From the Fund
If you take your benefits from the Fund, you will have a number of choices to consider.
Standard pension only
You can take all your Retirement Account benefits as a standard pension only. This would be paid to you each month for the rest of your life.
- This pension is worked out using your years of Pensionable Service and your Final Pensionable Salary at the time you stopped building up Pensionable Service.
- It is increased in line with the Fund rules up to the point you choose to receive it. It will then receive yearly increases, depending on when you built it up.
- If you have not reached the Fund’s Normal Retirement Age, you can take early retirement. Your pension may be reduced because it would start earlier and be paid for longer.
- The Fund will also pay a pension to your surviving spouse/civil partner or other dependant on your death. At retirement, you need to choose the level of pension your surviving dependant receives – your pack will include full details. This pension would also increase each year as applicable.
New Flexible Pension Option coming soon
We are planning to make a new Flexible Pension Option (FPO) available later in 2025.
If you are considering retiring before reaching State Pension age, the new FPO will allow you to receive a higher initial pension from the Fund up until your current State Pension age.
After reaching that age, your Fund pension will then step down (as you’ll have received more of your Fund pension upfront).
The FPO is being introduced to offer members greater flexibility in how they can take their Fund benefits at retirement and an opportunity to smooth out total income from the Fund and the State in retirement.
Find out more on My AZ Pension.
Tax-free lump sum and a reduced pension
You can exchange some of your Retirement Account benefits for a tax-free lump sum and take the remainder as a pension.
- You can take a tax-free lump sum that is broadly equivalent to 25% of the value of your Retirement Account . This will reduce the level of your pension, which will be worked out in the same way as your standard pension.
- As with the 'standard pension only' option, the Fund will also pay a pension to your surviving spouse/civil partner or other dependant on your death. At retirement you need to choose the level of pension they receive.
If you have an Investment Account
If you have an Investment Account, you can:
- Use it to fund part or all of any tax-free lump sum you decide to take. This would leave more of your Retirement Account to finance your pension.
- You could use any remaining balance from your Investment Account to buy a pension on the ‘open market’. See If you transfer out for details.
- Take all your Investment Account as a one-off cash sum or as two payments over two tax years (known as an Uncrystallised Funds Pension Lump Sum).
- The first 25% of each payment would be paid tax-free. The remainder would be taxed as earned income at your marginal rate.
Pension increases in payment
Any pension which is subject to an increase, will increase on 1 November each year in line with the Retail Prices Index (RPI) from the preceding July. Depending on your section and service, the increase will be capped at a certain level. In certain circumstances, part of your pension may not receive any annual increases.
For more details on pension increases, go to the FAQs page.
Your options if you transfer out. . .
You've read about your options from the Fund. Now take a look at your options If you transfer out of the Fund.