What does it mean to retire from a job?

FatherAbraham

Is there any legal difference between "retiring" from a job, and "resigning"?

Once upon a time, with occupational pensions, retiring implied taking benefits from the scheme: there was a stronger link between stopping work, and receiving a pension. Nowadays, my "company" pension schemes are really group personal pensions which I control: the employer just contributes monthly.

I'm a member of my employer's share-saving scheme, which promises a bonus after one has held the securities for X years, as long as one is still employed. Resigning terminates the bonus entitlement, but retiring means that the bonus is applied pro-rata for the length of the vesting period which one has held the shares for (for example, if the shares must be held for three years, and one retires after one year, then one-third of the bonus will be paid, whereas with resignation, no bonus is paid).

Presumably, one can elect to "retire" from a job at any age? It's none of the employer's business how one will support oneself subsequently.

At present it would seem to be advantage to always retire when one wants to move job, rather than resign. The only downside I've thought of is that in the future, a "reason for leaving" which says "retirement" might look a bit odd on a job application.

Warmest regards,
FA

Stargazer57

FatherAbraham wrote: »

Presumably, one can elect to "retire" from a job at any age? It's none of the employer's business how one will support oneself subsequently.

It is quite common for share schemes to distinguish between 'good' and 'bad' leavers, with retirement being good and working for a competitor being bad. Leaving to work elsewhere might be subject to negotiation.

So I'm afraid I think you'll find the employer will show an interest in how you will support yourself.

I retired, very early, from a job and my employer needed some persuasion that the customary retirement gratuity was appropriate.

redbuzzard

Good question. I don't know whether I am retired or not.

Redundant last summer, haven't looked for a full time job, doing a very small amount of freelance here and there. Declared self employed so no benefits.

Taking a small occupational pension at its NRD in May, will leave SIPP and a larger occupational pension until 65 in 5 years time, living on the small pension, savings and any freelance meanwhile.

FatherAbraham

Stargazer57 wrote: »

It is quite common for share schemes to distinguish between 'good' and 'bad' leavers, with retirement being good and working for a competitor being bad. Leaving to work elsewhere might be subject to negotiation.

So I'm afraid I think you'll find the employer will show an interest in how you will support yourself.

I retired, very early, from a job and my employer needed some persuasion that the customary retirement gratuity was appropriate.

Yes, good points.

I looked more closely at the plan rules (which are international):

... in the event of termination of employment due to the Participant’s inability to work, or in the event of the Participant's retirement pursuant to applicable laws or, in the absence of such laws providing for specific terms and conditions for retirement, pursuant to the rules of the employing Company or Group Company applicable in the particular country, or death, the Participant (or his/her heirs respectively) is only entitled to a cash compensation in lieu of Matching Shares.

As far as I can see, there aren't applicable UK laws about retirement per se, only about drawing pension bennies (55 or older), and the state pension age (currently 67 for me). Unless the forum knows better?

In which case, I need to discover the specific rules of my employing company, relating to retirement and how one could retire "pursuant" to them. If any such rules exist, they might specify an age limit below which one cannot retire, or they might specify that leaving to take another job cannot be regarded as retirement. Or they might not

Warmest regards,
FA

gamston

on the Railway "retiring" = age at which you can take the pension benefits ie 55 yrs old
anything before that would be resigning, unless ill health, redunancy etc
I think that is the way I've been reading things

bern48

If it is of any help I have recently "retired",8 months before state retirement age. I had paid into a share incentive plan where I was allocated various 1 for every 2 bought and etc benefits, these are taxable and NI contributionable if cashed in before 5 years holding threshhold is reached or retirement from the business. I anticipated losing a considerable amount due to my early retirement, but in the event I recieved the full amount with no tax or NI liability.There were no questions asked regarding my plans for the future etc, so I only assumed that retirement from the business was considered the same as "old age retirement", I didnt feel the need to argue the point!

jamesd

Defined benefit schemes are the ones where it's most likely to be a matter of dispute. Some of those might pay out only if you're not earning more than a certain amount or not working more than a certain number of hours. "Retiring" within five years of age 60 for a woman or 65 for a man isn't something that I'd expect to be questioned, retiring around two to three years before state pension age has been pretty routine.

HMRC governs the rules relating to the meaning of "retirement" for Sharesave schemes so you should read this non-HMRC document that summarises their apparent intentions: 'HMRC agree that an individual may be "bound to retire" not only at any age specified in the employment contract signed by the employer and the employee when the employment commenced, but at any other age properly agreed between employer and employee and incorporated into the individual's employment contract'.

FatherAbraham

jamesd wrote: »

HMRC governs the rules relating to the meaning of "retirement" for Sharesave schemes so you should read this non-HMRC document that summarises their apparent intentions: 'HMRC agree that an individual may be "bound to retire" not only at any age specified in the employment contract signed by the employer and the employee when the employment commenced, but at any other age properly agreed between employer and employee and incorporated into the individual's employment contract'.

Aye, thanks.

However, this is not a ShareSave scheme, it's an internationally-administered German-style employee-share-matching-programme, with no regard for UK tax legislation (the bonus will be taxed as income in the UK). HMRC's opinion is of little consequence.

Consulting HR on the question "how do I retire?", I've been directed to a retirement policy document, which requires the longer of one's notice period or three months to retire, and defines "early retirement" as being between 55 and the state pension age. There's no mention of retirement before 55, so it's still a moot point whether an employee under 55 would be able to use the "retirement" route to avoid the resignation penalty of the share-matching scheme.

Warmest regards,
FA

HappySeagull

I'm intending shortly to "resign" rather than "retire", so I get an "exit interview" with HR!

If I take my pension immediately on leaving, my company require longer notice and approval from a manager. However, I don't intend to draw my FS pension until I'm 56 in six months time, so I don't think that clouds the issue. And all my "Staff Incentive Plan" shares are over 5 years old, I believe.

gadgetmind

Stargazer57 wrote: »

It is quite common for share schemes to distinguish between 'good' and 'bad' leavers,

Yup, that's exactly how ours works. We have a lot of flexibility, but anyone retiring at 60+ is usually good with 55+ people possible if someone has health issues and agreement from chain of managers.

I just had a report retire at age 58 and we agreed to let all outstanding share options vest pro rata, This would have caused a CGT issue but he's cleared off overseas and is going to do the "no speaky Engrish" if HMRC try and get in touch!

For pensions, ours are group personal ones, so it's no business of ours as to if/when/how he takes it.