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How money goes in and out of your Pension Account

In this article
How to Add Money to your Pension Account How to Increase the Amount you Save every Month How to Take Money from your Pension Account How to Change when you Plan to Retire

How to Add Money to your Pension Account

The money you save for your retirement is deducted from your salary every month as a contribution to your Pension Account.

The percentage of salary deducted in this way depends which part of the company employs you and how long you have been employed.

Your contribution will be deducted through payroll and you will automatically get income tax relief on it each month, so the cost to you in your take-home pay is actually less than the amount of money added to your Pension Account. 

If you have not been auto-enrolled and would like to join the Scheme, contact us for more information.

If you work for Which? Ltd or Consumers’ Association

In your first year of pensionable service you save 3% of your Pensionable Pay and Which? contributes 6%. Once you have completed one year of pensionable service you still contribute 3% and Which? increases its’ contribution to 11%.

If you work for Which? Financial Services

In your first year of pensionable service you contribute 3% of your Pensionable Pay and Which? Financial Services contributes 6%. Once you have completed one year of pensionable service you contribute 4% and Which? Financial Services increases its contribution to 8%.

If you switched from the Hybrid Section of the Scheme in April 2019

Until April 2024 you contribute 3% of your Pensionable Pay and Which? contributes 20%. After that date you will still contribute 3% and Which? will contribute 11%.

Pensionable Pay is your basic annual salary.  If any other earnings are pensionable, your Employer will tell you separately in writing.

You can also transfer the money from another pension arrangement into your Pension Account – see the page about Transfers.

If you are no longer working for Which?, it is not possible for you to add any more money into your Pension Account, or to transfer money from another pension arrangement into your Pension Account.

How to Increase the Amount you Save every Month

At any time while working for Which? you may ask Payroll to deduct some extra money from your salary and pay this into your Pension Account. 

The extra savings are called Additional Voluntary Contributions (AVCs).  Details of the AVC funds where you can invest your extra savings are explained in the pensions section of the intranet. Application forms are also available on the intranet.

HM Revenue and Customs provide tax relief on all your contributions including your AVCs.  However they set a limit on how much money added to your Pension Account can get tax relief in a single year.

This is called the Annual Allowance. Normally the limit is £40,000 pa, but this is reduced to £4,000 if you take any money out of your Pension Account or any other defined contribution pension arrangement.

Contact us if you would like more information.

How to Take Money from your Pension Account

Before the age of 55*, you cannot normally take money out of your Pension Account. 

The only ways in which you can do so are:

  • You may be able to take the money from your Pension Account before age 55 if you are suffering from ill health or incapacity that prevents you from working and is expected to continue to prevent you from working in the future. 
     
  • At any age you may transfer all the money in your Pension Account to another registered pension arrangement.

From age 55* onwards you have the following choices:-

  1. You can take all the money in your Pension Account as a single lump sum.

    The first 25% will be tax free. The rest will be treated by HM Revenue and Customs in the same way as your salary and be subject to income tax, but not National Insurance.

    You may pay higher rate tax if your total income from all sources in one year goes above the HMRC limit for basic rate tax.
     
  2. You can take some money from your Pension Account once in each tax year as a lump sum.

    For each withdrawal, the first 25% will be tax free, and the rest will be subject to income tax in the same way as described above.

    There is no charge for the first withdrawal but the charge for the administration of subsequent withdrawals is £100. This charge may change in the future.
     
  3. If you wish to take regular money from your Pension Account, for example monthly withdrawals, you can transfer all the money in your Pension Account to an income drawdown provider.

    You will still be able to take up to 25% of your money as a tax free cash lump sum. Income taken in this way is subject to income tax.
     
  4. You can use all the money in your Pension Account to buy a secured income for the rest of your life from an insurance company of your choice. This is also known as an annuity.

    You will still be able to take up to 25% of your money as a tax free cash lump sum. A secured income from an insurance company is subject to income tax.

    If you retire while still a Which? employee, Which? will pay for you to have access to an annuity bureau of its choice. This way you will be able to review quotations from different insurance companies and select the secured income most suited to your circumstances.

    If you stop working for Which? and retire at a later date, you will have to make your own arrangements for selecting an insurance company.
     
  5. Your Trustees urge you to seek guidance from Pension Wise and take independent financial advice before you take any money from your Pension Account.

*The Government intends to increase the age from 55 as the State Pension Age increases so that it is 10 years before your State Pension Age.

From the first time you take any money from your Pension Account - or any other defined contribution pension arrangement - your Annual Allowance for future pension contributions to any defined contribution pension scheme reduces from £40,000 pa to £4,000 pa.

If the total money in your Pension Account is less than £10,000 and you take out all the money in one go, under the “small pot" rules this reduction will not apply.

HM Revenue and Customs rules prevent you from investing your tax free cash lump sum into another pension arrangement.

Contact us if you would like to discuss any of these ways of taking money from your Pension Account.

How to Change when you Plan to Retire

Your Selected Retirement Age (SRA) is a very important part of your retirement planning, but it is not the age at which you have to retire.

Since changes made to UK pensions law in April 2016 it’s been much easier for you to plan for a flexible retirement - you can take your money in more ways, you don't have to take it all in one go and there is no longer any notion of a normal retirement age (though there is a minimum age).

As described above you can withdraw money from your Pension Account any time from your 55th birthday until your 75th birthday; you can withdraw all of your money in one go or make several withdrawals over a number of years; and you have a number of choices how you use each withdrawal.

It is worth bearing in mind that the sooner you access your Pension Account, the longer your money has to last you.

You may contact the Administrators of the Scheme at any time in order to discuss when and how you might wish to use the money in your Pension Account for your retirement, or discuss the investment options available to you in the Scheme.

What is my Selected Retirement Age used for?

Most importantly your chosen SRA tells the Pensions Team how you wish us to invest your money.

As such your SRA is a very significant part of your retirement planning, so it’s important that you understand how it affects your Pension Account – for more information see the page about Funds.

You will be contacted by the Administrators of the Scheme as you approach the last three years before your SRA to choose your Retirement Option.

We also use your SRA when forecasting your benefits.

When you were auto-enrolled into the Scheme your SRA was set at 65 years old by default but you can change this at any time. 

Contact us to change your SRA to any age you wish at any time, subject to you giving one month's written notice.

Your Trustees urge you to seek independent financial advice when planning for your retirement.

When's the Earliest I can Retire?

As described above you can withdraw money from your Pension Account any time from your 55th birthday. The Government has indicated that it may increase this age in the future, so that it is 10 years before your State Pension Age.

Before the age of 55 you cannot normally take money out of your Pension Account. The only ways in which you can do so are:

  • You may be able to take the money from your Pension Account before age 55 if you are suffering from ill health or incapacity that prevents you from working and is expected to continue to prevent you from working in the future. 
     
  • At any age you may transfer all the money in your Pension Account to another registered pension arrangement.

Ill Health Early Retirement

Subject to the Trustees taking independent medical advice from a qualified medical practitioner and being satisfied that your physical or mental incapacity is serious enough:-

  1. to prevent you from following your normal occupation,
  2. to seriously impair your earning ability and
  3. that you are unlikely to recover

then the Trustees may pay your Pension Account before age 55.

Transfer to Another Registered Pension Arrangement

At any age you can request that all the money in your Pension Account is transferred to another registered pension arrangement.

You may transfer to:

  • an occupational pension scheme run by your new employer - if they are willing to accept a transfer,
  • a personal pension,
  • a self-invested pension plan (SIPP) or
  • a stakeholder pension.

The receiving arrangement must be registered with HM Revenue and Customs. The receiving scheme administrator will know whether it has been registered and the Which? Scheme administrators will require the evidence of this before making the transfer. To protect your assets, you will need to provide proof of identity before payment is made.

If you move abroad, a transfer to a Qualifying Registered Overseas Pension Scheme (QROPS) is possible but must be treated with caution as such transfers are subject to abuse and can result in punitive tax charges for you if it turns out to be bogus.

Pension benefits built up in the UK cannot legally be accessed before age 55 - except in the circumstances of ill health incapacity described above - and there are no legitimate loopholes that allow this, even if you transfer your benefits overseas.

Contact us if you would like to discuss when you plan to retire or if you are thinking of transferring to another arrangement.