Thinking about retirement

There are lots of options available these days – you don’t even have to stop working.

• You could start taking your pension at your Normal Retirement Date (age 65). You’ll be able to take your pension benefits from the Scheme as an annual income with the option to take some cash.
• You could take your pension early from age 55 (increasing to 57 from 2028). You’ll have a lower income from the Scheme – your pension will be reduced for each year that you retire before your Normal Retirement Date – but you may be able to continue working part-time if you want to. However, if your pension benefits are below a certain level, you may not be able to take them early or you may need to reduce your tax-free cash sum. Taking early retirement
• You could delay the start of your pension although you must either transfer your benefits to another pension scheme or start taking them before the age of 75. Delaying retirement
• You may also have other options, which are specific to members of your section of the Scheme.

You should take some time to start thinking about what you can do, between now and your retirement, to make sure you have the income you think you’ll need when you stop working.

The Pensions and Lifetime Savings Association has developed a set of ‘retirement living standards’ which outline how much income you might need in retirement depending on what kind of things you want to do in retirement. This could help you think through what your retirement might look like.

What income will you need?

Alternatively, you could work out what kind of income you might need in retirement by using budgeting tools like the one offered by the Money Advice Service. It will help you think about:

• How you plan to spend your time
• Will you have a mortgage or rent to pay?
• Will you have a car, and will you use it as much as you do now?
• If you have children, will you want to contribute towards them buying their first home or getting married?
• Are there any home renovations you’d really like to get done?

Budgeting tools

Do you think you’ll have enough money from your current level of savings?

If not, you might want to consider adjusting your retirement age, paying Additional Voluntary Contributions, or paying more into other retirement savings accounts.

Don’t forget to add any income from other pension schemes and the State Pension to work out your likely income in retirement.

Taking your pension from the Scheme means that you will have certainty around having a regular income throughout your retirement.

The way your benefits are paid from the Scheme doesn’t allow for a huge amount of choice about how you take them. However, you do have some choices at retirement. For example, you can choose when you want to retire, exchange some of your pension for a tax-free cash sum or for additional benefits to be paid to a spouse or dependant on your death.

Find out more about your choices at retirement.

If you want more flexibility and choice about how to take your pension than this, you can transfer your benefits out of the Scheme into a defined contribution pension arrangement. This potentially allows you to:

• Cash in your pension benefits for a one-off lump sum
• Take a number of lump sums at different times instead of a regular income
• Take part of your pension as an annuity (regular income) and part as lump sum or series of lump sum payments
• Arrange for different benefits to be paid on your death

However, there are risks associated with transferring your benefits out of the Scheme and each of the options can attract different levels of tax. You’ll need to manage your money and investments through your retirement – unless you decide to buy an annuity with your transfer value.

Find out more about transferring your benefits out of the Scheme.

Regardless of when you decide to take your benefits, you may also wish to consider flexible retirement – you don’t have to stop working to take your pension benefits from the Scheme. So, you could reduce your working hours and use your pension benefits to top up your income. (if you are still employed by Raytheon you would need their agreement).

If you continue working for Raytheon and start taking your pension from the Scheme, if you're not already a member, you may be able to join the Raytheon Systems Ltd Group Personal Pension Plan to earn benefits for future employment.

Don’t forget you may also receive retirement income from other sources, including:

• Any Additional Voluntary Contributions (AVCs) that you’ve paid.
• Any other workplace pensions you may have – if you’ve lost touch with them, you can track them down here.
• Your State Pension – you can get a forecast of how much you might get here.
• Any other savings and investments.

There are many things to consider when making these choices which is why it’s always best – and is sometimes a legal requirement – for you to talk to a financial adviser who can help you understand what the right approach for you will be.

If you’re not yet 55 and want to find your own adviser, you need to make sure your adviser is registered with the Financial Conduct Authority to give advice on pension transfers – go to www.fca.org.uk to be sure. You should always check whether an independent financial adviser will charge you for any services they offer, and that you agree any fees with them beforehand.

Finding your own adviser

How to get financial advice