Below you wll find Frequently Asked Questions about Retirement.
The earliest age you are currently allowed to the claim your benefits from the Scheme is 55. The only way you are allowed to take your benefits before this age is if you apply for early retirement due to incapacity and the Trustees approve your application.
On retirement from the KPS-FS you may have the following options:
- KPS-FS Pension with attaching spouse’s pension payable in the event of your death;
- up to 25% of your KPS-FS benefits as a tax-free cash lump sum & reduced KPS-FS Pension with attaching spouse’s pension payable in the event of your death; or
- if your total pension savings value is below £30,000, then you may be able to take a one-off taxable cash sum.
If you have KPS-FS AVCs or linked KPS-MP benefits, these will be used to provide the tax-free cash lump sum to enable you to take your full KPS-FS pension.
As a member of the KPS-MP you have the following options:
- Take all of your Retirement benefits as a one off cash sum, with 25% being tax free and the remainder taxed at your marginal rate of income tax. This is called an “Uncrystallised Fund Pension Lump Sum” or “UFPLS” for short.** Or “Small Pot Lump Sum” if all your benefits in the Scheme has a value of £10,000 or less.
- Use your Retirement Account to buy an annuity, which is a pension paid by an insurance company.
- Take 25% of your Retirement Account as a tax-free lump sum and use the balance of your Retirement Account to buy an annuity.
Please note you can also take withdrawals from your Retirement Account as and when you require – with no limits. Generally 25% of it will be tax-free. This is called “flexi-drawdown”. However, the KPS-MP is currently not able to offer this option and should you wish to take advantage of this, you will need to transfer your Retirement Account to a pension provider who can offer you the “flexi-drawdown” option.
** By taking all your pension savings as one off taxable lump sum you may be subject to a reduced Money Purchase Annual Allowance
The amount your pension is reduced if you decide to take early retirement is different depending on the terms of your benefits when you left the Scheme. But generally, your deferred final salary from the KPS will be reduced by 4% for each year before your Normal Retirement Date.
However, if you were a member of the KPS-FS at date of closure (30 June 2012) and decide to take payment of your deferred pension whilst still working for the Company between age 55-60, your pension will be reduced by 3% for each year before age 60. No reduction is applied when retiring from the KPS-FS on or after age 60 whilst still working for the Company.
If you have benefits with the KPS-FS, then the number of years you were an active contributing member has an impact on your final benefits.However if you were still an active member when the the KPS-FS closed to future accrual on 30 June 2012, your built up benefits will be calculated as at that date.
Your KPS-MP benefits is not affected by the length of service you have had with the Scheme. Your KPS-MP benefits is impacted by the amount you contribute into the your Retirement Account and also any investment returns you receive.
You may be eligible however you need to meet certain conditions. To check whether you are eligible we need to check your record. Please contact Group Pensions on 0303 334 7080 or by email email@example.com advising that you wish to look into exchanging your pension for a lump sum.
Please note one of the conditions for this is that you have to be aged 55 and over. So if you still have not reached age 55 you will not be eligible.
The rules are so that you can take your pension and carry on working. You do not have to change your working hours however if you wish to you then you will need to contact your HR to discuss further.
The only notification from us, your Company will receive is sent directly to your payroll to advise that you are retiring from the Scheme and you therefore need to stop contributing into the money purchase section.
Once you have retired from the Scheme, you can rejoin the Money Purchase section if you want to.