Since April 2015 there has been more choice as to how people can use their retirement savings. The Allen & Overy Pension Scheme provides the following options:
- Take 25% of your retirement savings account as a tax free lump sum and purchase an annuity with the remainder;
- Take all of your retirement savings account as cash; 25% of this would be tax free and the balance will be taxed at your marginal rate;
- Transfer your retirement savings account to another pension arrangement which may offer more choices.
You can select one or a combination of these options but you must use the whole of your DC retirement savings account in one go. If you want to take your benefits in stages (income drawdown) you will need to transfer to another pension arrangement.
Members who have benefits under both the Defined Benefits and Defined Contributions sections of the scheme can take their DB and DC benefits, or transfer out, at different times.
HR Advice can request details of your benefits from the Scheme Administrator. Alternatively, you may request this information direct from the Scheme Administrator.
If you choose to purchase an annuity, the amount you will receive depends on a number of factors:
- The realised value of your retirement savings account at the purchase date, less any cash sum that you have decided to take;
- The type of annuity you purchase, in particular, any increases you would like to receive once your annuity starts, any benefits you wish to provide for your dependants and possibly your state of health;
- The cost of providing an annuity at the time of purchase. This tends to move in line with interest rates so that the higher the current rates of interest the lower the cost of the annuity and vice versa.
When can I claim my retirement savings?
You have the right to use your retirement savings account if you retire at your Normal Retirement Date which is your 65th birthday. However, you may request payment earlier or later.*
If you carry on working for the Firm after your 65th birthday, your right to use your account will be deferred until you retire but you can ask the Firm for earlier payment.
*If you are a DC member who joined the Scheme before 1 April 2010, you have the right to claim your retirement savings account at age 62. If you continue as an employee of Allen & Overy after age 62 you may continue in membership of the DC Section on the same terms as applied before age 62.
If you carry on working for the Firm after your 65th birthday, your right to use your account will be deferred until you retire but you can ask the Firm for earlier payment.
*If you are a DC member who joined the Scheme before 1 April 2010, you have the right to claim your retirement savings account at age 62. If you continue as an employee of Allen & Overy after age 62 you may continue in membership of the DC Section on the same terms as applied before age 62.
Can I take my benefits before age 65?
You may request early payment of your benefits from age 55. If you are still employed by the Firm, you will require the Firm?s approval and, if granted, you will cease to be eligible for contributions under the Scheme and may only be allowed to re-join at the discretion of the Firm or periodically under the auto-enrolment legislation. If you want to take your benefits early, you should in the first instance discuss this with either HR Advice, or with your immediate Line Manager.
If you have left the Firm, or are no longer an active member of the Scheme, you will require the approval of the Trustee to early payment.
Your retirement savings account may be taken before age 55 on the grounds of incapacity as set out in the Scheme?s rules.
If you have left the Firm, or are no longer an active member of the Scheme, you will require the approval of the Trustee to early payment.
Your retirement savings account may be taken before age 55 on the grounds of incapacity as set out in the Scheme?s rules.
Can I postpone taking my benefits?
If you don?t want to use your retirement savings at age 65, and carry on working for the Firm, you can leave them invested in the Scheme and take them when you leave the Firm. Or, with the Firm?s agreement, you can take your benefits while still working for the Firm. If you have left the Firm, you will need the Trustee?s agreement to postpone taking your benefits past your Normal Retirement Date.
Are there any limits on how much I can save in my retirement Account?
Legislation restricts the amount of tax-privileged savings you can build up in a pension scheme throughout your life. This value is called the Lifetime Allowance and is set at £1,055,000 for the tax year 2019/20. If the value of your total pension savings, including your past and present savings from all other arrangements, exceeds the Lifetime Allowance, you will pay a tax charge on the excess called the Lifetime Allowance Charge when you take your benefits.
Legislation also prescribes an Annual Allowance. In the context of a DC arrangement, this is the maximum total annual contributions that can be paid to all your pension schemes by you or your employer without incurring a tax charge For the 2016/17 and 2017/18 tax years this is £40,000 for most people, but it will be less for those whom the pensions tax regime deems to be on "high income". Broadly speaking, if your total taxable income is above £110,000 (which includes any taxable income from outside of your Allen & Overy employment) in a tax year, then you could have a personal Annual Allowance which is below £40,000. The Firm as your employer does not have visibility of all your income so you will need to calculate what your personal Annual Allowance limit is. The Firm wrote to you in 2016 explaining this in detail. If you think your total contributions will exceed this amount in one tax year, please contact the HR advice team to discuss your options.
Legislation also prescribes an Annual Allowance. In the context of a DC arrangement, this is the maximum total annual contributions that can be paid to all your pension schemes by you or your employer without incurring a tax charge For the 2016/17 and 2017/18 tax years this is £40,000 for most people, but it will be less for those whom the pensions tax regime deems to be on "high income". Broadly speaking, if your total taxable income is above £110,000 (which includes any taxable income from outside of your Allen & Overy employment) in a tax year, then you could have a personal Annual Allowance which is below £40,000. The Firm as your employer does not have visibility of all your income so you will need to calculate what your personal Annual Allowance limit is. The Firm wrote to you in 2016 explaining this in detail. If you think your total contributions will exceed this amount in one tax year, please contact the HR advice team to discuss your options.