DC pension & at what age must one activate i.e. convert to Annuity or ARF

M

Mcivor

Registered User
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Hi, I am a 62 year old currently working part time and may continue to do so for a number of years past normal retirement age of 65. I have a reasonably sized DC pension fund from my previous employer that I have left in situ and is managed by Mercer. I may not need to access this fund for a few years. Is there an age limit as to when this fund must be used to purchase an annuity or ARF i.e. when I reach say 65 years old or could I leave it as is for a few years past that time
 
Assuming that the DC fund is from an Occupational Pension Scheme of your previous employer you can defer it to age 70.
 
that's great. I guess this is one of the few advantages of DC pensions over DB in that one has some flexibility in timing when to draw down the DC fund.
 
But if the benefits from a DB scheme are defined/guaranteed then why would one ever want to defer taking them?
 
I guess so. I was just thinking the DC fund does at least give one the opportunity to manage their tax liability. Would it be useful for those on smaller DB schemes to be able to defer drawing down with the option to get a larger payment later assuming they could afford to. Something like the new option with the state pension
 
Mcivor said:
Would it be useful for those on smaller DB schemes to be able to defer drawing down with the option to get a larger payment later assuming they could afford to.
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Depends on the DB scheme rules I guess?
I don't know if they generally offer such an option (i.e. higher benefits for deferral)?
 
I was in 2x DB schemes.
Benefits had to be taken at normal retirement date.
Other options had to be initiated by NRD.
No later.
It must indeed depend on rules of scheme.
 
LDFerguson said:
Assuming that the DC fund is from an Occupational Pension Scheme of your previous employer you can defer it to age 70
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Interesting, do you need to define the length of deferral or can you just decide anytime above 65 to start the ARF ? And while I'm there, will the pension company send annual reminders while in this ?
 
elcato said:
Interesting, do you need to define the length of deferral or can you just decide anytime above 65 to start the ARF ?
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A majority of DC schemes will just leave the fund invested until you fill out the retirement application forms. But it's worth getting in touch to verify this. I've seen a DC scheme that "froze" the fund automatically at 65 meaning that the customer got no further investment growth.

elcato said:
And while I'm there, will the pension company send annual reminders while in this ?
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A DC scheme should send annual statements to the member but I know that some schemes are better than others at actually doing this.
 
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