My retirement
When you retire, we will pay you a pension for life.
You can give up pension for a tax-free lump sum, and/or a spouse or civil partner pension.
Accessing my Church Pension
You can start taking your Church Pension from age 55. However, it’s worth thinking carefully about when you access it, the earlier you take it, the longer it needs to last.
This minimum age is set by the Government and will increase to age 57 from April 2028.
Pension for life
When you take your pension, we’ll pay you a monthly income for life, paid on the last working day of each month.
Your pension is treated as taxable income and deducted through PAYE. We handle this for you, but we rely on HMRC for your tax code, so your pension may be taxed incorrectly at first. Any adjustments are usually sorted out shortly afterwards.
Taking your pension early
You can take your pension before age 68, but it will be reduced—because it’s likely to be paid for longer.
The earlier you take it, the lower your monthly pension will be. Taking your pension early can give you more flexibility if you need money sooner. However, it also means:
- less time for your pension to grow
- a lower income throughout retirement
Taking your pension late
If you continue working after age 68, you will keep building up your pension until you leave or stop contributing.
Your pension may be increased to reflect the later start date.
Taking tax-free cash
When you retire, you can choose to take part of your pension as a tax-free lump sum. In exchange, your monthly pension will be reduced.
This can be useful for covering large expenses, but it’s important to think about the long-term as your regular income will be lower for life.
Providing for a spouse or civil partner
You can also choose to give up part of your pension to provide a continuing pension for your spouse or civil partner after your death.
- This option must be chosen when you retire
- You cannot change your decision later
If you do not select this option, no pension will be paid to a spouse or civil partner after your death in retirement.
Choices with other providers
Most people are happy to stick with the choices we offer. Taking your pension from us can often be the best option, but transferring your pension can give you more freedom and flexibility over how you take your money.
Watch the video below to find out more about your options on the wider market.
You can opt for a 'partial transfer', which could give you the best of both worlds. Doing this means you transfer some of your Church Pension and leave the rest with us.
How does a transfer work?
A pension transfer means giving up your pension in return for a sum of money, which is called a ‘transfer value’. Your transfer value could be a large amount of money which you could transfer to another registered pension scheme to then take as cash or invest.
While it is invested it could go up in value, but there is a risk it could go down in value too. Once you transfer your pension, there are lots of different ways you can use your money, and even leave it to loved ones.
Is transferring a good idea?
Transferring can be worth exploring, depending on your circumstances. Having more flexible ways to access your money can really help if you are in poor health and your life expectancy is limited, or you are single or have no dependents.
You might want to get your hands on more money up front and even leave money to your loved ones.
There is no right or wrtong answer to transferring your pension. While you do not need to take financial advice before you transfer, if you are unsure whether moving your money to another provider is best for you, a financial adviser can help.
If you transfer your pension, you cannot transfer it back to us.
You can leave your pension with us for as long as you like. If you are still working, money will keep going in, and you can keep topping this up with AVCs if you want to.
The earlier you take it the longer you will need to live off it, so only take it early if you can afford to do this.
The longer you leave it the more chance your pension will have to grow with bonuses.
Your pension can be passed on tax-free if you die before age 75. After this, it is taxed as income.
You can take your whole pension in one go as cash. A quarter is tax free, and the rest is taxed as income.
This could push you into a higher tax bracket, which means you will pay more tax than you usually do for that tax-year.
Amount you'll get tax-free
You'll need to plan how to provide an income and make sure you have enough to last your lifetime, and whether you want to leave anything to someone when you die.
It's worth knowing what you will do with the money. If you leave it in the bank and inflation increases, it will reduce the spending power of your money.
Amount that is taxed
You can get a regular income that goes up or down. So, if you need more money in one year but less in another, you can easily plan for this.
Before you do this, you can take a quarter of your pension as a tax-free lump sum at the start. Your income after this is taxed.
As you get to pick how much you want and when you want it, your income is not guaranteed to last as long as you live. The more money you take out in the early years, the less is left for the future.
With this option, any money left when you die can pass on to your loved ones, in some cases tax-free.
Instead of a regular income, you can take cash lump sums until your money runs out. How much you take is up to you. If you want to take large amounts over a shorter period, you can easily do this.
A quarter of each amount you take is tax-free and the rest is taxed as income. In between taking money out the rest stays invested. This gives your money a chance to grow, but it can also go down.
With this option, any money left when you die can pass on to your loved ones.
A lifelong pension (also known as an annuity) provides you with an income that will last as long as you live. You can also get an income for a set number of years. If you want security instead of flexibility this is the option for you.
Before you buy an annuity, you can take a quarter of your pension tax-free. After this your pension will be taxed as income.
There are various types of annuity. The main features you can decide are how the pension will increase, whether you want to provide a pension for your husband, wife or civil partner when you die, and whether there is a minimum length your pension will be paid, for example 5 years.
If you smoke or have a medical condition, you may be able to get an ‘enhanced’ annuity.
Buying an annuity is a one-time, irreversible decision, but not one you necessarily need to make when you retire. You can move your pension into ‘drawdown’ first while you value financial flexibility and buy an annuity later in life when you value security of income more.
As you cannot change your mind once you have bought an annuity, and annuity prices vary significantly, shop around to make sure you get the best deal.
You don’t have to choose one option when deciding how to take money from your pension.
Mixing your options can give you flexibility to suit different needs at different times during your retirement.
For example, you could use one option at the beginning of your retirement – such as flexible retirement income. And you can use another option later – such as an annuity to get a guaranteed retirement income.
If you have a large pot, you might be able to split it to provide some guaranteed retirement income and leave some invested.
If you have more than one pension pot, you might choose different options for each pot.
You can also keep saving into a pension if you want, and get tax relief up to age 75.
How do I access my pension?
When you are ready to take your pension, simply get in touch with us and let us know your chosen retirement date.
We will guide you through the next steps, providing all the information and forms you need. Once you have made your decisions, we will put everything in place for you.
As setting up your pension can take up to three months, it is a good idea to contact us as soon as you know your plans.
Can I take my pension and keep working?
Yes. You do not have to stop working to take your Church Pension. You can start receiving it while continuing in employment.
However, it is important to think carefully:
- taking your pension early means it needs to last longer, so your income will be lower
- your pension will be added to your salary and other income, and taxed accordingly
If you take a larger amount while still earning, it could push you into a higher tax band, meaning you pay more tax overall.
What happens to pension contributions?
If you continue working after taking your pension, your employer may still need to pay contributions into a pension for you, as long as you meet auto-enrolment rules.
In this case, we will set up a new pension pot for you, which you can access later.
Important: tax implications to consider
If you take money from one pension while continuing to save into another, this can trigger a tax rule called the Money Purchase Annual Allowance (MPAA).
The MPAA limits how much you can contribute to a pension each year while already receiving income from another pension.
- The current MPAA limit is £10,000 per year
- If you exceed this, you may have to pay a tax charge
You will usually trigger the MPAA when you start taking pension benefits, except if you use your pension to buy a guaranteed income (known as an annuity).
Things to consider
Taking your pension while still working can offer flexibility, but it also comes with important financial and tax considerations.
Before going ahead, it is worth thinking about:
- how long your pension will need to last
- the impact on your tax position
- whether the MPAA could affect your future savings
If you are unsure, we are here to help you understand your options so you can make the choice that is right for you.
Ill health retirement
If your health is starting to affect your ability to work, your first step should be to talk to your line manager or employer.
They will work with you to explore ways to help you continue in your role. This might include adjustments to your duties or support through an occupational health adviser, who can provide guidance on managing your condition at work.
If you are aged 55 or over
If you are 55 or over and unable to continue working due to your health, you can choose to access your pension in the usual way.
If you take your pension before your Normal Pension Age, it will be reduced for early payment, as it is expected to be paid over a longer period.
All the standard retirement options, such as taking tax-free cash or choosing benefits for a partner, will still apply.
If you are under 55
If you are under 55 and permanently unable to work due to ill health, you may still be able to access your pension early.
Because this is before the normal minimum pension age, this is known as an ill-health pension, and we need medical evidence to support your application.
Your pension will still be reduced for early payment.
The application process
We understand this can be a difficult time, and we aim to make the process as smooth as possible. However, it can take time, often up to six months, depending on how complex your case is.
Some applications are straightforward. Others may require input from independent medical advisers, who may:
- review reports from your GP or specialist
- speak with your healthcare providers
- arrange a short telephone assessment with you, if needed
Any assessment will be arranged at a time that suits you, and only if further information is required.
Keeping you informed
We’ll keep you updated throughout the process, so you always know what’s happening and what to expect next.