Get to Grips with Retirement
Most of us have one common goal when saving into our pension – to ensure our retirement is comfortable and worry-free when it comes to money. While many of us realise the impact that topping up our pension pot each month can have on later life, we may not be as familiar with the ins and outs of the retirement process.
Time to Retire
You can choose to take your pension anytime between age 55 (rising to 57 from 6 April 2028) and 75. However, if you choose to take your pension before your Normal Pension Age, your pension is likely to be reduced due to early payment.
The only way for your pension to be paid before your Normal Pension Age without a reduction is in cases of ill health retirement, retirement with full Rule of 85 Protection and in some cases of redundancy/business efficiency retirements (active members only).
Your Normal Pension Age (NPA) is simply the age you can retire and receive your benefits in full. Normal Pension Age depends on when you built up pension benefits:
- Before 1 April 2015: Normal Pension Age is 65
- On or After 1 April 2015: Normal Pension Age is the same as your State Pension age (SPA), with a minimum age of 65 for those who have a State Pension Age younger than 65. For any benefits built up before 1 April 2015, your NPA will remain 65.
If you take your benefits before your Normal Pension Age they will likely be reduced as they are being paid early. If you take your benefits later than your NPA, your benefits will increase.
You cannot take your pre and post April 2015 benefit separately, they must be taken at the same time. So you may find depending on your NPA and what age you retire, some benefits are reduced but others are not.
Steps to Retirement
Deferred Ill health retirements or those retiring with Additional Voluntary Contributions (AVCs) will have some additional steps but the general retirement process is as follows:
- Agree a retirement date with your employer. If you are requesting ill-health, redundancy or flexible retirement from active status, your employer will have their own process to reach this agreement. Ask your line manager if you have any questions about any of these types of retirement.
- Your employer will notify us once you have agreed and set a retirement date. You can let us know yourself to ensure there are no delays.
- Around 2-4 weeks* before your retirement date, we will write out to you about your pension options. This will include your options to swap pension for lump sum.
- Complete and return the forms we send to you.
- After your final pay has been paid, your payroll department will pass on your final pay details to us. This is used to calculate the final value of your pension and lump sum. This step does not apply to deferred members.
- We will write out to you once we receive your final pay details, confirming the date of your first pension payment.
The length of time it takes to process and put your pension into payment varies depending on resources available and the timescale of when we receive final pay information from your employer, so the more notice we receive, the better.
Once we have received all your paperwork, including your completed forms and final pay figure from your employer, we will process your pension for payment. Pensions are paid on the 15th of each month. Your first payment will depend on when we receive your paperwork. If you are getting a lump sum, this will be paid around 15-20 working days after we receive your paperwork.
*We aim to have pension options issued 2-4 weeks before retirement. However this might not always be possible. Timings can vary in terms of how long your pension can take to be processed and come into payment, so please be sure to begin the process from your side in plenty of time, especially if you have a specific retirement date in mind.
For more information on retirement and to learn about the different types of retirement available, visit here if you are an Active member and here if you are a Deferred member.
