Choosing the right option is a big decision that will affect the rest of your life. Our retirement checklist covers some of the main points you should consider.
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It is extremely important that you understand the risks of taking your pension benefits. Here are questions and answers to guide you through the risks and considerations you should be aware of.
Have you taken financial advice?
If not, you can still seek financial advice, which will provide you with recommendations based on your personal circumstances. A charge usually applies for advice.
Have you made provisions for your dependants?
It’s important to consider any dependants you have when making decisions about your pension savings and the financial impact it will have on them when you die.
Have you thought about medical conditions that may enhance your income?
Medical conditions can impact the income you may receive. It may mean you could have received a higher income from your pension savings if you chose an annuity to provide a guaranteed income.
Have you considered the effect of inflation on your income?
The effect of inflation means the cost of goods and services will go up over time, so your money from your pension savings will buy you less in the future.
Have you considered how long you will require an income to last?
You should carefully consider how long you need your income to last and remember that you will need to plan your retirement spending accordingly. The length of time you’ll require an income for is often underestimated.
Have you considered charges for your new product?
You need to consider any charges that may apply to any new products you are thinking about buying from your pension savings. These may be higher than the charges applying to your existing pension.
Have you thought about scams?
There’s a chance that fraudsters will try to target people like you with access to large sums of money. If you’re approached about a new investment opportunity, we strongly recommend that you discuss it with a financial adviser first. Never be pressured into making a quick decision about investments. Before you sign anything, call The Pensions Advisory Service on 0300 123 1047. To learn more about scams and fraud tactics visit www.pensionwise.gov.uk/scams
Have you considered how this affects any means-tested benefits?
It’s important to consider the impact on any means-tested benefits you may be receiving. These may stop or reduce if you access your pension savings. If you think this may apply to you, you should speak to the Department for Work and Pensions (DWP) office in your local area to understand the impact on your own circumstances.
Are you aware any creditors you may have could have a claim over your pension once you claim it?
Pension savings have a level of protection if you're made insolvent or bankrupt. If you take savings from your pension, you'll lose this protection on the amount you take and any creditors (people you owe money to) may be able to claim all or part of this sum.
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If your pension is with another company
We hope you found the information on this site useful. To find out more about your pension policy, you should speak to your pension provider.