You can enjoy a guaranteed package of benefits when you retire, including a pension that increases every year in line with the cost of living for the rest of your life and the option to exchange some of your pension for a tax-free cash lump sum.
The scheme’s normal retirement age is now linked to your State Pension Age for both men and women. But people retire and draw their benefits for all kinds of reasons and at all kinds of ages. You may retire and draw your benefits from anywhere between age 55, right up to the eve of your 75th birthday.
In cases of ill health, there is no lower age limit at all. There is one important condition – to be entitled to retirement benefits you must have at least two years’ membership.
What about retiring through redundancy and efficiency? If you leave employment on the grounds of redundancy or in the interests of business efficiency and you are aged 55 or over, then your benefits are payable right away. If you retire in this way, there are no early retirement reductions.
… and early retirement? You can choose to retire from 55 without permission from your employer. If you choose to retire before your normal retirement age your benefits will be reduced to take account of being paid for longer. How much your benefits are reduced depends on how early you retire (we have a prepared an early reduction table to show this).
You can retire after 65. You can stay in the scheme beyond 65 – in fact as late as 75 with your employer’s permission. If you choose to carry on working after age 65 you will continue to pay into the scheme, building up further benefits. You can receive your pension when you retire or when you reach the eve of your 75th birthday, whichever comes first. If you draw your pension after age 65 your pension will be paid at an increased rate.
There are other flexible retirement options. Rather than continuing in your job until your normal retirement age or beyond you may wish to consider the possibility of flexible retirement. From age 55, if you reduce your hours or move to a less senior position, and provided your employer agrees, you can draw some or all of the pension benefits you have built up – helping you ease into retirement.
You can still draw your wages / salary from your job on the reduced hours or grade and continue paying into the scheme, building up further benefits.
If you take flexible retirement before your normal retirement age your benefits will be reduced to take account of being paid for longer. How much your benefits are reduced depends on how early you draw your benefits. Your employer may, however, determine not to apply all or part of any reduction. You must have your employer’s consent for the payment of your pension benefits under flexible retirement.
If you are interested in Flexible Retirement and require more information please refer to your employer’s policy or contact your employer direct.
Retiring through ill health
If you have two years’ membership or more and have to leave work due to illness you may qualify for immediate payment of your benefits. This can be from any age. Your employer will refer you to an independent occupational medical practitioner who will assess your condition and make decisions about the impact of your condition on your own job and your capability for other paid employment.
There are graded levels of benefit based on how likely you are to be capable of gainful employment after you leave your job. The different levels of benefit are:
- No prospect of other gainful employment at any age before your normal retirement age. You will get a pension and normally a lump sum based on the membership you have built up so far, plus all the extra membership you would have built up if you had remained a member until your normal retirement age.
- If you are unlikely to be capable of gainful employment within three years, but you may be capable of doing so before your normal retirement age. You will get a pension and normally a lump sum based on the membership you have built up so far plus 25% extra membership you would have built up if you had remained a member until your normal retirement age.
- Good prospect of other gainful employment straight away or any time in the next three years. You will get your pension and normally a lump sum. But your pension will only be paid for up to three years, and may stop earlier following a review after 18 months or taking up gainful employment. If the payment is stopped it will become payable again from your normal retirement age.
‘Gainful employment’ means paid employment for not less than 30 hours in each week for a period of not less than 12 months. If you are part-time, any extra membership awarded due to ill-health retirement will be reduced to reflect your part-time hours at leaving, disregarding any reduction in your hours due to your illness.