Your options for taking your money
Choosing to take your money from your pension pot is one of life’s big decisions. You’ve worked hard and paid in money over the years. You’ll want to be sure you’re making the right choice so that your future is secure.
As long as you have left IBM employment, you can access your pension savings at your selected retirement age, or any time after age 55. The Normal Minimum Pension Age (NMPA) is currently age 55 but this is increasing to age 57 from 2028. You may be able to access them earlier than this if your original scheme had a protected retirement age, or if you’re in ill health. If you get close to your chosen retirement age and decide you don’t want to take your money yet, you can also delay taking money from your pension pot.
Getting help to decide
It’s important you shop around to find the best option for your personal circumstances and income goals. It’s a big decision so it’s worth comparing what each provider can offer as you don’t have to stay with Legal & General and might get better options elsewhere.
Pension Wise is a government service from MoneyHelper that offers free, impartial guidance about your defined contribution pension options. An appointment with Pension Wise is free and will help you understand what your overall financial situation will be when you retire. You can book an appointment once you are aged 50 or over.
Your options under your current plan
Options available to you within your current plan
Things to consider
Take it all in one go
You can take your pension pot in cash as a single lump sum.
- 25% of it will usually be tax-free but the rest may be taxed as income.
- If you take this option you'll need to think about where your income will come from as you'll need to have left IBM employment in order to access your money.
Buy a guaranteed income (an annuity)
You can usually take up to 25% of your pension pot as a cash lump sum and use the rest to buy a guaranteed regular income for a fixed period or for the rest of your life. This is known as an annuity.
You can request a quote for a Pension Annuity (also known as a 'lifetime annuity') with Legal & General by calling them on 0345 675 0017, or emailing ibmpension@landg.com. If you give Legal & General consent to share your information with other providers, they will also tell you if you can get a better deal with someone else. If you are happy for your quote to be shared with Legal & General’s partner, AnnuityReady, you will be able to see the quotes from other providers.
If you choose to use Legal & General’s service, you will need to inform them that you are a member of the IBM scheme, to ensure that your quote is based on the Pension Annuity product that you are able to take under your Plan Rules.
Alternatively, the Money Helper website also has its own annuity comparison service if you would prefer to use this.
Annuities have a number of features, for instance you can arrange for payments to continue to your dependants after your death.
- You can usually take up to 25% of your pension pot as tax-free cash. Each annuity payment will be taxed as income.
- Smokers and those in poor health usually get better rates because of their shorter life expectancy.
Leave it
You can leave your pension pot where it is. We’ll continue to manage your money in the same way we have been, unless instructed otherwise
- Your money has the chance to grow but it could go down in value too.
- We’ll automatically extend your retirement age by five years. You can still access your pot in this period
- You should review your retirement plans regularly to make sure you’re investing your pot in the most suitable way
Other options available to you
The following options are not available in your current plan. However you can still access them by transferring your savings. If you are considering taking a flexible income you can access the Legal & General WorkSave Mastertrust Pension Access Scheme or you can switch to another provider. You can find out more about the Pension Access Scheme at legalandgeneral.com/ibmatretirement. Other providers may offer different terms so you should shop around to make sure you’ve got the best deal for you.
Options available under the WorkSave Mastertrust Pension Access Scheme
Things to consider
Take a flexible income
You can usually take up to 25% of your pension pot as a cash lump sum and leave the rest invested to provide a regular income, and occasional lump sums if required. This is often referred to as flexi-access drawdown.
- You can usually take up to 25% of your pension pot as tax-free cash but the rest will be taxed as income.
- You can vary, stop or suspend the amount you’re taking at any time.
- Your money has the chance to grow but it could go down in value too. If you take out too much or your investment funds don’t perform as well as you’d expected, you could run out of money before you die.
Take it in a series of cash lump sums
You can leave your money invested and withdraw it as cash lump sums as and when you wish. The money left invested has the chance to grow but it could go down in value too.
- Usually the first 25% of each amount you take will usually be tax-free but the rest will be taxed as income.
- If you choose this option, you may wish to spread your withdrawals over a number of tax years to minimise the amount of tax you pay.
You can choose more than one option and provider
You don’t just have to choose one option or provider. You can mix your options for each pension pot you have. You can transfer all or some of your pension pot to another provider and have your benefits paid by them. However, you may lose your entitlement to any benefits that were protected, such as the ability to combine your defined benefit and defined contributions pots, the ability to access your pot before the Normal Minimum Pension Age (NMPA) or a tax-free cash sum greater than 25% of your pot. Please check this before transferring. The NMPA is currently age 55 but this is increasing to age 57 from 2028.
The law, tax rates and any allowances may change in the future. These changes could affect the value of your savings, how much you can pay in, or the age at which you’re able to access your money.
How tax works for you will depend on your individual circumstances.
Ready to make a choice
Once you’re ready to take your money and you’ve decided which option (or options) you want to take, you can get in touch for all the information you need and any relevant forms.
We’re here to help if you have any final questions or you need any more information before you make your decision, just let us know.
Please note that under your schemes rules some of these options may not be available.
