It’s important to think about your retirement options

Your options

Your options

The money you save in Atlas is your money. You decide where it’s invested, how you take it, and when you take it (once you have reached your 55th birthday). You can take it all at once, at regular intervals or not at all. Retirement isn’t a fixed point, it’s fluid, and you can tailor your options to suit your circumstances.

You might have seen how you and your employer contribute to your pension and how it works.

When it comes to investing, everyone’s different – with different views on saving, risk, and what they want from retirement. 

Here’s a brief summary of some of your options when you come to take your benefits. You can read our Retirement Guide to find out more.

If you’re an Isle of Man, Jersey or Guernsey member, your options may differ from what’s shown here. The available options will be made clear to you when we write to you about your retirement.

Option 1: One big lump sum

Take all of your pension account as one big cash lump sum. 25% of it would be tax free, and the rest is taxed as earnings (i.e. 20%, 40% or 45%).

If you take your pension account as a single lump sum you may be charged more tax than you’re expecting.

Important things to think about

  • It’s one lump sum, so what if you live longer than you expect? You’d become more reliant on your State Pension.
  • What happens if you spend it all? Do you have other income? How will you be paying for your lifestyle in the future? Will you have to make drastic changes?
  • You may end up paying more tax.
Option 2: Some, or lots, of smaller cash lump sums

You may also have heard of this option being called ‘drawdown’. Under this option you take smaller lump sums from your pension account as and when you need them. The rest of your pension account remains invested (in investment funds) until it runs out.  

If you took this option, you’d have to decide how you take the 25% tax-free cash portion. Would it be better for you to take it as one whole amount? Or to share it evenly across every lump sum so that 25% of every lump sum is paid tax free?

Important things to think about

  • You could live longer than you think, so you need to make sure you don’t run out of money.
  • Your investments can go up as well as down. This means your pension account may not grow as well as you expect
  • You may end up paying more tax than you need to.
Option 3: Exchanging your pension account for a regular income (buying an annuity)

Under this option you use your pension account to buy an insurance policy to provide you with a regular income, like your wages, or a more traditional pension. This type of policy is known as an annuity. You choose the type of income you want and you get a guaranteed set amount based on your request.

There are lots of annuities on the market so it’s wise to shop around and choose one that best suits you.

Important things to think about

  • You need to shop around to make sure you get the best deal because different providers offer different rates.
  • It’s not very flexible. Once you start taking your pension, you can’t change it.
  • The annual income you will get depends on the type of annuity you choose.
  • You may need to live a long time to get maximum benefit from the policy.
What else can you do?

The options above are the main options you have, but you don’t have to take just one of them. You can mix and match. It really depends on what is going to be the best thing for you.

You don’t have to do anything, you can always leave your pension savings in your pension account until you are ready. Or you can transfer your pension account to another scheme.

Important note:
If you decide to take some or all of your pension account but want to carry on working and saving into a pension scheme, there is a new limit on the amount you can save. If at the time you take your pension account its value is over £10,000, the most you can pay in in future and still get tax relief on your contributions will be £4,000 a year.

Relevant information

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