In the 2014 budget, the government announced that anyone over age 55 (rising to 57 in 2028) could take up to 25% of their defined contribution savings as a tax-free lump sum and use the rest as they choose.
You no longer have to buy an annuity with the rest – giving you more freedom and flexibility when accessing your savings.
It’s been four years since the pension freedoms were introduced but research shows there’s still a pensions knowledge and confidence gap between genders.
Pension freedoms apply to defined contribution (DC) pensions, like the Investment Builder, where you can build up a pot of money to boost the guaranteed income you’ll get from the Retirement Income Builder (the defined benefit part of USS).
A recent survey with our members found that less than half of women feel confident about financial decision making, compared with two thirds of men. This confidence gap extends to pensions – women were half as likely as men to say they had looked into their pension and felt confident choosing the right options for them.
This confidence gap is also replicated across the industry. An AJ bell report found that fewer women (63%) feel in control of their retirement income than men (77%), and that women are less likely to be aware of how they can use their pension savings.
While everyone’s personal circumstances will differ, we all want to understand what our pension means to us and what our options are on our journey to retirement. You’ll have worked hard for your pension, when it does come around, so you should know all the different ways you can take your savings.
We can all probably do a little more to familiarise ourselves with our pension – here’s a list to help you feel more in control:
- Understand which part of USS you’re in and what benefits you’re building up.
- Understand your options at retirement so you know what you’re working towards.
- Take a look at how you could use your Investment Builder pot if you have savings here.
- Update your Expression of Wish and choose who should receive a lump sum payment should you die whilst paying into USS. Log in to My USS to complete online or download the Expression of Wish form to print and return to us.
- Estimate what you’ll get at retirement using our Benefit Illustrator to understand whether you’re on track for the retirement you want.
- Keep up to date on your savings – visit My USS to view and manage your savings.
A J Bell: Gender pay gap extends to pension freedoms
Published: 23 May 2019