Retirement planning
When it's time to retire, there are a few ways to take your pension. This section explains your options, like taking some tax-free cash, retiring early or later, and how your pension can increase over time. We cover the basics here so you know what to expect when your retirement pack arrives.
Your retirement options explained
Your guide to the retirement options available from the Manweb Group of the Electricity Supply Pension Scheme. It provides information about how each of the options work and the things you should consider before making your choice.
What are my options when I retire?
You’ll have various options about how and when you want to take your retirement benefits. For example, you could:
Exchange some of your annual pension for a tax-free cash lump sum at retirement (see below).
Exchange part of your pension that increases in retirement for a higher pension that doesn’t increase (see ‘Will my pension increase?’).
Transfer your benefits out of the Group at retirement so you can access them in a different way (for example, all as cash or through a ‘drawdown’ facility). You’d need to take independent financial advice before doing this.
Full details of your options will be provided in your retirement pack as you approach normal pension age.
Taking a cash lump sum at retirement
The Group automatically provides you with a cash lump sum, but you can choose to exchange some of your pension for a higher tax-free cash lump sum at retirement.
Cash lump sums up to 25% of the total value of your retirement benefits, as worked out by HMRC, are usually tax-free (subject to a limit of £268,275 across all pension schemes unless you have a form of Lifetime Allowance protection). This amount will be shown in your retirement pack as you approach normal pension age.
When can I retire?
Typically, members retire at their normal pension age. However, depending on your circumstances, you may be able to retire before or after your normal pension age.
Early retirement – at your own request
The earliest age you can retire is 55 (increasing to 57 in April 2028). Your annual pension will be reduced because it’s being paid early and so is expected to be paid for a longer period. The earlier you retire, the more your pension will be reduced.
Please note If you’re male and joined the Group before April 1988, your annual pension will be reduced if you retire before age 63 (even though your normal pension age is 60).
Early retirement – requested by the Company
The Company may ask you to retire early due to reorganisation or redundancy. The exact terms of your retirement, and any early retirement pension you receive as a result, will depend on when you left your role with the Company, when you’re planning to retire, and the terms of your redundancy agreement with the Company.
Normally, you can receive an immediate unreduced annual pension if you’re age 50 or over and you joined the Group before 6 April 2006. The position may vary if you joined or transferred to the Group after 6 April 2006.
Early retirement – due to ill health
If you meet HMRC’s ill health requirements and the Company’s Occupational Health Adviser confirms that you can’t carry out any work you may be reasonably expected to do given your previous role in the Company due to ill health or incapacity, you may be entitled to an immediate annual pension without reduction.
If you’re still in active service, this will be worked out based on your pensionable salary when you retire and the pensionable service you would’ve completed at normal pension age. If you’ve already left the Company, this will be worked out as your deferred pension revalued to date of early retirement.
Example You retire from active service at age 45 due to ill health, with a pensionable salary of £25,000 after completing 12 years of pensionable service. If you’d stayed in the Group until your normal pension age (63), you would’ve completed 30 years of pensionable service.
Pension = 1/80 x £25,000 x 30 = £9,375 a year
Plus
Cash sum = 3 x £9,375 = £28,125
You need the Company’s agreement to retire early due to ill health.
Ill health pensions are granted in line with the Rules of the Scheme. To ensure you continue to meet the criteria required to qualify for it, you may be periodically subject to a medical review.
If your ill health is so serious that you’re unlikely to live for more than one year, you may be able to take all your pension benefits as a single lump sum instead of a pension.
Late retirement
You can continue building up benefits in the Group for as long as you’re working, up until age 75. If you choose this option, you’ll continue paying into the Group and building up pensionable service. You’ll also remain covered for life assurance (see ‘What happens to my retirement benefits when I die?’).
If you choose to stop paying contributions and leave pensionable service, you may still delay your retirement, and you’ll be entitled to an increased pension reflecting the amount of time you delayed taking the pension.