Receiving my full final salary pension and keep working?

edited 31 October 2012 at 12:03PM in Pensions, Annuities & Retirement Planning
10 replies 1.1K views
H20TGPH20TGP Forumite
4 Posts
First Post
MoneySaving Newbie
I will be 60 in January and eligible for my full pension with no actuarial reduction. Having worked for the company for 43 years I have always expected my normal retirement date to be 60.
Recently a number of older colleagues have taken their pension at 65 and the company has allowed them to continue in their current job.

I have requested to be treated the same but the company are saying that my official NRD is 65 and that if I want to draw my pension at 60 I will have to leave the company! It seems stupid to me that I have a fully paid up pension and stopped my contributions 3 years ago and yet they say I have to leave, but if I wait until 65 I can stay!

I would appreciate any thoughts from forum members as to whether they can force me to leave under the new ageism rules.

Cheers

Tom

Replies

  • ajbellajbell Forumite
    1.2K Posts
    ✭✭✭
    If you want to carry on working can you defer your pension for a bit longer. If you take your pension now and carry on working you will pay a lot of tax.
    4kWp, South facing, 16 x phono solar panels, Solis inverter, Lincolnshire.
  • kidmugsykidmugsy Forumite
    12.7K Posts
    Tenth Anniversary 10,000 Posts Name Dropper Combo Breaker
    ✭✭✭✭✭
    " the company are saying that ...": (i) could it be worth talking to somebody else at the company? (ii) Have they put that in writing to you?
    Free the dunston one next time too.
  • H20TGPH20TGP Forumite
    4 Posts
    First Post
    MoneySaving Newbie
    Thanks for the prompt responses, to answer the questions.
    The company HR dept have given me the options verbally at present. Yes I can defer taking the pension and keep working but in doing so I would be coming into work on 12 hour day/night shifts for 1/3rd pay.
    I.e. I can stay at home and be paid my 2/3rds salary pension and save on petrol / car costs etc.
    I appreciate that I will be paying an obscene amount of tax if I keep working and draw my pension, but at least I will be drawing an increased monthly sum to compensate. My pension after 60 will not benefit in deferment in any way other than it would be based on my final salary that may increase on a year by year basis up to 65.
  • CLAPTONCLAPTON Forumite
    41.9K Posts
    10,000 Posts Combo Breaker
    ✭✭✭✭✭
    yes it is perfectly legal for a company to (only) pay your pension when you retire (i.e stop working for) from that company.
    it has nothing to do with ageism but might well be worth reading the T&Cs very carefully or seeking other advice.
  • PaulCooperPaulCooper Forumite
    245 Posts
    Part of the Furniture 100 Posts Combo Breaker
    ✭✭
    There are some very learned people on here and you need to get second opinions on this.
    I'm pretty sure that you no longer HAVE to retire at a certain date (this has recently changed--- last few months). So if you're being told you have to retire, it's wrong.
    You need to look at the Terms of your pension, it might say you have to leave the employment to get the pension, I have no first hand experience of those restrictions--- don't have company pension.
    One of the posts earlier hit the nail on the head, the most important thing here is how you will be treated from a tax point of view. If you could claim you pension and still work full time, you'll give a lot of it back to the taxman
    not the sort of thing that I would want, but we're all different
    Paul
  • zzzLazyDaisyzzzLazyDaisy Forumite
    12.5K Posts
    Part of the Furniture Combo Breaker
    ✭✭✭✭✭
    PaulCooper wrote: »
    I'm pretty sure that you no longer HAVE to retire at a certain date (this has recently changed--- last few months). So if you're being told you have to retire, it's wrong.
    Paul

    There is confusion here about what 'retirement' means, and the difference between what the law says about employment and what the pension scheme says about drawing the pension.

    I will try to explain it simply (not that it is simple, but you know what I mean)

    Firstly, in general, it is correct that employers can no longer make you retire at a certain age.

    Secondly, if you are paying into a pension scheme you can only access the pension provided you come within the rules of the pension.

    I can't see the rules of the pension scheme, but at a guess it seems likely that this is an occupational pension which pays out at 65.... unless the employee retires early, in which case provided the quatification requirements are met, the employee can draw the pension on that earlier retirement.

    What OP seems to be saying is that he wishes to draw the pension at 60 but carrying on working. But (if I am right) the pension scheme would not allow that because he would not have met the qualification criteria of having retired early from the employment. Whereas if the pension pays out automatically at 65, the issue of whether the person is still working or not is a non-issue.

    On the other hand, if OP reites from work, draws his pension and then becomes a self employed contractor for his former employer, that would not normally prevent him from drawing his pension.

    It is impossible to say for certain without considering the rules of the pension scheme, but the scenario that I have outllined above would not be uncommon.

    So when HR says that OP must retire if he wishes to draw his pension at 60, they are simply stating what the rules of the pension scheme are. This is not unlawful, as they are not forcing him to retire at 60, he is saying he wishes to 'retire' at 60 but carry on working for them, and that is not allowed by the pension scheme. It is two different issues.

    Sorry if I have made things seem even more complicated!
    I'm a retired employment solicitor. Hopefully some of my comments might be useful, but they are only my opinion and not intended as legal advice.
  • H20TGPH20TGP Forumite
    4 Posts
    First Post
    MoneySaving Newbie
    Again thank you all for your replies.

    To ZZZlazy daisy.

    Many thanks for taking so much time to answer my post.

    I believe you are right on all points and that the company is sticking to the pension scheme rules. When they told
    Me last week that I would have to leave the company if I wanted my pension I came back to them with an offer of self employed status. I am yet to hear back from them on my proposal.
    I am not hopeful of a successful outcome in this instance and am resigned to early retirement in the New Year.

    Cheers

    Tom:(
  • edited 31 October 2012 at 4:09PM
    mgdavidmgdavid Forumite
    6.7K Posts
    Part of the Furniture 1,000 Posts Name Dropper
    ✭✭✭✭
    edited 31 October 2012 at 4:09PM
    you perhaps seem to be (too) trusting of HR department and what you are being told; you need to get hold of the full Scheme Rules from the Company Pension Scheme Trustees and read it thoroughly. You also need to have a copy of your employment contract, Terms & Conditions, and Staff Handbook or similar, and read that closely too.
    For info, I have done exactly what you want to do - 'retired' from the pension point of view at 60, drawn final salary pension with no penalty, and carried on working in the same job.
    Remember that your Employer company and the Pension Scheme company are two entirely separate organisations in law and have to be very careful about how they share employees personal information. In my case it was suggested I apply for my pension to the Trustees and no need to contact HR dept (i.e. my Employer) as it's none of their business.

    And yes you may pay a lot of tax on the pension but it's still 'free money'...
    The questions that get the best answers are the questions that give most detail....
  • CLAPTONCLAPTON Forumite
    41.9K Posts
    10,000 Posts Combo Breaker
    ✭✭✭✭✭
    PaulCooper wrote: »
    One of the posts earlier hit the nail on the head, the most important thing here is how you will be treated from a tax point of view. If you could claim you pension and still work full time, you'll give a lot of it back to the taxman
    not the sort of thing that I would want, but we're all different
    Paul


    Why ever would you decline a (say) 50% increase in income just because you pay a little more tax?

    Most people would jump at it.
  • kidmugsykidmugsy Forumite
    12.7K Posts
    Tenth Anniversary 10,000 Posts Name Dropper Combo Breaker
    ✭✭✭✭✭
    H20TGP wrote: »
    I appreciate that I will be paying an obscene amount of tax if I keep working and draw my pension,

    Why do so? Just bung enough into a private pension every year to let you avoid higher rate tax. Simples.
    Free the dunston one next time too.
This discussion has been closed.
Latest MSE News and Guides

Energy price cap could be extended beyond 2023

New plans have just been announced by the Government

MSE News

Cheap contents insurance for tenants

DON'T assume your landlord covers you

MSE Guides

Summer sizzlers round-up

Incl £2ish sun cream & £1.50 disposable BBQs

MSE Deals