FAQ- Pensions

What is the personal pension?

It is a tax-efficient plan that helps you and your employer provide for your retirement. Any contracting-out contributions to your Personal Pension build up Protected Rights for you at retirement.

Additional contributions build up a pension fund for you at retirement.

When you retire, you use the pension fund to buy a pension. You can also take a tax-free cash sum from your fund in return for a lower pension. Your Protected Rights must be used to buy a pension.

What is 'contracting-out'?

S2P provides employees with a pension on top of the basic state pension. 'Contracting-out' is where an employee gives up the pension from S2P in return for a pension from a Personal Pension or employer's pension scheme.

You must be employed and at least 16 years old to contract-out.

If you contract-out using a Personal Pension, the National Insurance Contributions Office (NICO) will contribute to your pension fund.

The pension fund provided is called 'Protected Rights' and cannot be taken before age 60.

How flexible is it?

You can transfer money into the Personal Pension from other pension plans. This can include Protected Rights.

You can transfer in any divorce credit you are entitled to, including both 'Safeguarded Rights' (due from contracting-out) and 'non-Safeguarded Rights' (due from contributions).

You can use your plan to contract-out ofS2P if you are eligible to do so.

You can change your choice of funds for both new and existing contributions.

You and your employer can reduce subject to our minimum, or stop contributions and start again later if circumstances change. This will reduce the size of your final pension fund.

If you stop making contributions:
•your fund value will continue to remain invested in your chosen funds
•the pension provider will continue to deduct charges from your Plan

What might I get when I retire?

Your pension will depend on:
•how much is contributed to your Personal Pension
•investment growth
•any Loyalty Bonuses paid into your pension fund. Please refer to your personal illustration to see if this applies to you
•the date you start taking your pension
•the pension company charges
•interest and annuity rates when you take your pension
•how you take your pension, for example, if it continues to your spouse on death.

To convert the value of your Personal Pension when you retire into a pension, you buy an annuity. You can arrange an annuity with the insurance company of your choice and this will be paid by them for the rest of your life.

Further retirement options are available and most people should seek professional advice.


What choices will I have when I retire?

Non-Protected Rights
You can:
•convert all of your Personal Pension into a pension or cash withdrawals
•take up to 25% of the pension fund as a tax-free cash sum in return for a lower pension or cash withdrawals
•start taking your pension at any time between the ages of 50 and 75,including while you are still working. You must start taking the pension by age 75.
•start taking a pension before age 50 only if you are forced to take early retirement through ill-health, or if HM Revenue and Customs have approved this for your job
•buy your pension (annuity) from any authorised insurance company.

Protected Rights
If you are contracting-out, you can:
•convert all of your Protected Rights into a pension
•start taking your Protected Rights pension from age 60. You must start taking the pension by age 75.

If you are married and die after you have retired, at least half of your pension from Protected Rights will continue to be paid to your spouse.

What about tax?

You will get tax relief on your contributions. The Pension provider claims the tax relief at the basic rate from HM Revenue and Customs and invest it into your pension fund. If you are a higher-rate tax payer, you claim the extra relief through your self assessment tax return.

Pension funds benefit from tax relief which helps your fund value grow faster. Some funds receive less tax relief than others.

You can convert all of your Personal Pension into a pension or cash withdrawals. Alternatively, you can take up to 25% of the pension fund as a tax- free cash sum in return for a lower pension or cash withdrawals.

Your pension or cash withdrawals will be taxed as earned income. These benefits may change in the future. If you are contracting-out, part of the contracting-out contributions will benefit from basic rate income tax relief. This is the part of the payment which represents your own share. This will be a percentage of your National Insurance contributions.

You may be subject to additional taxes or costs which are not accounted for within the contract.

Where are the contributions invested?

Contributions are invested in the funds you choose.

Depending on which funds you choose, your money can be invested in a wide spread of investments such as company shares, government bonds, fixed interest securities and property.

What are the charges?


Different Pension companies levy different charges. These charges can all be found on personalized illustrations in conjunction with their key facts and key feature documents.

What happens to the personal pension if I die before I retire?

The whole amount of your Personal Pension can normally be used to provide a dependant's pension or a cash sum inline with HM Revenue and Customs practice and Scheme Rules.

The value of any Protected Rights fund must be used to provide a pension for your spouse.

If you do not leave a spouse, the Protected Rights fund can be paid as a lump sum, to a person nominated by you, or to your estate if you have not made a request. Cash sums paid on death will normally be free from inheritance tax.

The Pension company will pay out the death value of your pension fund at the date they are told of your death.

Can I transfer my personal pension?

You can transfer your Personal Pension to another pension at any time before you start taking a pension.