The retirement basics

Your pension in the Bradford & Bingley Staff Pension Scheme is what’s known as a Defined Benefit (or Final Salary) pension scheme.

Your Defined Benefit pension provides you with an annual income at retirement which is calculated based upon your earnings and the length of time you have been a member of the scheme, prior to the scheme closing at the end of 2009.

A second type of pension scheme is available known as a Defined Contribution (or Money Purchase) plan.  In a Defined Contribution plan, contributions made by you and/or your employer are invested in a range of different investments to provide you with an income when you retire.  The benefits you receive at retirement depend on the size of your pension ‘pot’ and how you decide to take your benefits. You may have a type of Defined Contribution plan, known as Additional Voluntary Contributions (AVCs), as part of your Bradford & Bingley Staff Pension Scheme benefits. Typically, these are used to provide tax-free cash at retirement.

Remember, you may also have a State Pension based on your National Insurance Contributions (NICs) record.  You’re entitled to it when you reach your State Pension age and it will continue until the end of your life.

When can I access my pension?

The normal retirement age in the Bradford & Bingley Staff Pension Scheme ranges from 60 to 65 depending on when you were a member and the Section of the Scheme that you were a member of. Your normal retirement age is the age from which you can take your full pension.  Alternatively, once you reach 55 you can access your pension, but it will be reduced for each year before your normal retirement age that you chose to take it. 

Your Bradford & Bingley Staff Pension Scheme pension will be paid to you as a monthly income (pension) and you have the option to take some of your benefit as a one-off lump sum when you retire.  

If you have any Defined Contribution benefits, you have a great deal of flexibility on how you can take your pension pot. Normally you can take part of your pot as a tax-free lump sum. What you do with the rest is up to you. You can opt for an annuity that will pay you a guaranteed income for the rest of your life. You could move your money to income drawdown, so you decide how much to take out and when. You can take some out and leave the rest invested, have it all as one lump sum, or a combination of these. 

What is worth knowing is that, once you have had your tax-free lump sum, the rest of your pot may be taxed. 

You do not have to make a decision on what to do with any pension pots now, but it’s worth thinking ahead so you’re ready when it’s the right time for you.

How much do I need to live on?

Everyone’s circumstances are different. Have you made a budget planner to identify how much income you’ll need?  This includes monthly needs and occasional lump sums during the year – gifts, holidays, new car, home improvements?

It’s also worth noting that you have the freedom to choose whether you continue to work and how. You can choose to continue working even whilst receiving your Scheme and/or State Pension.

What should I do about inflation?

Your Scheme pension will increase each year broadly inline with inflation to protect against its real value being eroded over time.

For any Defined Contribution pension pots, there are steps you can take to protect your pension income against inflation, such as purchasing an increasing annuity. There are also several ways to leave your pension pot invested so the money you do not need now has the potential to grow.

Could I defer my Pension?

You can take your pension from age 55 (increasing to 57 from 2028) if you wish. For any Defined Contribution plans, your pension pot will continue to be invested until you decide to access it.  You can claim your State Pension once you reach your State Pension age.  However, you do not have to. Your State Pension will increase every year you put off claiming it.

But remember, you don’t get your State Pension automatically, you have to claim it.

You don’t get your State Pension automatically, you need to claim it. You should get a letter four months before you reach the State Pension age telling you what to do. So, if you have not been contacted about claiming it three months before your State Pension Age, call the State Pension claim line on 0800 731 7898.

You may also receive State Benefits upon receiving your State Pension

These could include:

• Winter fuel payment.
• Housing benefit.
• Council tax support.
• Carer’s allowance.

For more information visit www.gov.uk.

Who is eligible?

If you have paid, or been credited with, National Insurance Contributions (NICs) for a minimum of 10 tax years, you’re eligible for a State Pension.

The State Pension age varies depending on when you were born but is expected to increase gradually to 68 by the mid 2030s. To find out when you will be entitled to collect your State Pension, use the Government’s State Pension Calculator.

What will you get?

The amount you will get from the State Pension will largely depend on how many years National Insurance Contributions (NICs) you have paid or been credited with up until State Pension age.

HM Revenue and Customs(HMRC) see your State Pension as an income, although you do not pay tax on it directly. If your yearly income goes over your personal allowance (the standard personal allowance is £12,570 in the tax year 2024/25), the tax due will be taken from any additional income you receive and paid according to the tax bracket you fall into.