Retirement

Retirement Age

Normal Pension Age (NPA) is the age at which you qualify for a pension. In Plan 35, this is 65 for both men and women, but it is possible to retire earlier and draw a pension. If the Company agrees, you can retire from service on an immediate pension at any time from age 55, provided that your pension benefit has a value in excess of those which are required to be paid from age 60/65 as a result of contracting out of the State Second Pension (S2P).

Maximum pension

The rules of Plan 35 provide that the maximum pension payable at NPA shall not exceed two thirds of the greater of:

  • your Final Pensionable Pay (inclusive of the single person’s Basic State Pension);

and

  • the annual average of your gross taxable earnings for the best three consecutive tax years in the last 10 prior to you leaving or retiring.

The Maximum Pension is adjusted to take account of any periods of part-time service. It is also reduced pro-rata on early retirement in line with the amount of pensionable service actually completed.

Your pension on retirement at Normal Pension Age

You receive a pension equal to 1/60th* of your Final Pensionable Pay multiplied by your Pensionable Service in Plan 35.

Pensionable Service is the years and months you have been a member of Plan 35 plus any additional period you have been granted as a result of the transfer of money from Plan 18.

Final Pensionable Pay is your highest Pensionable Pay in your last five complete tax years of Pensionable Service.

Final Pensionable Pay and Pensionable Service may be adjusted to take account of any periods of part-time service.

For example, if you retire at 65 with Final Pensionable Pay of £12,000 and you have 25 years' Pensionable Service, your pension calculation would be:

1/60th of your Final Pensionable Pay of £12,000
X
your Pensionable Service of 25 years

So your Plan 35 pension would be £5,000 a year.

Early retirement

If you retire before Normal Pension Age your pension is calculated in the same way; 1/60th* of your Final Pensionable Pay for every year of Pensionable Service. However, if you retire before 62* the amount is reduced because you are likely to be drawing your pension for longer. The percentage reduction on retirement from active service before the age of 65 is shown in the table below.

Age Reduction % Age Reduction %
64 None 59 9
63 None 58 11
62 None 57 14
61 3 56 16
60 6 55 18

For instance, in the previous example if you retire at 60 with 20 years’ service then your pension would be:

1/60th* of your Final Pensionable Pay of £12,000
X
your Pensionable Service of 20 years
Less 6%

Which would give you a Plan 35 pension of £3,760.

Tax-free lump sum

Regardless of age, if you retire on an immediate pension, you can choose to take part of your pension in the form of a tax-free cash sum.

Income if disabled

If you have to retire on grounds of incapacity and the Company consents, you can elect to receive an enhanced pension. In Plan 35, 'incapacity' means that as a result of physical or mental deterioration there is no reasonable prospect of you being capable of following any employment of any description at any time in the future. It is for the Company to decide whether you suffer from incapacity. If it decides that you do, the Trustees also have to approve the decision.

The incapacity pension is equal to 1/60th* of your Final Pensionable Pay for each year of your Pensionable Service plus a further 1/60th* of Final Pensionable Pay for each year of Pensionable Service you would have completed had you remained a member of the Scheme until age 65.

In the previous example, if you retired on an incapacity pension at 60 with 20 years’ Pensionable Service then your pension calculation would be:

1/60th* of your Final Pensionable Pay of £12,000
X
your Pensionable Service of 20 years
plus the extra five years you would have served to age 65.

Which would give you a Plan 35 pension of £5,000 a year.

*Certain members who joined the Fund prior to 1988 may have different accrual rates, Normal Pension Ages or applicable early retirement factors.
 

© Clarks Pensions 2014