Protected Rights Annuity

If you have contracted out of the additional State pension, known also as the State Second Pension (previously called the State Earnings Related Pension Scheme (SERPS)), and put your National Insurance (NI) rebates into a personal pension fund, you must use that part of that pension fund to buy a protected rights annuity.

Your current pension provider will tell you if protected rights applies to you and what it might mean in your circumstances.

Your choices

There are a number of available options

With a protected rights pension you have some choices:

Take a pension income

You can take your protected rights pension income at the same time as your occupational or personal pension, provided you are aged over 50 years old and your pension scheme rules currently allow you to start taking your pension at age 50. This lower age limit will be going up to age 55 in April, 2010.

Take tax-free cash

You can convert up to 25% of your protected rights fund into a tax-free cash lump sum.

Take a joint life annuity

You will have to buy a joint-life annuity paying a 50% spouse’s pension benefit if you are married or have a civil partner.

Select how your income is payable

You can choose between taking level annuity payments or an escalating income.