When an employee retires

Pensions and retirement

When employees retire, you should make sure they receive any occupational pension(s) that they are due.

If employees retire at State Pension age - currently 65 for men and 60 for women - they will need to make a claim for State Pension or consider options to defer it. It would be helpful to confirm that they have received a claim form from The Pension Service, which will normally write to invite a claim around four months before a person reaches State Pension age.

Calculate an employee's State Pension age on the Pension Service website.

As well as the State Pension, if you run an occupational scheme and your employee is a member of it, you should write to the trustees or managers of the scheme to let them know the retirement date. The trustees or managers will then:

• work out what the employee will be entitled to on retirement
• write to the employee shortly before retirement with details of any tax-free lump sum that they may be entitled to
• provide details of the amount of pension payable and the date at which the first payment is to be made

If your scheme is a money purchase arrangement that is not run by a pension provider, eg an insurance company, the employee should be advised that as of 6 April 2006, they have the right to buy an annuity from a provider other than the one running the pension scheme. This is an alternative to receiving a pension from your scheme.

If any employee thinks they may have lost track of an old pension from a previous workplace, they may find it helpful to contact the Pension Tracing Service - trace an old pension on the Pension Service website.

Your employees may also benefit from independent financial advice to help with any decision they have to make. Find information and guidance on pensions at the Pensions Advisory Service website.

You may therefore wish to consider providing this advice as an employee benefit. From 6 April 2005, you can do this as a tax-free benefit as long as it is made available to all employees and costs less than £150 per employee per year.

Subjects covered in this guide

• Introduction
• Retirement - the process to follow
• Pensions and retirement
• Providing support for a retiring employee
• Ill-health related retirement
• Early retirement

 

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