What options are available on retirement?
• lump sum • payment of a regular pension by the trustees • purchase of an annuity. How much can the employee take as a lump sum? Up to 25 per cent of the value of their fund at retirement but currently, due to the lack of annuity providers, it is possible to take the other 75% as a lump sum too. Is this subject to tax? Under the current rules there will be no tax liability. What does purchase of an annuity mean? Trustees can approach an annuity provider, usually an insurance company, and purchase an annuity which will provide a pension income for a pre-agreed period. The pension can be of a fixed amount, can increase with inflation, can be paid for a fixed period and can be paid to the widow/widower on the death of the member. What is the difference between a pension paid through an annuity and a pension paid by the trustees? A pension purchased by the annuity is fixed in its terms, which are determined when it is purchased. A regular pension will be paid by the trustees from the fund
