When you can access your retirement savings
The earliest you can normally receive your benefits is age 55. In exceptional cases, you might qualify for early or ill-health retirement at the discretion of the Trustee.
The RS Plan’s Normal Retirement Age (NRA) is age 65. Unless you choose your own Target Retirement Age (TRA), or your employment contract states otherwise, your NRA is 65.
How you can take your benefits
When you decide to take your RS Plan savings, you have four options:
- Buy an annuity, which gives you a regular retirement income for life
- Take your savings as cash
- Transfer your savings to an external income drawdown arrangement
- Choose a combination of all three of these options
1. Buying an annuity
If you use your RS Plan savings to buy an annuity, it will provide you with a guaranteed income for life at regular intervals.
An annuity is a financial product that you buy from an insurance company. They will use various factors, such as life expectancy, to work out what level of income your savings can buy you.
You can choose an annuity to suit your circumstances. For example, you may want an annuity that increases in line with inflation, or one that provides a pension for your spouse after you die, or both.
2. Taking your savings as cash
You have the option to take your whole Account as cash. The first 25% would be paid tax free, and the rest would be counted as part of your regular income and taxed as such.
You would then be solely responsible for making sure that your pot of money doesn’t run out.
3. Income drawdown
Income drawdown allows you to take a variable income whenever you need it, while the rest of your pot remains invested.
If you choose income drawdown, you would need to transfer your Account out of the RS Plan into another regulated arrangement that offers this option.
4. Choose a combination
Your plans for the future are unique to you. This is why you are able to combine any or all of these options if it suits you.
For example, you might want to take some tax-free cash to pay off your mortgage, and buy an annuity with the remaining funds so you have a regular income for the rest of your life.
If you're unsure about which decision to make, talk to an independent financial adviser. You can find one in your area on www.unbiased.co.uk