Money Purchase

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 .

4 months before your Selected Retirement Age you will automatically be contacted by Legal & General to provide you with an overview of your options and any steps you need to take. If your pension savings’ value is above £15,000, Hargreaves Lansdown will also contact you to provide further information about annuities.

If you would like to retire before your Selected Retirement Age (the earliest age at the moment is 55), please contact Legal & General directly and they will be happy to help.

When you come to retire, you need to decide what to do with your Retirement Account. One of the options is to buy an annuity. An annuity converts your Retirement Account into a regular income when you reach retirement age.

Why not watch our video explaining the options you may face when choosing an annuity or click here to take you directly to the Annuities Explained module.


You can choose an annuity which meets your individual needs. You may choose:

  • a fixed pension a pension that increases each year;
  • to have a guaranteed minimum payment period for your pension so that your pension is paid for a minimum number of years even if you die within that period;
  • provide a pension for your spouse, civil partner or any dependants after your death
    or single-life pension

Remember, how much income you receive from an Annuity will depend on

  • the value of your Retirement Account at the time you retire
  • the cost of buying an Annuity from an insurance company
  • the type of Annuity you buy
  • your age when you buy your Annuity – generally the younger you are when you retire, the less you will receive

Following recent changes in Pension Legislation, you now have many more options available to you. To help you understand your retirement options, the Government has set up a free and impartial service, called Pension Wise.

We recommend that you take advantage of this service, prior to making decision about the option you wish to take at retirement. To find out more please click on the link below.

Pension Wise

If you decide to purchase an annuity with your Retirement Account you will need to do so via the Open Market Option.

To help you, the Trustee has appointed an independent firm called Hargreaves Lansdown to help you shop around to find the most competitive quote for buying an Annuity on the Open Market using their dedicated website for our Scheme members ‘Your Retirement Service’. Alternatively, you could go to an independent financial adviser of your own choice.

For more information about the Open Market please click here.

When you come to retirement there may be other options available to you, however through the scheme you are currently only able to purchase a lifetime annuity, (with or without 25% tax free lump sum) or take your whole Retirement Account as an “Uncrystallised Fund Pension Lump Sum” (UFPLS) or Small Pot Lump Sum, depending on the value of your benefits in the scheme.

You may find there are other retirement options more suitable for you, however to take these options you will need transfer your benefits out of the Scheme.

The other retirement options, which may be available to you, are flexi-drawdown and other types of annuities. If you wish to go ahead with one of these options we recommend you seek independent financial advice.

Something you should know is that neither the Company nor the Trustee can give you personal financial advice. Without knowing all your personal details and without the specialist expertise required it is difficult to give advice specific to your circumstances.

For ease we have created a section to help you find more information or locate an independent financial adviser. This can be found in our Knowledge Centre entitled Independent Advice.