How you can take your benefits
At a glance
You have options about how you take your benefits. Most members take their benefits from the Plan, but you could also choose to transfer your benefits to another registered pension arrangement which may give you extra flexibility.
You can choose to take up to 25% of the value of your benefits as a tax-free cash lump sum. In most cases the maximum tax-free lump sum (across your pension schemes) is £268,275.
You’ll also receive a regular income (pension) from the Plan each month
Your pension would be increased each year to help it keep pace with inflation (see pension increases for more detail)
Your spouse or civil partner would be entitled to a pension after you die (see Taking care of your loved ones for more detail)
You can find out how much pension you would receive from the Plan by logging onto the secure area of the website: Member Online
If you choose to transfer your benefits out of the Plan, you have more flexibility in how you take your benefits:
You could take all your benefits as a cash lump sum, though only the first 25% would be tax free. In most cases the maximum tax-free lump sum (across your pension schemes) is £268,275.
You could buy an annuity (a regular income, usually paid for the rest of your life) set up to suit you, for example with or without benefits for your spouse and with or without pension increases
You could invest your pension and just take money out as and when you need it (referred to as ‘drawdown’)
If the value of your benefits is more than £30,000 it’s a legal requirement that you take financial advice before transferring. Even if your benefits are worth less than this we’d strongly recommend taking advice, because there are many scammers out there trying to take your hard-earned savings. Your pension is likely to be one of your most valuable assets, so it’s important that you protect it from scammers who want to trick you out of your hard-earned savings.
There’s been a sharp increase in scamming since rules about how you can take your pension were relaxed. In December 2020, research by provider The People's Pension found that 1 in 200 adults in the UK - around 250,000 savers - have lost retirement savings to fraud.
Recently, new rules have been introduced that aim to safeguard your benefits and prevent you falling victim to a scam. As part of these rules, Capita have a responsibility to check your transfer request carefully in case the receiving scheme could be a scam. There’s a traffic light system for low, medium and high-risk transfers. If any amber or red flags are identified, Capita will contact you directly to explain their concerns and they may require you to make an appointment with MoneyHelper for a ‘Pension Safeguarding Guidance’ appointment before being able to let the transfer go ahead.
If they have serious concerns, Capita have the power to block transfers that have the hallmarks of a scam, so it’s important that you engage with them in the case of any concerns, to minimise any delays. Please remember, too, that all of these rules are aiming to safeguard your benefits and prevent you falling victim to a scam.