Your Pension - Your Future 

You can take your defined contribution (DC) pension savings flexibly. With more choice comes more responsibility to understand the factors to consider and which option(s) best suits your individual circumstances and priorities.

Think 'when'

You can retire as soon as you reach the Minimum Pension Age*, which is set by the government. The current Minimum Pension Age is currently 55, but is increasing to 57 in 2028. But just because you can retire at this time, doesn't always mean you should, because there's plenty more to consider.

1. Have you saved enough?

   Consider all savings for retirement, including your State Pension and any other pensions you may have. Will this be enough to support the lifestyle you want to have, for as long as you want to have it? Refer to the Retirement Living Standards to find out more.

2. How long will you live?

   We are generally living longer than past generations. Understanding how long your money needs to last is important - the earlier you take your savings, the longer they will likely need to last. Try the Life expectancy calculator.

    

3. All at once, or one by one?

   You may have many 'pots' of savings. Will you take them all at once? Or will you take them as you need them? If the latter, you may want to consider how you invest the pots you intend to take later, to get the best investment growth from them. 

4. Cut and dry or easing in?

   Are you aiming to stop working entirely, or reduce your hours and 'ease' yourself into retirement? If you choose to ease yourself in but want to start to take some of your savings as you continue to work (and continue to be a member of a pension plan), you may get a high tax bill. This is because as soon as you take any retirement savings, the Money Purchase Annual Allowance (MPAA) kicks in, which restricts how much you can save for retirement. You can learn more about the MPAA on the MoneyHelper website.

*A small number of members in the Scheme have a Protected Retirement Age of 50. Contact the ZPen administration team if you believe you could retire before the Minimum Pension Age.

Not ready yet?

If you're not ready to retire just yet, make your working years count by:

1. Contributing more

   Saving into ZCashBuilder or another pension is still the most tax-efficient way to save for retirement. There are certain tax limits, which you can learn more about on the government website. Even if you're already contributing, could you contribute a bit more? The sooner you save, the more time you give your money to grow and benefit from compound interest. 

2. Tracing your pensions

   It can be challenging to keep track of different pension pots, especially if you have changed employers throughout your career and if pension schemes have merged or been renamed. It's important that you trace down any lost pensions sooner rather than later so you can get a clearer picture of your retirement savings.

3. Investing for your circumstances

   Check that the way your savings are invested matches how you may want to take them.

   - If you're invested in the lifestyle option, your investments could move automatically into 'lower risk' but lower growth funds, like a cash fund as you approach your Target Retirement Age (TRA) to protect their value. Think about when you want to use each particular pot of savings, and make sure the TRA reflects that date. Find out more about changing your TRA in the ZCashBuilder investment guide.
   
   - If you choose your own investments, remember to monitor them regularly, but bear in mind that investments do go up and down. Make sure you read the ZCashBuilder investment guide.

4. Understand your retirement options 

   Get up to speed on the choices available to you, set out in the 'Your options in a nutshell' section below. You can also watch this short video. If you're over 50 years old, you can book a free, impartial guidance session with a pension specialist through Pension Wise - a government service - to further discuss your options at retirement. 

When you take your retirement savings, you can take up to 25% of your savings as a tax-free cash lump sum (but the maximum is £268,275), as you dip into each pot, if you have more than one. Once you’ve made the decision of how much of your savings to take tax-free, you can choose between 3 main options, as listed below.

• many members choose to put some of their savings into an annuity to provide a minimum secure level of income, while leaving some for ‘ad hoc expenses’ , invested in a Drawdown account;
• some continue to work reduced hours, and supplement their income with a Drawdown account;
• while others stop work and live off a Cash lump sum, but then go on to work reduced hours and supplement their income with an annuity.

Whichever option – or combination of options – appeal to you, it’s important to know the advantages that each option offers, any tax limitations they have, and if they offer any flexibility in the future.

Buy an annuity, or regular income, for life

Buy a regular income from an insurance company, called an annuity.

With this option, you get:

👍 A guaranteed income for the rest of your life - you can choose the level of benefits and cover you need to match your priorities (see optional elements below)

👍 Optional ill-health annuity - if you have recognised health issues, you could get a higher income if the insurance company believes your life expectancy is lower than average. This is known as enhanced terms

👍 Optional yearly increases to your income to give you some protection against increases in the cost of living (inflation), in exchange for a lower starting income. This is known as an increasing annuity

👍 Optional pension for your eligible dependants (your spouse or partner) on your death, in exchange for a lower regular income. This is known as a joint life annuity

👍 Optional guarantee period - you can choose to have your income continue to be paid to a loved one after your death, for a 'guaranteed' period of time

However, you should consider:

👎 There are many types of annuities - you'll need to shop around for the annuity best suited to your personal circumstances

👎 No future flexibility - once you've purchased an annuity, you can't change your mind. So you need to be sure that the annuity will meet any future needs

👎 Future protection - depending on the benefits you choose, the annuity may not provide protection for your spouse or partner or against the effects of inflation. 

Drawdown your savings as and when you need them

Insert your retirement savings and withdraw cash as and when you need it.

With this option, you get:

👍 A fund - where your savings are invested. You will be able to take your money as and when you need it until it runs out. Withdrawals are subject to tax, investment growth is not

👍 Tax-free cash - if you did not take 25% of your retirement savings as a tax-free cash lump sum when you started to take your pension savings, you can take 25% of each withdrawal tax-free (under current tax rules)

👍 Legacy options - you can pass on your drawdown account to whoever you choose when you die (typically tax-free if you die before the age of 75)

👍 The option to buy an annuity at a later date - with the savings you have left in your drawdown account

However, you should consider:

👎 Your life expectancy - you'll need to make sure your money lasts as long as you need it to

👎 Uncertainty - you will not have a guaranteed income for your retirement

👎 Your appetite to invest - you will need to choose your investments to ensure your savings continue to grow, and ongoing investment charges apply

Cash out

Take all your retirement savings as cash.

With this option, you get:

👍 A cash lump sum - you can either take your retirement savings as a single cash lump sum or as a series of lump sums, with full flexibility over how you use it.

However, you should consider:

👎 Your life expectancy - you'll need to make sure your money lasts for as long as you need it to

👎 Tax - you'll be taxed on the amount you take above your tax-free allowance

It's important to note that not all options are offered by every pension scheme. Sometimes you will need to transfer out of one arrangement and into another to be able to access your chosen option. Therefore, it's important to understand what's available to each of your pots if you have more than one.

If you choose to combine, or 'consolidate', your pots into a single arrangement close to retirement, your most important consideration when choosing where to transfer to should probably be that the Scheme you move to can accommodate your chosen retirement option.

Read more about consolidating pensions on the MoneyHelper website.

Your ZCashBuilder Scheme offers you all three options.

• Annuity - Railpen, the administrator of ZCashBuilder for the Trustee, have appointed Origen Financial Services as a specialist company to help you choose the right annuity for you. If you want to use Origen, let Railpen know by contacting zcashbuilderteam@railpen.com or 0800 232 1915 (option 2) and they will give you more information

• Drawdown - You can choose Drawdown through LifeSight, which provides:

  - flexibility to access your savings as and when you need them
  - online visibility with the LifeSight app. Go to the LifeSight website for further information
  - planning tools to help you know when your savings could run out, and;
  - the choice to invest your savings in a way that matches your short, medium, and long-term retirement goals

• Cash - you can take cash directly from the Scheme 

What would these options mean in pounds and pence?

If you would like to explore each of these options further, use the Retirement Options tool. You'll find an estimate of your retirement savings in your retirement letter or by logging in to your online account. Simply type your numbers into the illustrator tool to see what these options could mean for you. 

Lastly, please be aware of potential pension scams when you're thinking about transferring. You can learn more about pension scams via the Pensions Regulator. If in doubt, take financial advice from a registered and reputable financial adviser. Also, see the ScamSmart resources on the Financial Conduct Authority (FCA) website. As a rule of thumb, if something sounds too good to be true, it probably is. 

The Trustee has appointed an FCA-registered financial guidance firm, WTW's Financial Planning Group, to provide members who are 50 years and older with tailored, impartial financial guidance.

When and how you decide to take your retirement savings will depend on your personal circumstances. We recommend you speak to a regulated financial adviser to help consider your options.

1. Your State Pension

   When considering whether you have enough to retire, don't forget about the State Pension. See what it's worth and how to get a quote if you don't already have one.

2. How long might you live?

   Understanding how long you may live and how long your money needs to last can influence when you retire and how you choose to take your savings. Use the Life expectancy calculator.

3. Inflation and how to protect against it

   Make sure the retirement option you choose will help you to continue to afford the things you want and need as prices go up. Visit the MoneyHelper website for more information.

4. Tax and allowances

   Different options and ways to retire have different tax implications. Understand what this means for you by going to the government website.

5. Compare your options

   Consider which option could be right for you, considering your personal circumstances and your priorities. Take a look at this retirement options guide.

6. Small pensions

   If you have a pension with a value of less than £10,000, there are additional considerations. Find more information on the MoneyHelper website.

How you take your savings when you retire is a big decision and depends on what is right for you. It's important to have all the information you need to make it.

It may be useful to receive some professional guidance, or perhaps speak to an FCA-registered guidance provider before making your decision. It's important to remember that the Trustees and Scheme administrator are unable to provide you with guidance themselves, and are not responsible for any guidance you receive. 

Guidance from WTW

The Trustee has appointed an FCA-registered financial guidance firm, WTW's Financial Planning Group, to provide eligible members with tailored, impartial financial guidance on their Scheme savings and has negotiated a competitive rate for members. They will help you review your retirement options in the context of your wider financial position. They will also highlight the next steps to put your retirement plans into action.

Find out more about this service from WTW.

1. Understand your retirement options

   Find out more about your options by using the Retirement Options tool

2. MoneyHelper retirement tools

   MoneyHelper, a government website, has many useful tools and provides access to guidance that could help you with your decisions.

   • Pension calculator - understand what you may need in retirement, and how much you have
   • Compare annuities - shopping for an annuity? This comparison tool can help you see what's available on the market
   • Guidance from PensionWise - if you're over 50 years old, you can have a free guidance call with a pension specialist from PensionWise (part of MoneyHelper) about your DC savings 

    

3. Watch out for scams

   Don't let a scammer enjoy your retirement. Go to the Financial Conduct Authority (FCA) website for further information.

4. Retirement Living Standards

   The Pensions and Lifetime Savings Association (PLSA) has set out some benchmarks for required levels of income in retirement, depending on lifestyle. 

5. Do you earn enough for a decent standard of living?

   The minimum income calculator can help you see what your costs will be and any benefits you may be entitled to. 

6. Trace lost pensions

   If you've lost track of a pension, make sure you trace and claim it sooner rather than later. You can search for a lost pension on the government website.

7. Consolidating pensions

   If you have several pension pots, you should consider whether combining them is right for you. You can learn more about this on the MoneyHelper website.

1. Know your numbers

   If you haven't already received a retirement letter and you'd like to know how much you can expect to receive, you can find the information by logging in to your pension account.

2. Understand your retirement options

   • Find out more about what your retirement options could mean for you in terms of pounds and pence with the Retirement Options tool

   • If you have any questions about this tool, please refer to these FAQs

3. Speak to a regulated financial adviser

   Speak to a regulated financial adviser before you make a choice. WTW's Financial Planning Group can provide tailored, impartial financial guidance at a competitive rate, or you can find another regulated financial adviser via the MoneyHelper website 

4. Apply to retire

   If you would like to retire, contact the ZPen administration team on 0800 232 1915, option 2 (Monday to Friday, from 9am to 5pm) or by emailing zcashbuilderteam@railpen.com to know what your next step should be, or if you can apply to retire online

Before we are able to progress any request for you to take your ZCashBuilder benefits, you will need to confirm to us whether you have used the Pension Wise service. If you have already received financial advice about taking your benefits, or have taken Pension Wise guidance in the previous 12 months you do not need Pension Wise guidance.

If you decide not to have an appointment with Pension Wise, then you will need to complete this opt-out form.

You don't have to do anything until you are ready. You can reconsider your options in the future when you are ready to retire.