Share Incentive Scheme (SIP) and retirement

Sterlingtimes

My SIP allows income tax at marginal rate and Employee National Insurance contributions to be kept upon retirement together with the one free share for each two purchased.

Benefits above would be lost outside of five years would be lost when leaving the company save for retirement.

What does "retirement" mean in this context? Does it mean to leave work with the purpose of retirement and never to work again in any way.

greenglide

"Retirement" in these cases "normally" means leaving the employer and taking a pension at the pension schemes normal pension age.

It is normally to specifically exclude people taking redundancy - either compulsory or voluntary.

It used to be simple in the days of "forced" retirement, it isnt any more. My employer had a "with the agreement of the employer" condition but when I left under voluntary redundancy (over age 65) they still paid my share incentives even though they shouldnt have - the redundancy documents specifically stated that I would lose them!

Sterlingtimes

Thank you, greenglide.

There is only a DC scheme in respect of my current employer. Presumably, I would mark "retirement" by doing something with the pension scheme, e.g. transferring a portion (or all) to a SIPP. But if I were tempted to do a little post-retirement work, this would presumably not alter the positions that I had retried. One possibility is to retire and leave the DC pension in deferment: then have I retired?

westv

greenglide wrote: »

"Retirement" in these cases "normally" means leaving the employer and taking a pension at the pension schemes normal pension age.

It is normally to specifically exclude people taking redundancy - either compulsory or voluntary.

Where I work both are classed as "good" leavers. I always assumed that applied generally to SIPs.

Fermion

You need to check very carefully whether the HR function in your organisation really does recognise the word "retirement" - due to "age discrimination" legislation many companies have changed their Ts&Cs and insist that employees formally "resign" when they wish to retire. The problem for employees being that some payments types (e.g bonus payments and Share options etc) are often discretionary and not contractual and employees could potentially loose out.

I had this problem with my final employer (a large global IT Outsourcer) who tried to claim I wasn't eligible for a final bonus as I had "resigned". A few carefully worded letters to the UK CEO solved the problem in my case as I was a "good leaver"

Sterlingtimes

Fermion wrote: »

You need to check very carefully whether the HR function in your organisation really does recognise the word "retirement" - due to "age discrimination" legislation many companies have changed their Ts&Cs and insist that employees formally "resign" when they wish to retire.

Thank you.The arrangement is that the employee resigns and then confirms that "your reason for leaving is due to retirement, which is necessary for payroll purposes prior to processing your final payments."

Of course, this deal with the company formality, but what happens as far as the Revenue and Customs is concerned if the retired employee subsequently decides to work again? What marks retirement from a Revenue & Customs perspective other than perhaps taking a State Pension?

greenglide

Of course, this deal with the company formality, but what happens as far as the Revenue and Customs is concerned if the retired employee subsequently decides to work again? What marks retirement from a Revenue & Customs perspective other than perhaps taking a State Pension?

HMRC have no interest in whether you "retire", are dismissed or just plain leave for any other reason.

Whether your employer gives you benefits on leaving or keeps them for itself is between you and them - HMRC dont care.

Sterlingtimes

greenglide wrote: »

HMRC have no interest in whether you "retire", are dismissed or just plain leave for any other reason.

Whether your employer gives you benefits on leaving or keeps them for itself is between you and them - HMRC dont care.

But the employee will have benefited from not having paid income tax at marginal rate and National Insurance at 2%. I was seeing this principally as a tax compliance matter.