you have logged in to your <a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="">myRPS</a> account.</p><p>If you’re 55 or over (or 50 with a Protected Pension Age) you may be able to take <strong>early retirement. </strong></p><p>You may also be able to start taking your benefits early if you have to stop work due to<strong> ill health. </strong></p><p>Alternatively, you may be able to <strong>delay taking your pension up to the age of 75</strong>. </p><p>Each of these options will have an impact on how much pension you receive each month and may have additional consequences, particularly if you decide to start claiming your benefits early and then return to work. You can find out more <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/staying-in-work" data-sf-ec-immutable="" data-sf-marked="">here</a> </p><p>We understand that when to retire is very much a personal choice and may depend on what you can afford to do, as well as when the rules will allow it. You can find out more about getting your pension savings on track, and what to do if the numbers don’t add up, such as making Additional Voluntary Contributions (AVCs) here </p><h3><span style="background-color: rgba(0, 0, 0, 0); font-size: var(--font-size-h1); font-weight: bold; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; font-family: "Open Sans Condensed", sans-serif; color: inherit"></span></h3><h3><strong>How to take your DB pension </strong></h3><p>There are 4 main ways to take your benefits from DB pension within the RPS. These are outlined below, although the rules of your specific section may vary so please check your Member Guide for more details. </p><p style="margin-left: 30px"><strong>1. Part lump sum/part pension </strong>– so you get some of your pension as a one off lump sum and the rest as regular pension payments. Depending on the rules of your section, you can usually decide how this is split, for example:<img src="https://cdn3.railpen.com/mp-sitefinity-prod/images/default-source/old-site-images/infographics/db-lump-sum-options_v01_bg-and-title.jpg?sfvrsn=8a94cbb7_5" style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; font-size: inherit" alt="Graphic showing that you can either take a larger lump sum and less pension OR a smaller lump sum and more pension"></p><p style="margin-left: 30px">And generally, as long as the lump sum is worth 25% of your entire benefits, or less, then it will be tax free. </p><p style="margin-left: 30px"><strong>2. All pension – </strong>so you take all of your benefits as regular pension payments, and none as a lump sum. This may be restricted if you have paid any Additional Voluntary Contributions (AVCs) and by the rules of the particular section of the Scheme you’re paying into</p><p style="margin-left: 30px"><strong>3. All cash –</strong>This is only possible in very limited circumstances, such as:</p><ul style="list-style-type: disc"><li>Under small pot/trivial commutation</li><li>Commutation on the grounds of serious ill health or</li><li>Short service leaver refunds</li></ul><p style="margin-left: 30px">And where the rules of your specific section allows.</p><p style="margin-left: 30px"><strong>4. Transfer out –</strong> you may be able to transfer your entire DB pension to another type of pension within the RPS, or to a different provider all together. This will depend on whether or not you’re still paying in, the rules of your specific pension section and whether the new provider accepts transfers. You can also choose to transfer just your Additional Voluntary contributions (AVCs) if your section rules allow. Transferring your pension does, however, carry significant risks and you should read the details <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/transferring-my-pension" data-sf-ec-immutable="" data-sf-marked="">here</a> carefully, before making any decisions. By law you will also need to get financial advice if you’re considering a transfer of DB benefits worth more than £30,000. </p><p>In addition to these 4 main choices, you can also opt to tweak how you claim your benefits in a number of different ways. </p><p>The first is to take a <strong>level pension option.</strong> This means taking more of your RPS pension before you reach State Pension age and then less RPS pension after you reach State Pension age. This is designed to make sure you have a consistent level of income throughout your retirement, as shown below:</p><p><img src="https://cdn3.railpen.com/mp-sitefinity-prod/images/default-source/old-site-images/infographics/pension-levelling_v02_horizontal.jpg?sfvrsn=3f0631f_7" alt="Diagram showing how pension levelling works, with levelling giving you a higher Scheme pension before State Pension age and a higher one afterwards."></p><p>The second option is to give up part of your pension to<strong> leave extra pension for your dependants. </strong>This would give a named dependent 15% more of your pension when you die, than they would have otherwise received as standard according to the rules of the Scheme. However, the money will be lost if your dependant dies before you do and you cannot change your named dependant once this option has been taken. Exactly how of your pension you give up will depend on your age and sex, as well as those of your dependant.</p><p>You can read more about all of these options, including how they can be affected if you have any Additional Voluntary Contributions (AVCs) in our <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/ways-to-take-my-pension" data-sf-ec-immutable="" data-sf-marked="">written guide</a> or <a href="https://member.railwayspensions.co.uk/knowledge-hub/help-and-support/video-library" data-sf-ec-immutable="" data-sf-marked="">short video</a> </p><h3><strong>Making the right decision for you </strong></h3><p><span style="background-color: rgba(0, 0, 0, 0); font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; font-family: inherit; color: inherit">There’s a lot to consider here, but help is at hand.</span></p><p>If you’re still paying into your pension, then you can get an idea of how much it might be worth when you retire by using the <strong>pension planner</strong> in your myRPS account. </p><p>This will show you what your annual income could be when you stop work and how much you may be able to take as a tax-free lump sum.</p><p>The planner will also let you see how this might change depending on how and when you choose to take your pension, for example if you go for the level pension option mentioned above. </p><p>If you’re no longer paying into your pension (are a preserved member) you won’t have access to the pension planner, but you can still <strong>get an estimate of your pension benefits</strong> by logging in to your <a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="">myRPS</a> account.</p><p>While the pension planner and estimates offer no guarantee of your future benefits, they will give you a rough idea of what your pension might be worth and give you a starting point for considering your options. </p><p>From there, you may find it helpful to <strong>get independent financial advice</strong>. </p><p>Liverpool Victoria (LV) has been chosen as the official partner to give RPS members access to financial advice. LV can be contacted on 0800 023 4187. </p><p>You are still free to choose your own Independent Financial Adviser (IFA). You can find an IFA in your area at <a href="https://www.unbiased.co.uk/" target="_blank" data-sf-ec-immutable="">unbiased.co.uk</a></p><p>More free and general information is also available from <a href="https://www.moneyhelper.org.uk/en" data-sf-ec-immutable="">MoneyHelper</a>, sponsored by the Department for Work and Pensions. </p><p>You find more tips for making the right decision for you <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/making-the-right-decision" target="_blank" data-sf-ec-immutable="" data-sf-marked="">here.</a> </p><h3><strong style="background-color: rgba(0, 0, 0, 0); color: inherit; font-size: var(--font-size-h3); text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal">Applying for your pension</strong></h3><p><span style="background-color: rgba(0, 0, 0, 0); font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; font-family: inherit; color: inherit">Once you’ve decided how you want to go ahead, you will need to apply for your pension.</span></p><p>You should do this around three months before you want payments to start, just to make sure there is time for everything to be processed. </p><p>If you’re still paying into your pension, all you need to do is tell your employer that you’re ready to start claiming your benefits and they will tell the scheme administrator. </p><p>If you’re not currently paying in (and are a preserved member) you’ll need to <a href="https://member.railwayspensions.co.uk/knowledge-hub/help-and-support/get-in-touch" data-sf-ec-immutable="">contact the scheme administrator</a> directly. </p><p>You can find out more about applying for your pension <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/applying-for-my-pension" data-sf-ec-immutable="" data-sf-marked="">here</a> </p><p> </p>
<p><span style="background-color: rgba(0, 0, 0, 0); font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; font-family: inherit; color: inherit">How much you’ll get is based primarily on:</span></p><ul><li>how long you’ve paid into the Scheme (your membership) and</li><li>your final average pay </li></ul><p>While knowing this in advance can help take away some of the worry, there are still 2 decisions you need to make. These are: </p><ol><li><a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/when-to-retire" style="font-family: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; font-size: inherit" data-sf-ec-immutable="" data-sf-marked=""><strong>When to retire with a DB pension</strong></a></li><li><a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/ways-to-take-my-pension" data-sf-ec-immutable="" data-sf-marked=""><strong>How to take your DB pension</strong></a><strong> </strong></li></ol><p>You can find a summary of your options for each point below. </p><h3><strong>When to retire with a DB pension </strong></h3><p>Many members in a DB pension scheme will stop work once they reach <strong>Normal Retirement Age (NRA)</strong>. This is usually between 60 and 65 years old, depending on the section of the Scheme you’re a member of. </p><p>You can check your NRA in your Member Guide. This can be found in the library section once you have logged in to your <a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="">myRPS</a> account.</p><p>If you’re 55 or over (or 50 with a Protected Pension Age) you may be able to take <strong>early retirement. </strong></p><p>You may also be able to start taking your benefits early if you have to stop work due to<strong> ill health. </strong></p><p>Alternatively, you may be able to <strong>delay taking your pension up to the age of 75</strong>. </p><p>Each of these options will have an impact on how much pension you receive each month and may have additional consequences, particularly if you decide to start claiming your benefits early and then return to work. You can find out more <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/staying-in-work" data-sf-ec-immutable="" data-sf-marked="">here</a> </p><p>We understand that when to retire is very much a personal choice and may depend on what you can afford to do, as well as when the rules will allow it. You can find out more about getting your pension savings on track, and what to do if the numbers don’t add up, such as making Additional Voluntary Contributions (AVCs) here </p><h3><span style="background-color: rgba(0, 0, 0, 0); font-size: var(--font-size-h1); font-weight: bold; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; font-family: "Open Sans Condensed", sans-serif; color: inherit"></span></h3><h3><strong>How to take your DB pension </strong></h3><p>There are 4 main ways to take your benefits from DB pension within the RPS. These are outlined below, although the rules of your specific section may vary so please check your Member Guide for more details. </p><p style="margin-left: 30px"><strong>1. Part lump sum/part pension </strong>– so you get some of your pension as a one off lump sum and the rest as regular pension payments. Depending on the rules of your section, you can usually decide how this is split, for example:<img src="https://cdn3.railpen.com/mp-sitefinity-prod/images/default-source/old-site-images/infographics/db-lump-sum-options_v01_bg-and-title.jpg?sfvrsn=8a94cbb7_5" style="background-color: rgba(0, 0, 0, 0); color: inherit; font-family: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; font-size: inherit" alt="Graphic showing that you can either take a larger lump sum and less pension OR a smaller lump sum and more pension"></p><p style="margin-left: 30px">And generally, as long as the lump sum is worth 25% of your entire benefits, or less, then it will be tax free. </p><p style="margin-left: 30px"><strong>2. All pension – </strong>so you take all of your benefits as regular pension payments, and none as a lump sum. This may be restricted if you have paid any Additional Voluntary Contributions (AVCs) and by the rules of the particular section of the Scheme you’re paying into</p><p style="margin-left: 30px"><strong>3. All cash –</strong>This is only possible in very limited circumstances, such as:</p><ul style="list-style-type: disc"><li>Under small pot/trivial commutation</li><li>Commutation on the grounds of serious ill health or</li><li>Short service leaver refunds</li></ul><p style="margin-left: 30px">And where the rules of your specific section allows.</p><p style="margin-left: 30px"><strong>4. Transfer out –</strong> you may be able to transfer your entire DB pension to another type of pension within the RPS, or to a different provider all together. This will depend on whether or not you’re still paying in, the rules of your specific pension section and whether the new provider accepts transfers. You can also choose to transfer just your Additional Voluntary contributions (AVCs) if your section rules allow. Transferring your pension does, however, carry significant risks and you should read the details <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/transferring-my-pension" data-sf-ec-immutable="" data-sf-marked="">here</a> carefully, before making any decisions. By law you will also need to get financial advice if you’re considering a transfer of DB benefits worth more than £30,000. </p><p>In addition to these 4 main choices, you can also opt to tweak how you claim your benefits in a number of different ways. </p><p>The first is to take a <strong>level pension option.</strong> This means taking more of your RPS pension before you reach State Pension age and then less RPS pension after you reach State Pension age. This is designed to make sure you have a consistent level of income throughout your retirement, as shown below:</p><p><img src="https://cdn3.railpen.com/mp-sitefinity-prod/images/default-source/old-site-images/infographics/pension-levelling_v02_horizontal.jpg?sfvrsn=3f0631f_7" alt="Diagram showing how pension levelling works, with levelling giving you a higher Scheme pension before State Pension age and a higher one afterwards."></p><p>The second option is to give up part of your pension to<strong> leave extra pension for your dependants. </strong>This would give a named dependent 15% more of your pension when you die, than they would have otherwise received as standard according to the rules of the Scheme. However, the money will be lost if your dependant dies before you do and you cannot change your named dependant once this option has been taken. Exactly how of your pension you give up will depend on your age and sex, as well as those of your dependant.</p><p>You can read more about all of these options, including how they can be affected if you have any Additional Voluntary Contributions (AVCs) in our <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/ways-to-take-my-pension" data-sf-ec-immutable="" data-sf-marked="">written guide</a> or <a href="https://member.railwayspensions.co.uk/knowledge-hub/help-and-support/video-library" data-sf-ec-immutable="" data-sf-marked="">short video</a> </p><h3><strong>Making the right decision for you </strong></h3><p><span style="background-color: rgba(0, 0, 0, 0); font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; font-family: inherit; color: inherit">There’s a lot to consider here, but help is at hand.</span></p><p>If you’re still paying into your pension, then you can get an idea of how much it might be worth when you retire by using the <strong>pension planner</strong> in your myRPS account. </p><p>This will show you what your annual income could be when you stop work and how much you may be able to take as a tax-free lump sum.</p><p>The planner will also let you see how this might change depending on how and when you choose to take your pension, for example if you go for the level pension option mentioned above. </p><p>If you’re no longer paying into your pension (are a preserved member) you won’t have access to the pension planner, but you can still <strong>get an estimate of your pension benefits</strong> by logging in to your <a href="https://member.railwayspensions.co.uk/login" data-sf-ec-immutable="">myRPS</a> account.</p><p>While the pension planner and estimates offer no guarantee of your future benefits, they will give you a rough idea of what your pension might be worth and give you a starting point for considering your options. </p><p>From there, you may find it helpful to <strong>get independent financial advice</strong>. </p><p>Liverpool Victoria (LV) has been chosen as the official partner to give RPS members access to financial advice. LV can be contacted on 0800 023 4187. </p><p>You are still free to choose your own Independent Financial Adviser (IFA). You can find an IFA in your area at <a href="https://www.unbiased.co.uk/" target="_blank" data-sf-ec-immutable="">unbiased.co.uk</a></p><p>More free and general information is also available from <a href="https://www.moneyhelper.org.uk/en" data-sf-ec-immutable="">MoneyHelper</a>, sponsored by the Department for Work and Pensions. </p><p>You find more tips for making the right decision for you <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/making-the-right-decision" target="_blank" data-sf-ec-immutable="" data-sf-marked="">here.</a> </p><h3><strong style="background-color: rgba(0, 0, 0, 0); color: inherit; font-size: var(--font-size-h3); text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal">Applying for your pension</strong></h3><p><span style="background-color: rgba(0, 0, 0, 0); font-size: inherit; text-align: inherit; text-transform: inherit; white-space: inherit; word-spacing: normal; font-family: inherit; color: inherit">Once you’ve decided how you want to go ahead, you will need to apply for your pension.</span></p><p>You should do this around three months before you want payments to start, just to make sure there is time for everything to be processed. </p><p>If you’re still paying into your pension, all you need to do is tell your employer that you’re ready to start claiming your benefits and they will tell the scheme administrator. </p><p>If you’re not currently paying in (and are a preserved member) you’ll need to <a href="https://member.railwayspensions.co.uk/knowledge-hub/help-and-support/get-in-touch" data-sf-ec-immutable="">contact the scheme administrator</a> directly. </p><p>You can find out more about applying for your pension <a href="https://member.railwayspensions.co.uk/defined-benefit-members/Im-planning-to-take-my-pension/applying-for-my-pension" data-sf-ec-immutable="" data-sf-marked="">here</a> </p><p> </p>
Blog
Your retirement options with a DB pension
As a member of a defined benefit (DB) pension scheme, you’ll get an income for life when you stop work.
How much you’ll get is based primarily on:
- how long you’ve paid into the Scheme (your membership) and
- your final average pay
While knowing this in advance can help take away some of the worry, there are still 2 decisions you need to make. These are:
You can find a summary of your options for each point below.
When to retire with a DB pension
Many members in a DB pension scheme will stop work once they reach Normal Retirement Age (NRA). This is usually between 60 and 65 years old, depending on the section of the Scheme you’re a member of.
You can check your NRA in your Member Guide. This can be found in the library section once you have logged in to your myRPS account.
If you’re 55 or over (or 50 with a Protected Pension Age) you may be able to take early retirement.
You may also be able to start taking your benefits early if you have to stop work due to ill health.
Alternatively, you may be able to delay taking your pension up to the age of 75.
Each of these options will have an impact on how much pension you receive each month and may have additional consequences, particularly if you decide to start claiming your benefits early and then return to work. You can find out more here
We understand that when to retire is very much a personal choice and may depend on what you can afford to do, as well as when the rules will allow it. You can find out more about getting your pension savings on track, and what to do if the numbers don’t add up, such as making Additional Voluntary Contributions (AVCs) here
How to take your DB pension
There are 4 main ways to take your benefits from DB pension within the RPS. These are outlined below, although the rules of your specific section may vary so please check your Member Guide for more details.
1. Part lump sum/part pension – so you get some of your pension as a one off lump sum and the rest as regular pension payments. Depending on the rules of your section, you can usually decide how this is split, for example:
And generally, as long as the lump sum is worth 25% of your entire benefits, or less, then it will be tax free.
2. All pension – so you take all of your benefits as regular pension payments, and none as a lump sum. This may be restricted if you have paid any Additional Voluntary Contributions (AVCs) and by the rules of the particular section of the Scheme you’re paying into
3. All cash –This is only possible in very limited circumstances, such as:
- Under small pot/trivial commutation
- Commutation on the grounds of serious ill health or
- Short service leaver refunds
And where the rules of your specific section allows.
4. Transfer out – you may be able to transfer your entire DB pension to another type of pension within the RPS, or to a different provider all together. This will depend on whether or not you’re still paying in, the rules of your specific pension section and whether the new provider accepts transfers. You can also choose to transfer just your Additional Voluntary contributions (AVCs) if your section rules allow. Transferring your pension does, however, carry significant risks and you should read the details here carefully, before making any decisions. By law you will also need to get financial advice if you’re considering a transfer of DB benefits worth more than £30,000.
In addition to these 4 main choices, you can also opt to tweak how you claim your benefits in a number of different ways.
The first is to take a level pension option. This means taking more of your RPS pension before you reach State Pension age and then less RPS pension after you reach State Pension age. This is designed to make sure you have a consistent level of income throughout your retirement, as shown below:
The second option is to give up part of your pension to leave extra pension for your dependants. This would give a named dependent 15% more of your pension when you die, than they would have otherwise received as standard according to the rules of the Scheme. However, the money will be lost if your dependant dies before you do and you cannot change your named dependant once this option has been taken. Exactly how of your pension you give up will depend on your age and sex, as well as those of your dependant.
You can read more about all of these options, including how they can be affected if you have any Additional Voluntary Contributions (AVCs) in our written guide or short video
Making the right decision for you
There’s a lot to consider here, but help is at hand.
If you’re still paying into your pension, then you can get an idea of how much it might be worth when you retire by using the pension planner in your myRPS account.
This will show you what your annual income could be when you stop work and how much you may be able to take as a tax-free lump sum.
The planner will also let you see how this might change depending on how and when you choose to take your pension, for example if you go for the level pension option mentioned above.
If you’re no longer paying into your pension (are a preserved member) you won’t have access to the pension planner, but you can still get an estimate of your pension benefits by logging in to your myRPS account.
While the pension planner and estimates offer no guarantee of your future benefits, they will give you a rough idea of what your pension might be worth and give you a starting point for considering your options.
From there, you may find it helpful to get independent financial advice.
Liverpool Victoria (LV) has been chosen as the official partner to give RPS members access to financial advice. LV can be contacted on 0800 023 4187.
You are still free to choose your own Independent Financial Adviser (IFA). You can find an IFA in your area at unbiased.co.uk
More free and general information is also available from MoneyHelper, sponsored by the Department for Work and Pensions.
You find more tips for making the right decision for you here.
Applying for your pension
Once you’ve decided how you want to go ahead, you will need to apply for your pension.
You should do this around three months before you want payments to start, just to make sure there is time for everything to be processed.
If you’re still paying into your pension, all you need to do is tell your employer that you’re ready to start claiming your benefits and they will tell the scheme administrator.
If you’re not currently paying in (and are a preserved member) you’ll need to contact the scheme administrator directly.
You can find out more about applying for your pension here
