Understanding the options your provider gives you for retirement can be confusing. Final salary (defined benefit) schemes usually have a range of options regarding income and cash in differing proportions, whilst providers of defined contribution schemes may ask if you want to purchase an annuity on the open market, or for them to do this on your behalf.

It is critical to remember two points. Firstly, these options will not give any consideration to any other arrangements, savings, investments, liabilities and outgoings you may have. Secondly, there will often be other options available that the existing provider is unable to offer.

Before making any decisions it is imperative to give careful consideration to the following:

  • What are my income requirements in retirement?
  • What is the state of my health?
  • Will I want to leave either an income or lump sum to my spouse/children on my death?
  • Do I have any outstanding liabilities?
  • Do I have cash reserves?
  • Are my income requirements likely to change?
  • Do I have other pension or investment plans that will provide an income?
  • Do I know the level at which my state pension will be payable?


Due care also needs to be paid to the Lifetime Allowance (LTA). This is currently frozen at £1,073.100. This means those with benefits over that amount could face charges of up to 55% on the excess. At Churchill, we are able to look at your current level of benefits and advise whether we think you may be challenged by the LTA. This is a complicated issue, and although most people feel it is a problem they will not be faced with, it’s worth bearing in mind that a final salary scheme of £48,000/annum with a lump sum entitlement of £136,000 would exceed the limit.

It is possible to apply for protection so that your personal limit remains at a higher level but the criteria are specific and those who are interested in receiving more information should contact us as soon as possible. If we are unable to help due to the specifics of your case, we may be able to offer alternative solutions so that you can continue saving for retirement without being penalised.

Next: Personal Pensions / SIPPs »


For further information, please contact us on 0117 923 7652 or click here to use our enquiry form »