Taking DB pension and continuing to work??

C_Mababejive

Hi all,

I'm guessing there are a lot of common rules within DB pensions.

For me, the PS rules say that you have to retire to take your DB pension and that you can take it from 55-59 with a staged reduction or a "full" pension at 60.

So the first question is, why do they have this rule? Why cant i for eg, take my accrued DB pension at 55 and keep working?

If you stopped contributing at say 56 and became a deferred pensioner, would it make a difference?

In my scheme, if you retire you can take your pension, then you must leave a minimum 1 month gap and can return to work.

Are all these rules linked to pension legislation and/or HMRC rules or are they simply quirks of the scheme?

Thanks

Marcon

C_Mababejive said:

Hi all,

I'm guessing there are a lot of common rules within DB pensions.

For me, the PS rules say that you have to retire to take your DB pension and that you can take it from 55-59 with a staged reduction or a "full" pension at 60.

So the first question is, why do they have this rule? Why cant i for eg, take my accrued DB pension at 55 and keep working?

If you stopped contributing at say 56 and became a deferred pensioner, would it make a difference?

In my scheme, if you retire you can take your pension, then you must leave a minimum 1 month gap and can return to work.

Are all these rules linked to pension legislation and/or HMRC rules or are they simply quirks of the scheme?

Thanks

How old are the rules - I suspect they were written some considerable time ago, when a retirement age could be enforced by an employer?

zagubov

There's an issue in that the DB pension is meant be a substitute to your working salary not an addition to it, and carrying on with full-time work may results in your pension being clawed back.

In some sectors such as education you may be able to take your pension and start working again on a full salary but there are caveats - such as you must be collecting the pension for at least a day before you start the new job, and also you must retire before your pension date which may be for example your 60th birthday.

This would mean you're not collecting a full pension while you go back to work, but you'll be on an actuarially adjusted pension (even if the reduction is tiny).

The exact rules are likely to vary between different public sectors and home nations.

C_Mababejive

Marcon said:

C_Mababejive said:

Hi all,

I'm guessing there are a lot of common rules within DB pensions.

For me, the PS rules say that you have to retire to take your DB pension and that you can take it from 55-59 with a staged reduction or a "full" pension at 60.

So the first question is, why do they have this rule? Why cant i for eg, take my accrued DB pension at 55 and keep working?

If you stopped contributing at say 56 and became a deferred pensioner, would it make a difference?

In my scheme, if you retire you can take your pension, then you must leave a minimum 1 month gap and can return to work.

Are all these rules linked to pension legislation and/or HMRC rules or are they simply quirks of the scheme?

Thanks

How old are the rules - I suspect they were written some considerable time ago, when a retirement age could be enforced by an employer?

Good point. I cant remember when the law changed to delete enforced retirement or what retirement age was. I doubt many of these rules have changed for decades whilst the world around them has?

hyubh

C_Mababejive said:

I'm guessing there are a lot of common rules within DB pensions.

Common principles certainly. Common rules? Well only to the extent covering pensions legislation is obviously generic. But even that changes over time, which is itself a cause of difference...

For me, the PS rules say that you have to retire to take your DB pension and that you can take it from 55-59 with a staged reduction or a "full" pension at 60.

You're already getting into scheme specifics! What is the scheme...?

So the first question is, why do they have this rule? Why cant i for eg, take my accrued DB pension at 55 and keep working?

Covering legislation makes so-called flexible or partial retirements in DB land possible (go back 30 years, and that wasn't the case). However it would be unreasonable to expect this legislation to micro-manage what exactly a scheme should allow for. Greater flexibility comes at an administration cost, so it would be reasonable to assume a default of no flexibility, not maximum flexibility...

Marcon

C_Mababejive said:

Marcon said:

C_Mababejive said:

Hi all,

I'm guessing there are a lot of common rules within DB pensions.

For me, the PS rules say that you have to retire to take your DB pension and that you can take it from 55-59 with a staged reduction or a "full" pension at 60.

So the first question is, why do they have this rule? Why cant i for eg, take my accrued DB pension at 55 and keep working?

If you stopped contributing at say 56 and became a deferred pensioner, would it make a difference?

In my scheme, if you retire you can take your pension, then you must leave a minimum 1 month gap and can return to work.

Are all these rules linked to pension legislation and/or HMRC rules or are they simply quirks of the scheme?

Thanks

How old are the rules - I suspect they were written some considerable time ago, when a retirement age could be enforced by an employer?

Good point. I cant remember when the law changed to delete enforced retirement or what retirement age was. I doubt many of these rules have changed for decades whilst the world around them has?

2006 Regulations introduced a default retirement age of 65, until the law changed in October 2011, meaning employers could no longer force employees to retire at 65.

The whole meaning of the word 'retirement' has changed, so reading scheme rules in rather more detail (especially if they've not been updated recently) is now more important than ever. It's unlikely a private sector employer could refuse to pay your DB pension if you then get another job elsewhere, although public sector schemes certainly have some restrictions/offsets.

Pat38493

hyubh said:

Covering legislation makes so-called flexible or partial retirements in DB land possible (go back 30 years, and that wasn't the case). However it would be unreasonable to expect this legislation to micro-manage what exactly a scheme should allow for. Greater flexibility comes at an administration cost, so it would be reasonable to assume a default of no flexibility, not maximum flexibility...

Just curious but why does someone taking their pension early but carrying on working create extra administration cost?

I would have thought that normally the people running the pension payments and calculations are not the same people doing payroll.  When someone puts their pension into payment, I would have assumed that the work involved in doing this is the same regardless whether they are still working or not.  Further, the benefits to be paid out to the person are supposed to attempt to give them the same average lifetime benefit even if they take the pension early, so there is no extra "cost" to the pension scheme (or taxpayer if it's an unfunded scheme).

Therefore I'm not really seeing why organisations would want to prevent people from taking their pension while still carrying on working?

Further to this, I assume we are talking about taking the pension whilst still continuing to work with the same organisation that the pension is with?  I would guess it would be illegal to try to stop someone from working at all in any capacity after taking pension i.e. they can just get another job with another organisation anyway.

I suppose, is the complexity if the person wants to take their pension, but still carry on working whilst paying into the same pension scheme that they have already put into payment?

jimjames

Pat38493 said:

hyubh said:

Covering legislation makes so-called flexible or partial retirements in DB land possible (go back 30 years, and that wasn't the case). However it would be unreasonable to expect this legislation to micro-manage what exactly a scheme should allow for. Greater flexibility comes at an administration cost, so it would be reasonable to assume a default of no flexibility, not maximum flexibility...

Therefore I'm not really seeing why organisations would want to prevent people from taking their pension while still carrying on working?

I guess it very much depends on the employer and sector. I'm forced to take my pension at 60, there isn't any option to defer (although it can be taken early) and will carry on working anyway.