Pensionable age changing

richlatham

Hi - I'm 52 (today is Feb 2010) - If I get made redundant before April I will get redundancy plus a company pension because I'm over the minimum retirement age (50). I've worked for 18 years at my companyy, so it's worth having!

However, after April the minimum retirement age goes up to 55. So what would my rights be if I got made redundant in May, or before I was 55?

ceridwen

Errrr......<cough> - none actually as far as I can see.

Not the answer you want to have I know. There does not appear to be any phasing-in of this change at all. As far as I can see - there is just this cut-off point. Before it = you're okay. After it = you're not okay.

I guess you are thinking of the way that the increase in womens State Pension Age is being phased-in (starting this year) - but its not the same thing here.

getmore4less

Allthough you may not be able to take the pension did the company enhance it it in an way if you are terminated after 50?

How are they dealing with the change in their compensation packages thats what is important to you long term.

You have 12 weeks notce anyway so they would have to termnate with PILON to get inside the April date anyway is PILON normal pratice for your company?

richlatham

It was more of a hypothetical issue regarding redundancy. In answer to the question - I would get pay in lieu of notice.

Currently IF you get made redundant and you're over 50 my company gives you a redundancy package PLUS a pension of X 60ths based on years service, payable from redundancy date. However if you're less than 50, you have to wait until you are 65 to draw the pension. It seems with the min retirement age going to 55 from April, thay you miss out if you're over 50 now, but younger than 55 - like me - in the unfortunate event of redundancy.

jh2009

The law changes at midnight on 5th April 2010 for the 50 to 55 law. So if the company has a policy of 50 early retirement in a redundancy it will be illegial to provide early retirement to 50 to 55 year olds (the legislation overrides any companies 50 minimum policies).

The only exceptions are:

(i) Ill health retirements (which if granted can be provided at any age)

(ii) Those with specialised occupations (such as sportman, deep sea divers, stunt men, etc) where their scheme has an earlier retirement age (for physical / health reasons) agreed with HM Rev and Customs.

Although the 5th April is still two months away, beware leaving things to the last minute if you are to take early retirement. My understanding is that you MUST be retired and in receipt of benefits/any investment funds cashed by midnight 5th April.

Remember easter falls on the 3rd april this year, so 2nd april - 5th is a write off as offices will be shut for the easter weekend, (although i think HMRC are allowing schemes to set people up on the 6th april).

So if an early retirement for a 50 to 55 year old is being considered, anyone should get on with it ASAP as they will need time to consider options, deal with paperwork, have their benefits set up, etc.

Uncertain

One point to remember is that your pension will obviously be worth more if taken later. Depending on your circumstances you may be able to live on savings for a couple of years then "pay them back" using the extra in the higher pension. You might even be able to increase any mortgage to achieve the same thing but do take care with your calculations!!

jh2009

"One point to remember is that your pension will obviously be worth more if taken later. Depending on your circumstances you may be able to live on savings for a couple of years then "pay them back" using the extra in the higher pension. You might even be able to increase any mortgage to achieve the same thing but do take care with your calculations!! "


............The above is something to consider, but be careful of two things.........

1. If the company offers early retirement on any form of "enhanced terms" at your redundancy. Often you only get those terms if you take early retirement at your actual redundancy date. (it is compensation for loss of employment at that date, which if you refuse the company has no obligation to provide later on).

If you turn down the early retirement at your redundancy date, and then come back in two years and ask to take early retirement, its highly possible that a normal early retirement calculation would be made, with NO enhancement and with a full reduction for early payment.

A pension enhanced to compensate for some of the early retirement at 52 could easilly end up higher than a pension at 55 fully reduced for payment 10 years early.

2. If no enhancement is provided, then a full early retirement reduction would be applied at your retirement, if you took your pension early.

Obviously this reduction would be higher for someone at 52/53 than someone in the same position at 55.

But the reduction factors change. People are living longer, and the costs of schemes are increasing. This means factors are always under review and so any quote given today for 3 years time will (as im sure the scheme will point out in any quotation to you) be unable to be guaranteed to apply in the future if the factors have changed.

I guess what im saying is that if you ask for a 55 quote at same time as you are looking at an immediate quote for today at 52, the 55 quote could change in 3 years.

Some Schemes sometimes can also refuse early retirement requests that come direct from members, although most don't do this.

.......In all cases above, a lot depends on what the scheme rules and company policies say. Before you take any action you should check this out with the Company/pension scheme if this is an avenue you want to consider.