You will generally receive a pension at your Normal Retirement Date equal to 1/60th of your Final Pensionable Earnings for each year of Pensionable Service. Some members may accrue a different amount of pension, particularly those who joined the Company before April 1986.
For most members your Normal Retirement Date is your 60th birthday. You will have been told if you have a different Normal Retirement Date. Your pension will be paid monthly for the rest of your life. At retirement, you will also have the option to exchange up to 25% of your pension for a one-off lump sum, which is normally tax-free.
Example: The example below shows the pension payable to a member retiring at their Normal Retirement Date with Final Pensionable Earnings of £20,000 and Pensionable Service of 15 years.
Guaranteed Minimum Pension (GMP)
From 6 April 1978 until 5 April 2016 (inclusive), the DB Section was contracted out of the State Second Pension Scheme (S2P), formerly known as the State Earnings Related Pension Scheme (SERPS). If you were an Active member of the DB Section during this period you will have built up a Guaranteed Minimum Pension (GMP) for the period you were contracted out of SERPS before 6 April 1997. This will be included in the pension detailed above.
Tax-free lump sum
You may exchange up to 25% of the value of your benefits for a one-off lump sum (this will be restricted to 25% of the outgoing Lifetime Allowance). Under current legislation, the lump sum is normally tax-free. Taking a tax-free lump sum will lead to a reduction in your annual pension calculated by applying a rate specified by the Trustee (based on advice it receives from the Scheme Actuary). Your tax-free lump sum may be restricted to ensure the pension you receive is not less than any GMP you have built up within the DB Section.
Other options at retirement
Other options may be available to you at retirement. For example you may be able to exchange some of your pension to provide a higher pension to your Spouse or Civil Partner following your death. Please refer to the Member Booklet, available to download from the Document library for more details.
Taking your pension before your NRD
If you are aged 55 or more you may be able to start receiving your pension immediately, as long as the Company gives its approval.
Your pension will be reduced by factors decided by the Trustee (based on advise it receives from the Scheme Actuary) to take account of the fact that you are being paid early and for a longer period of time.
If you have Pensionable Service between 6 April 1978 and 5 April 1997 the pension you receive from the DB Section in respect of this period must be at least equal to your GMP. If your early retirement pension is not expected to be at least equal to your expected GMP at GMP Pension Age your early retirement options may need to be restricted.
You can find more information about how to start receiving your pension before your NRD in the ‘How do I?’ section of this website.