Retirement
When you retire, your pension will be based on the length of your pensionable service and your pensionable salary.
Your annual pension is calculated as follows:
Because your pension is calculated based on your pensionable service, the age at which you retire plays an important part in the amount of pension you may receive.
If you elected to cease contributing to the Fund at age 60 or age 65 then your pension will be based on the pension you had built up until the date you ceased contributing, plus the late retirement bonus of 8 percent a year and any pension increases granted between the date you ceased contributing and the date you retire.
Retiring before age 65
In the Fund, your Scheme Pension Age is 65; however, you may retire between the ages of 60 and 65 without any reduction to your accrued pension.
If you retire before age 60 your pension will be reduced because it would be paid earlier and for a longer time. Here are some example reduction rates:
| Retirement Age | Reduction |
|---|---|
| 58 | 8 per cent |
| 55 | 18 per cent |
| 50 | 33 per cent |
What is the earliest age I can retire?
If you joined the Fund before 6 April 2006, the earliest age you can retire and draw pension is age 50.
If you joined the Fund on or after 6 April 2006 but before 4 November 2021, the earliest age you can retire and draw pension is age 55.
If you joined the Fund after 3 November 2021, then from 6 April 2028 the earliest age you can retire and draw your pension will be 57. If however you reach age 55 before 6 April 2028 you can draw your pension from age 55 onwards, as long as you have drawn your pension before 6 April 2028.
In all cases you can only draw your pension if you have left service when you take your pension, and any other applicable conditions are met.
Taking a cash lump sum
When you retire, you can give up some of your annual pension for an immediate cash sum – which under current UK law is tax-free. The maximum lump sum that can usually be paid is currently 25 per cent of the ‘value’ of your pension at retirement, subject to an overall maximum of £268,275 from all. You can take anything up to the maximum – smaller amounts will provide you with a larger remaining pension.
It is important to note that even if you take a lump sum and reduced pension, the Fund will not reduce the amount of any adult dependant’s or eligible children’s pensions payable on your death. The Fund will not charge you for taking a cash lump sum.
Variable pension
You may want to take advantage of a variable pension if you take your Fund pension before you reach your State Pension Age (SPA). A variable pension allows you to receive a higher pension1 until your SPA, and then a reduced one from SPA. You can take a variable pension regardless of whether or not you take a lump sum. When considering the variable pension you should be aware that this will increase the value of your pension for Annual
Allowance and Lifetime Allowance purposes.
The Fund must make sure that your reduced pension after SPA is at least half of your original pension and at least equal to your Guaranteed Minimum Pension (GMP).
You should note that in relation to the variable pension, the SPA to which the higher level of pension is paid is the SPA that was in force at the date your pension commenced. If legislation alters your SPA after the date your pension commenced, it will not alter the date to which the variable pension is paid.
You can obtain a detailed forecast of your State Pension online at www.gov.uk/check-state-pension
Other information about State benefits and pensions in general are also available at www.gov.uk
Pension Increases
Once in payment, your pension will increase each April. Your first year’s increase may be pro-rated. For example, if the full increase is 4 per cent and you have been receiving your pension for six months, you will receive a pro-rated increase of 2 per cent.
For members below State Pension Age, the whole of your pension may increase in line with inflation. Inflation is measured by the increase in the Retail Prices Index (RPI) over the twelve months ending in the previous September. If you are a New Member increases are limited to a maximum of 5 per cent each year. If there is no increase in the RPI, your pension will remain unchanged for that year.
Once you reach State Pension Age, increases will be paid on the various parts of your pension as follows:
Planning for Retirement
Our Pension Web Portal allows you to run your own retirement calculation and allows you to model the amount of tax free cash sum you take.
You are encouraged you to seek suitable independent financial advice before making any decisions relating to your retirement.
Further details can be found in our Guide to Retirement.
The earliest you can retire depends upon when you joined the Fund, if you joined the Fund before 6 April 2006 the earliest you can claim your pension is age 50, if you joined the Fund between 6 April 2006 and 3 November 2021 the earliest you can retire is age 55. If you joined the Fund after 3 November 2021 then until 5 April 2028 the earliest you can draw your pension is age 55, however from 6 April 2028 this will increase to age 57.
If you are an active member, we calculate your pension based on your pensionable service to your chosen date of retirement and your pensionable salary over the 12 months to your chosen date of retirement. If you are a deferred member, then your pension is based on your deferred pension at the date you left service increased in line with the Fund Rules to your chosen date of retirement. If you are under age 60 at your chosen date of retirement then your pension is reduced for early payment, for example at age 50 the reduction is 33 per cent, at age 55 it is 18 per cent and at age 58 it is 8 per cent.
If you are an active member of the Fund then you cannot draw your pension until you leave service, the only exception is if you are an Existing Member (i.e. you joined the Fund on 1 April 1989) then you can draw your pension on your 65th birthday while remaining in our employment.
If you are a deferred member then you can claim your pension at any time after your minimum retirement age.
If you are an active member once your leaver notification has been processed on SAP the Pension Fund Office will be notified and we will produce an issue an option pack to you.
If you are a deferred member you should contact the Fund Office confirming the date you wish to claim your pension from.
You will usually have the option to give up part of your pension for a tax free cash sum. If you have more than 6 months until your State Pension Age, you may have the option to elect a higher pension until your State Pension Age, in which case you will receive a lower pension once you reach your State Pension Age.
No, you can choose to have either a lower cash sum or no cash sum at all. You should consider your own financial position when considering whether to take a cash sum or not.
We cannot provide you advice, but when considering whether to take cash you should take into account your own financial circumstances and consider:
- How much tax free cash sum (if any) you need or want to take
- Whether a tax free lump sum today is better than pension for life taking into account that the pension increases once in payment
Whether a tax free lump sum today is better than pension for life taking into account that the pension increases once in payment
The variable pension means that your pension from the Fund is paid at a higher rate until you reach your State Pension Age, when it is then reduced to the lower rate, however your Stat Pension will offset some or all of this reduction depending on how much State Pension you have earned.
For the purpose of measuring your pensions savings, HMRC rules mean that we need to look at the difference between your initial pension option and your accrued pension at the last 5 April. The uplift to your pension is therefore taken into account, for this reason you should consider whether there is an Annual Allowance tax charge to pay and whether this is the best option to take. We would suggest you seek suitable independent financial advice.
If you were a member of the Fund before 6 April 1997 then you would have been contracted out of the State Second Pension and as a result you paid lower National Insurance contributions. His means that your pension may include an element known as Guaranteed Minimum Pension (GMP) which increases at a different rate to the rest of your pension, GMP accrued before 6 April 1988 is not increased by the Fund, GMP accrued between 6 April 1988 and 5 April 1997 is increased in line with CPI capped at 3%, pension in excess of GMP is increased in line with RPI capped at 5% for those who joined the Fund after 1 April 1989.
Pensions are paid 4 weekly in advance, a list of future pay dates in available on the Fund website
This will depend upon whether you have AVCs as these can only be disinvested once your final AVC has been received and cannot be disinvested before your retirement date. You may wish to consider stopping AVCs the pay period before you retire to reduce the impact of having to wait to disinvest your AVCs.
If we have fully completed paperwork in advance of your retirement date then if you have no AVCs we aim to pay your lump sum on the next business day after the day you retire.
Your pension will commence from the start of the pay period after any lump sum is settled, it will include any arrears due since your date of retirement.
We are required to check whether your pension exceeds the Lifetime Allowance, this is an HMRC requirement and to do this we need details of any other pensions you have in payment or have claimed.