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My retirement
Target retirement age
The Scheme’s normal retirement age is 60, but you can choose a target retirement age at any point from age 55. This is particularly important if you’re using one of the Lifestyle investment strategies, because the investment transition phase will begin based on your target retirement age.
For example, if you think you’d like to retire earlier than the Scheme’s normal retirement age, but you don’t update your target retirement age, your money will be invested in growth funds too close to your retirement. If there’s a sudden fall in the markets, there might not be enough time for your personal account to recover. Similarly, if you plan to work a bit later, the transition to less risky investments will begin too soon and you could miss out on some investment growth.
Please note that although the earliest age at which you can take your benefits is currently age 55, the government plans to raise the minimum retirement age to 57 by 2028. This may affect your plans for early retirement if you’re currently aged 49 or under. You can change your target retirement age by logging into your personal account.
Your choices at retirement
As you get closer to retirement, you’ll need to decide how you’d like to take the money you’ve built up in your personal account.
If you wish to, you can take up to 25% of the total value of your personal account as a tax-free cash lump sum. You can then use the remainder to provide a taxable retirement income in a way that suits you. Your choices are:
- An income drawdown arrangement, where you keep your money invested and withdraw a taxable income from it. You’ll need to transfer your savings to another pension arrangement that offers income drawdown.
- An annuity, which is an insurance product that guarantees a regular, taxable income. There are different kinds of annuity and prices vary, so you’ll need to shop around, much as you would with your home or car insurance.
- A cash lump sum, where you take all of your personal account as cash. Remember, the first 25% is tax free, but the remainder will be taxed at your marginal rate of income tax.
- Multiple cash lump sums. You would need to transfer your savings to another pension arrangement as this option is not available through the Scheme.
- A combination of these options.
The options for your savings are very flexible which mean you can manage your retirement income in the way that suits you best. For example, you might want to take cash or use income drawdown at the beginning of your retirement when your expenses might be higher before later deciding to purchase an annuity. It really depends on your own circumstances and what’s right for you.
Taking your benefits
When you’re ready to retire, there are a few things you’ll need to do to make it happen:
- Get a retirement quote from the Scheme administrator. You can check the value of your personal account at any time by logging in via My Work Pension, but Trafalgar House will send you a retirement pack explaining all your options, along with confirmation of your current fund value.
- Consider your choices and decide how much tax-free cash you’d like to take and how you want to manage your income in retirement.
- Tell NFU Mutual and the administrator – your retirement pack will contain all the forms you need to complete to put your personal account into payment.
Advice and guidance
Getting ready to retire is an exciting time, but there’s lots to think about and plan for. The Scheme Trustee can’t give you advice about your options but recommends that you take financial advice to help you decide which is best for your circumstances.
You may find it helpful to speak to one of the NFU Mutual Staff Financial Advisers or an Independent Financial Adviser.
You can also find more information about pensions and retirement from the MoneyHelper, which is the government’s free financial guidance service, including Pension Wise.