Can you be forced to draw on your pension between 55 and SPA?

Will_Do

Doesn't apply to me currently and fingers crossed never will, just a random question that popped into my head.

As the rules now allow an individual to access their pension from 55 years of age, can the state effectively force an individual to so? Or to put it another way, can any benefit entitlements be reduced by factoring in the option to draw on pensions but before state pension age or the individual's planned retirement age if earlier?

Linton

See: https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs91_pension_freedom_and_benefits_fcs.pdf


According to this document your pension assets are only taken into account for means tested benefits when you reach State Pension Age. This does seem a little surprising to me. If you are over SPA the pension is valued as the income which you could get from an annuity. Whether you actually take an annuity or not is up to you, the state doesnt force you to do anything.

p00hsticks

I'm not sure, but I have a feeling that if you have a Defined Benefit pension which has an earlier Normal Retirement Age than the State Pension Age (there are still some around that have a Normal Retirement Age of 60 ) then for benefits purposes you will be expected to take it at that date

Albermarle

I'm not sure, but I have a feeling that if you have a Defined Benefit pension which has an earlier Normal Retirement Age than the State Pension Age (there are still some around that have a Normal Retirement Age of 60 ) then for benefits purposes you will be expected to take it at that date

I think for most DB schemes, you can not delay taking it past the NRD anyway?

xylophone

I think for most DB schemes, you can not delay taking it past the NRD anyway?

It is possible not to claim the pension at NRD - and some schemes offer "late retirement increases".

Example

http://www.mnopf.co.uk/late_retirement.html

However, if claiming benefits, the applicant would be required to take a DB pension at the Scheme NRD when it would become payable without actuarial reduction.

Of course, in some schemes, Scheme NRD is aligned with SPA.

Silvertabby

xylophone wrote: »

It is possible not to claim the pension at NRD - and some schemes offer "late retirement increases".

Example

http://www.mnopf.co.uk/late_retirement.html

However, if claiming benefits, the applicant would be required to take a DB pension at the Scheme NRD when it would become payable without actuarial reduction.

Of course, in some schemes, Scheme NRD is aligned with SPA.

From experience with the LGPS, DWP can't make you take your pension benefits. However, they will assume that you are taking your pension from NRD, and assess your entitlement to means tested benefits accordingly.

One chap was entitled to unreduced benefits from 60, but refused to complete the paperwork/give us his bank details because he was getting more in means tested benefits. However, DWP didn't step in and ask us for details of his pension entitlement (which we were obliged to produce) until he reached NRD/SPA/65.

xylophone

One chap was entitled to unreduced benefits from 60,

But 60 was not actually NRA for the Scheme?


As far as I know, if Scheme NRA had been reached and the individual refused to claim his pension, DWP could ( indeed I think would) use "notional income" in calculating means tested benefits.

Given the generosity of many DB pensions, I would imagine that MTB could be reduced to nil?

Silvertabby

xylophone wrote: »

But 60 was not actually NRA for the Scheme?

As far as I know, if Scheme NRA had been reached and the individual refused to claim his pension, DWP could ( indeed I think would) use "notional income" in calculating means tested benefits.

Given the generosity of many DB pensions, I would imagine that MTB could be reduced to nil?

Yes. DWP would have no way of knowing that this chap met R85 at 60 - all they can see is that he was in a contracted out pension scheme, and that the normal retirement age was (then) 65. Even though he told us that he didn't want to take his unreduced benefits from age 60 because he would lose his means tested benefits, we couldn't 'bubble him' to DWP due to data protection legislation.

Come 65, however, when DWP asked us for his pension details, the legal requirement for us to disclose this information over-ruled data protection.