If I retire early, when will I get my
State pension?
You won’t get your State Pension until you reach
State Pension Age. But the Plan will pay you a
Temporary Early Retirement Allowance until your
State Pension can be paid. You can see how the
allowance is worked out above.
If I retire early, can I still have a tax
free cash lump sum?
Yes, and you can read about how this is worked
out below.
Medical retirement
If you can’t work at any age, because of illness or
an accident, the Company can ask the Trustee to
consider if you are eligible to receive an immediate
pension based on total or partial disability. You must
have two years’ service to be considered. Further
information is available from HR Direct and the
Medical retirement factsheet.
How is my pension paid?
Your pension will be paid every month in advance.
Income tax will be deducted before it is paid.
Please make sure the Administrator has your bank
account details, as well as your home address and
email (if you have one), in case they need to contact
you about your pension.
If you want your pension paid to an overseas bank
account, an administration charge will be deducted
from each pension payment to cover costs.
You will also be required to participate in an annual
‘Proof of Life’ exercise if you are paid or live outside
the UK, or if the bank account into which your
pension is paid is not in your own name.
Will my pension increase?
Pension built up after 6 April 1997
This part of the pension will automatically increase
by Limited Price Indexation (LPI) each April after you
retire. The increase will be in line with the annual
percentage change in the Retail Prices Index (RPI),
up to a maximum of 5% for service up until 5 April
2006 and 2.5% for service after that.
Pension built up before 6 April 1997
The way this part of the pension increases is
worked out differently. This is because, in general,
only a portion of this gets statutory increases.
See page 24 for details.
In addition to statutory increases, which are laid
down by law, the Company may, at its discretion,
pay further increases.
Taking part of your benefits
as cash
You can exchange part of your pension at retirement
for a tax-free lump sum, subject to HMRC limits.
The most you can currently take tax-free is around
25% of the HMRC value of your benefits, so long as
you don’t exceed the lifetime limit on the capital
value of benefits, called the Lifetime Allowance.
Taking part of your benefits as cash is sometimes
called ‘commuting’ your pension or ‘commutation’.
How much pension will I
have to give up?
The amount of pension you give up for the lump
sum depends on your age, gender, and when you
completed your pensionable service. The factors
used reference these aspects and are also updated
for market conditions monthly. For example with a
factor of 18 and a pension of £20,000 pa, if the
member chooses to exchange (commute) 25% of
their pension then they will receive a pension of
£15,000 pa and a cash lump sum of £90,000.
If I pay AVCs, can I take these
as a lump sum?
Your AVC fund is a type of defined contribution plan
and as such you have the freedom to take your
pension savings in one of several ways:
• Use the AVC funds towards your tax-free cash
when drawing main Plan benefits.
• Receive one lump sum cash payment, 25%
of which would be paid tax-free and the rest
at your marginal rate.
• Use the AVC fund to buy an annuity (an income
for life).
• Transfer your AVC fund out of the Plan.
To find out more please see our factsheet:
Boost your benefits
Retirement benefits
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