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  • FIRST POST
    • dave_ave
    • By dave_ave 22nd Apr 17, 7:59 AM
    • 194Posts
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    dave_ave
    Retire at 54 - Railway DB scheme
    • #1
    • 22nd Apr 17, 7:59 AM
    Retire at 54 - Railway DB scheme 22nd Apr 17 at 7:59 AM
    I am contemplating retiring at 54 from the railway DB scheme. The pension income is more than sufficient for our needs.

    I understand though that you cannot stay in employment if taking the pension at 54 - OK from 55 though.

    Are these scheme rules do you think, or HMRC rules or just employer rules?

    How long do they apply for? I mean if I retired at 54 and then took a job a week, month, year later, is that allowed?
Page 1
    • Silvertabby
    • By Silvertabby 22nd Apr 17, 9:28 AM
    • 1,512 Posts
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    Silvertabby
    • #2
    • 22nd Apr 17, 9:28 AM
    • #2
    • 22nd Apr 17, 9:28 AM
    I am contemplating retiring at 54 from the railway DB scheme. The pension income is more than sufficient for our needs.
    I assume that you have reserved rights to take this pension from age 50 rather than 55?

    I understand though that you cannot stay in employment if taking the pension at 54 - OK from 55 though.

    Are these scheme rules do you think, or HMRC rules or just employer rules?

    How long do they apply for? I mean if I retired at 54 and then took a job a week, month, year later, is that allowed?
    Speaking from a LGPS point of view, scheme rules in accordance with HMRC regulations - ie, you must retire (or flexibly retire) in order to gain access to your pension pension. In other words, you can't arrange with your boss to take a short unpaid 'holiday' and then return to your old (or similar) job.

    It depends on the Railway scheme rules how they would treat your taking up another job some months down the line. For a start, you would have to see if they apply 'abatement' - ie, if you were to return then your pension plus your salary can't exceed your current salary - if it did, then your pension would be reduced (abated).
    • xylophone
    • By xylophone 22nd Apr 17, 11:10 AM
    • 22,869 Posts
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    xylophone
    • #3
    • 22nd Apr 17, 11:10 AM
    • #3
    • 22nd Apr 17, 11:10 AM
    There is a note here https://www.railwayspensions.co.uk/docs/default-source/newsletters/review/review-feb-2012-pdf.pdf?sfvrsn=0

    on early retirement and re-employment but it is from five years ago.

    It would be best to check your situation with your scheme administrator.
    • Dazed and confused
    • By Dazed and confused 22nd Apr 17, 11:16 AM
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    Dazed and confused
    • #4
    • 22nd Apr 17, 11:16 AM
    • #4
    • 22nd Apr 17, 11:16 AM
    dave_ave

    The responses so far seem to assume that this comment means you intend to work for your current employer again

    I mean if I retired at 54 and then took a job a week, month, year later, is that allowed?


    Is that actually what you meant or do you mean a job somewhere else unrelated to the railways? If so the rules may be totally different.
    • Deneb
    • By Deneb 22nd Apr 17, 12:07 PM
    • 237 Posts
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    Deneb
    • #5
    • 22nd Apr 17, 12:07 PM
    • #5
    • 22nd Apr 17, 12:07 PM
    I am contemplating retiring at 54 from the railway DB scheme. The pension income is more than sufficient for our needs.

    I understand though that you cannot stay in employment if taking the pension at 54 - OK from 55 though.

    Are these scheme rules do you think, or HMRC rules or just employer rules?

    How long do they apply for? I mean if I retired at 54 and then took a job a week, month, year later, is that allowed?
    Originally posted by dave_ave
    Assuming that you mean returning to work with your current employer, the legislation is in the Finance Act 2004 and came into force in 2010.

    It is quite complex, but in essence if you have a scheme entitlement (protected pension age) which allows you to take your pension benefits between the ages of 50 and 54, then you cannot return to employment with your current employer until a period of six months has elapsed from the date at which you took benefits from the pension.

    To do so would make both you and the pension administrators liable to unauthorised payment charges; in other words you would lose a substantial amount of your pension benefits to a tax charge - 40% of your lump sum and all ongoing pension payments plus a 15% surcharge on the pension scheme itself according to the advice that was circulated to members of my scheme.

    There are a few exceptions, such as being a member of the armed forces, and a general exception that you can return to employment with your current employer after a break of at least one month, but only if your pension payments are abated.

    If this is likely to affect you, I would suggest seeking professional advice before making any decisions.

    This caused me a few months of worry when I retired in 2011 and went back to work for my employer, as although the legislation came into force in 2010, neither my employer or pension administrators seemed to know anything about it until a few months after I had commenced my pension. Thankfully, although I took my pension at 54, I had a protected pension age of 49 under my scheme and in my case the restrictions didn't apply.

    The relevant legislation is paragraphs 21 and 22 of Schedule 36 to the Finance Act 2004 (as amended).

    I only know this because of a technical document from HMRC which was circulated by my pension scheme following the ensuing panic!
    • dave_ave
    • By dave_ave 22nd Apr 17, 3:06 PM
    • 194 Posts
    • 79 Thanks
    dave_ave
    • #6
    • 22nd Apr 17, 3:06 PM
    • #6
    • 22nd Apr 17, 3:06 PM
    Thank you for all your replies - extremely informative.

    My thinking currently is to retire at 54 (as this is permitted under scheme rules) and do the same role abroad, but for a different employer.

    My other plan was to resign at 54, take the job overseas and take my pension at 55, but the estimate obtained from the scheme meant £7,500 less pension per year than simply taking a pension at 54.

    In view of the information provided above if I retired at 54 and took a pension, I could take the job abroad soon after with no tax implications?
    • xylophone
    • By xylophone 22nd Apr 17, 3:36 PM
    • 22,869 Posts
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    xylophone
    • #7
    • 22nd Apr 17, 3:36 PM
    • #7
    • 22nd Apr 17, 3:36 PM
    In view of the information provided above if I retired at 54 and took a pension, I could take the job abroad soon after with no tax implications?
    Presumably you mean "no unauthorised payment implications" rather than tax implications?

    It would appear from the information provided that if you draw your pension and then obtain employment from a source completely unconnected with your former company, then the "unauthorised payment" rules will not apply.

    However, there will still be the question of tax on pension income/employment income whether here or abroad.

    Do you intend to emigrate or simply to work abroad?


    Have you obtained a new state pension statement?

    https://yourstatepension.campaign.gov.uk/?utm_source=Mail-Online&utm_medium=Partnership&utm_campaign=GTKY
    • dave_ave
    • By dave_ave 22nd Apr 17, 7:10 PM
    • 194 Posts
    • 79 Thanks
    dave_ave
    • #8
    • 22nd Apr 17, 7:10 PM
    • #8
    • 22nd Apr 17, 7:10 PM
    Do you intend to emigrate or simply to work abroad?


    Have you obtained a new state pension statement?
    I do not intend to emigrate just work abroad for a few years to boost savings.

    I did get a new state pension statement. I have worked 38 years, but I was contracted out all of that time. I need 7 more years to get a full state pension.
    • Silvertabby
    • By Silvertabby 22nd Apr 17, 7:24 PM
    • 1,512 Posts
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    Silvertabby
    • #9
    • 22nd Apr 17, 7:24 PM
    • #9
    • 22nd Apr 17, 7:24 PM
    My other plan was to resign at 54, take the job overseas and take my pension at 55, but the estimate obtained from the scheme meant £7,500 less pension per year than simply taking a pension at 54.
    Are you sure about that? I've heard of hybrid schemes which pay the equivalent of the State pension until the State pension kicks in, then reduce by that amount, but not one which reduces from 55.
    • dave_ave
    • By dave_ave 22nd Apr 17, 8:43 PM
    • 194 Posts
    • 79 Thanks
    dave_ave
    Are you sure about that? I've heard of hybrid schemes which pay the equivalent of the State pension until the State pension kicks in, then reduce by that amount, but not one which reduces from 55.
    The railway scheme has a level pension option I believe, which I believe is what you are explaining. We have an online planner, which gives estimates of pension at different ages. In my explanation above I would be out of the pension scheme for a year and it seems to make a big difference. The scheme supplied me with quote based on this and it was £7,500 less per annum than if I remained in the scheme an extra year to 55.
    • Sleazy
    • By Sleazy 22nd Apr 17, 8:47 PM
    • 6,403 Posts
    • 6,205 Thanks
    Sleazy
    Probably best to check with RPMI directly - suggest you ask them for an estimate. From my own experience as a previous member of the DB scheme, the online planner is pretty accurate, though doesn't seem to make much sense that you get less if you contribute for another year.
    • zagfles
    • By zagfles 22nd Apr 17, 8:53 PM
    • 12,240 Posts
    • 10,172 Thanks
    zagfles
    Are you sure about that? I've heard of hybrid schemes which pay the equivalent of the State pension until the State pension kicks in, then reduce by that amount, but not one which reduces from 55.
    Originally posted by Silvertabby
    Some schemes have different early retirement factors if you take the pension immediately compared to if you take the pension later.
    • dave_ave
    • By dave_ave 15th Sep 17, 1:07 PM
    • 194 Posts
    • 79 Thanks
    dave_ave
    The relevant legislation is found here with examples: https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm062230
    • kidmugsy
    • By kidmugsy 15th Sep 17, 6:45 PM
    • 9,611 Posts
    • 6,363 Thanks
    kidmugsy
    ...take my pension at 55, but the estimate obtained from the scheme meant £7,500 less pension per year than simply taking a pension at 54.
    Originally posted by dave_ave
    The scheme supplied me with quote based on this and it was £7,500 less per annum than if I remained in the scheme an extra year to 55
    Originally posted by dave_ave

    These two statements seem to me to clash.
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