4.7 Benefit Options
4.7.1 Pension Benefit at Retirement
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The amount of pension payable from a Personal Pension is determined
by the amount of money accumulated within the fund and annuity rate
at the time.
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Pension benefits must normally be taken between the ages of 50
and 75, but with the following exceptions:-
- Where the individual is in an occupation where an earlier retirement
age has been approved by the Inland Revenue, e.g. athletes at age
35, flat racing jockeys at age 45.
- On the grounds of serious ill health.
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Pension benefits arising from the DWP payments may not be made
before age 60, and must be paid as pension only.
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The pension must be payable for life, but may be set up with a
guaranteed payment period of up to 10 years; the more usual period
is 5 years.
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Individuals may take a reduction in their pension in return for
providing a spouse's or dependant's pension payable following their
death, but the level of the dependant's pension must not exceed
the member's own pension.
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At retirement, the plan-holder may exercise an open market option.
This allows individuals to transfer the accumulated value of their
pension fund to any life office or friendly society to purchase
their benefits. This enables the plan-holder to seek out the best
annuity rates available on retirement.
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Pension payments are taxed as earned income. Annuities paid under
PPPs are taxed under PAYE and this came into force on 6th April
1995. Prior to this income tax was deducted at the basic rate and
any balance due to or from the parties was dealt with by the Local
Inspector of Taxes
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