What happens if I retire but don't take my pension?

xylophone

Further thought: if you don't NEED the c. £100k lumpsum then ask if there's a facility to forego some of it for a bigger annual pension.

The OP's scheme booklet says

You will also have the option to exchange part of it for acash lump sum which, under current regulations is tax-free.

so it would appear that there is no obligation to take a lump sum at all?

xylophone

and a reduced life expectancy

In a previous post you have mentioned a health problem - is there any chance of retirement on grounds of ill health?

Audaxer

pimento wrote: »

OK, here's what the booklet says:

Can I stop working before age 60 and receive a pension?

Yes, you may retire at any time after the age of 55 provided you have been a member of the scheme for at least 2 years. If you are aged 55-60 you additionally need the agreement of your employer. You will receive an immediate pension, calculated as for normal retrement, but if you are aged under 60 it will be reduced because it is being paid earlier than usual and over a longer period of time. The reduction applicable will be determined by the trustees on the advice of the Scheme's Actuary.
You will also have the option to exchange part of it for acash lump sum which, under current regulations is tax-free.

If your retirement is at the instigation of your employer (but is not for misconduct) and you have been a member for over 10 years and you are aged 55 and over, you pension will be calculated as shown but the reduction for early payment may be waived by the Trustees.

So your Normal Retirement Age is 60 rather than 65, which is better for you. The figures you have quoted show a lump sum, but in view of what the booklet says about the option of a lump sum, you should also have figures that show what you would get if you took the full pension at 59 or 60 without a lump sum, which may be a consideration if you want to leave at 59?

pimento

xylophone wrote: »

In a previous post you have mentioned a health problem - is there any chance of retirement on grounds of ill health?

I don't think so. My disability is a degenerative kidney problem (genetic). My father has it and has had a transplant and is now on his last knockings. He's 81 and almost certainly won't make 82 but apart from high blood pressure, it doesn't impede my ability to do my desk job.

pimento

Audaxer wrote: »

So your Normal Retirement Age is 60 rather than 65, which is better for you. The figures you have quoted show a lump sum, but in view of what the booklet says about the option of a lump sum, you should also have figures that show what you would get if you took the full pension at 59 or 60 without a lump sum, which may be a consideration if you want to leave at 59?

The reason I want the lump sum is that I don't expect to make very old age and my husband and I have a penchant for travel. I can sit and watch the telly when I'm too old to go anywhere.

pimento

Audaxer wrote: »

So your Normal Retirement Age is 60 rather than 65, which is better for you. The figures you have quoted show a lump sum, but in view of what the booklet says about the option of a lump sum, you should also have figures that show what you would get if you took the full pension at 59 or 60 without a lump sum, which may be a consideration if you want to leave at 59?

On the online tool it gives my retirement date as October 1st 2025 which is the first of the month after my 65th birthday.

squirrelpie

On the online tool it gives my retirement date as October 1st 2025 which is the first of the month after my 65th birthday.

Doesn't that contradict what your booklet says? Does your booklet say anything else about retirement dates? What is the booklet called? (i.e. is it definitive rules or just an annual informative flyer?) I think you need to understand your scheme's rules more fully.


It might be worth talking to the scheme's administrators and/or the trustees. They could tell you all about the possibilities and your questions needn't get back to your employer. How real is the possibility of redundancy? Does your employer have a reputation for treating people well or for gouging them?

Audaxer

pimento wrote: »

On the online tool it gives my retirement date as October 1st 2025 which is the first of the month after my 65th birthday.

The same thing showed online with my DB pension - 65 is the default age that showed for everyone on the online tool as that is the Normal Retirement Age for newer members to the scheme, but my Normal Retirement Age was 60. I suspect the booklet is correct and your Normal Retirement Age is 60, but you should check that is the case.

pimento

mgdavid wrote: »

Beware the online calculator's figure for taking the pension at 60 will probably assume you have worked the year up to 60th birthday. However if you resign/retire at 59 you will have 1 less year's service so I would expect the figure to be different.

This is my question. How will I know what the difference between the two figures is?

pimento

The leaflet says:

"Normal retirement age - The first day of the month on or after your 65th birthday."