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Retirement options

Our SSAS offers members a wide choice of payment options for their benefits, so they can phase their retirement income, to suit their circumstances.

Members can take their benefits at any time from age 55, although in the case of serious ill health it may be possible to take benefits earlier.

It is important for members to seek professional advice before taking benefits, as the choices they make will affect both their retirement income and the level of contributions they can make to a pension scheme in the future.

A member does not have to retire or stop work in order to take benefits from their scheme. Benefits can also be taken in stages, rather than as a single lump sum.

Lifetime allowance

When a member takes benefits from their scheme, and again at age 75, the total value of their funds along with any other arrangements held will be tested against the current lifetime allowance. If the lifetime allowance is exceeded, an additional tax charge will apply unless the member has obtained pension protection.

Upon retirement, benefits can be taken as follows:

Uncrystallised Funds

Uncrystallised Fund Pension lump Sum

To release all, or part of your fund for immediate payment is known as an Uncrystallised Funds Pension Lump Sum. This differs from flexi-access drawdown as the total amount released must be taken at once. Twenty five percent of the uncrystallised funds pension lump sum is paid tax-free, with the rest treated as earned income and liable to income tax. Members can take as many Uncrystallised Fund Pension Lump Sums from their uncrystallised funds as they wish.

A money purchase annual Allowance test is triggered when benefits are taken in this way. An uncrystallised funds pension lump sum is not available to members with tax-free lump sum protection, or rights to a lump sum of more or less than exactly 25%.

Uncrystallised Fund Pension Lump Sum is not available for DBSSAS.

Crystallised Funds

If Members want more flexibility with how they take their benefits, they can instead crystallise all or part of their fund and decide how much tax free pension commencement lump sum and income they take:

Pension commencement lump sum

Members can take up to 25% of the fund they have crystallised fund as a tax free lump sum.

Pension commencement lump sum is available for DBSSAS however the amount available to take will be calculated on a case by case basis rather than the standard 25% of fund value.

Flexi-access drawdown

From the remaining 75% of the crystallised fund, members may draw an income using flexi-access drawdown. There is no restriction on the amount a member can take or the payment frequency. A money purchase annual allowance test is triggered following receipt of income from flexi-access drawdown.

Flexi-access drawdown is not available for DBSSAS.

Lifetime annuity

A lifetime annuity is purchased from a life assurance company. The annuity must be payable up to the member’s death or the end of any guarantee period should the member die within the period.

The annuity may be level or incorporate annual increases. It may also allow for pensions to be paid to dependant’s after the death of the annuitant.

Short-term annuity

A short-term annuity is purchased from a life assurance company and is payable for a term of no more than five years.

Capped drawdown

Up to 5 April 2015, income could be taken from a pension fund as capped drawdown. Under capped drawdown, pension payments are limited and must be regularly reviewed to ensure they do not exceed the permitted maximum. If a member is already taking capped drawdown income they can continue to do so. Alternatively, members can convert capped drawdown funds into flexi-access drawdown, which means their income will not be subject to the capped limits and review requirements, although a money purchase annual allowance test will be triggered.

Scheme pension (for DBSSAS only)

A Rowanmoor DBSSAS offers members the opportunity to take benefits as a scheme pension. This is a secured income paid to the member for life. Unlike income drawdown, a scheme pension can provide a guaranteed income.

A scheme pension allows a member to receive income direct from their DBSSAS, which provides the member with a set level of pension for their fund. The level of pension is calculated by our group company, Embark Actuarial, and is designed to pay out over the member’s expected lifetime. The amount of scheme pension payable is normally reviewed every three years and may vary, depending on the performance of the scheme investments.

If a member’s life expectancy changes, for example due to ill health, the actuary can review the payment of the scheme pension to reflect any decrease in life expectancy.

We recommend members seek financial advice from a suitably qualified adviser before proceeding with this method of taking benefits.

If you have any specific questions, please contact us. Alternatively visit our document library for more information.