Flexible retirement

Flexible retirement has been introduced from the 6th April 2006. Flexible retirement means exactly what it sounds like it means - more freedom to draw your pension in the way that most suits you. You may wish to consider:

1. Taking your pension whilst continuing to work

Subject to being at least the Minimum Retirement Age, you may put your pension benefits into payment without leaving O2. This is a change to the position prior to 6th April 2006 where the law meant that you had to leave the Company you worked for in order to take your pension benefits. You may use this approach in conjunction with 3 and 4 below.

2. Postponing your benefits

You will not be forced to take you pension when you reach age 60 or 65 or on leaving the Company at either of those ages. You can choose to take your pension anytime before your 75th birthday at which time tax rules require that you put your Retirement Account into payment.

3. Take your benefits over staggered periods

This is more complicated and the example below is intended to help you understand your options. You are able to use part of your fund to set up a pension and tax free cash. The remainder of the fund will stay invested until you choose to put it into payment. There are a few conditions that apply to ensure that the process works well and complies with tax law but there are no conditions that are designed to inconvenience you.

Example

On reaching age 58 Ramon decides to put part of his pension fund into payment and reduce his hours of work with O2 to 3 days a week.

Ramon opts to put half his fund of £90,000 into payment. Of this £45,000, Ramon opts to take 25% (£11,250) as tax free cash to pay off his mortgage and uses the other £33,750 to purchase a pension which is arranged by the O2 Pensions Admin team.

The remaining element of Ramon's retirement account (£45,000) continues to be invested until his 65th birthday when Ramon puts his entire fund into payment. Between age 58 and 65 Ramon continues to contribute to the O2 Pension Plan and his contributions along with the Company's matching contributions and tax relief are invested in his Retirement Account.

Ramon was covered for death benefits as follows:

Up to age 58 - 3 x salary and a 30% dependent's pension.
Age 58 to 65 - 3 x salary and any dependent's pension set up by purchasing a pension.
65 onwards - any dependent's pension set up by purchasing a pension.

Conditions

The first payment must not commence prior to your Minimum Retirement Age.
All benefits must be in payment before or on your 75th birthday.
Tax free cash relating to an element of your Retirement Account must be taken at the same time as the pension to which it relates.
Subject to (iii) above you may continue to contribute to the Plan under 4 below.

4. Make more savings

If you choose to take only some of your pension (under 1, or 3 above), you may continue to contribute to the Plan. You will need to be in the employment of the Company and either under age 65 or have Company consent. You will also need to maintain a balance of at least £2,000 in your Retirement Account. You will continue to benefit from Company Contributions as set out in Making Contributions. However, your death benefits will be altered as noted below.

5. Partial transfer of your benefits

You may opt to transfer part of your Retirement Account should you wish. The conditions that apply are as noted in conditions (ii), (iii) and (iv) in 3 above. You are strongly recommended to take Financial Advice should you be considering this option.

Death benefits under flexible retirement

Should you be in receipt of pension from the Plan but remain in service you will be entitled to the following death benefits:

If you do not make further contributions to the Plan under 4 above, you will be entitled to 2 x salary as though a non member.
If you continue to contribute at least 4% of salary to the Plan under 4 above you will be entitled to a lump sum death benefit of 3 x salary. Entitlement to 30% dependent's pension will cease from the date that your first pension payment is made. The dependent's pension by virtue of being an active member ceases as pension in payment may provide a dependent's pension.