Age retirement
Classic pension scheme
Pension
We work out your pension as follows (Pensionable pay x Reckonable
service)/80. Part-time service counts based on the actual hours you work
and the equivalent full-time pensionable pay. However, in the past there
have been various restrictions on who can join the scheme depending on the
number of hours worked. If you have had part-time service in the past, your
pension administrator can tell you how these restrictions may apply to you.
Lump sum
We work out your lump sum, which is payable free of tax based on 3 x your
annual pension. This lump sum will be reduced if you are still contributing
to provide benefits for your widow or widower or civil partner, or for
incapacitated children you have nominated during service.
The maximum lump sum will be increased from 1 October 2007. We have
produced a calculator which shows the maximum lump sum for a given amount
of pension and the effect that taking a lump sum would have on your
remaining pension, for those taking their pension from 1 October 2007
onward..
Lump sum calculator [XLS] This calculator uses
Microsoft Excel. If you do not have Excel, ask your pensions administrator
helpline to do the calculation for you.
Exchanging your lump sum
You may choose to give up all or part of your lump sum in return for an
increase in your pension. Your pension administrator can give you more
information. If you decide to exchange all or part of your lump sum, you
must make your decision before your last day of service.
Once we start paying your benefits, we cannot change them. The maximum
length of reckonable service that can count towards your pension at pension
age (normally age 60) is 40 years. You can build up more reckonable service
if you work beyond your pension age, but it cannot be more than 45 years.
Once you are old enough to receive a State retirement pension, the State
basic pension will become payable in addition to your classic pension, as
long as you have paid enough National Insurance contributions.
Paying benefits
Capita, who are the group who actually make the pension payments, pay
benefits as quickly as possible, although they can promise no particular
start date. This is because they can only complete your benefit
calculations on your last day. In practice, they make every effort to
ensure that you receive your lump sum within a few days of retiring, and
your pension as soon as possible afterwards. It might help if you agree
your last day of service as far in advance as possible.
The lump sum is paid direct to either your bank or building society
account. Pensions are normally paid every month in arrears by direct credit
to your bank or building society account. They are treated as earned income
for tax purposes. Due tax is taken off before the pension is paid.
Providing benefits for someone else
You have the option to give up part of your pension to provide benefits for
another person. This is known as allocation of pension. You may choose to
add to the benefits you have already provided for your husband or wife, or
to provide for another person who is dependent on you. This pension will
start after you have died.
You need to remember a number of points about allocating part of your
pension.
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You give up part of your pension.
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You cannot give up more than one third of your pension (sometimes this
limit is lower).
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You cannot change or cancel the allocation, even if the person who would
have received the benefits dies first.
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You must be in good health (we will need proof).
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The pension you allocate is payable for life and is not affected if you
get married again.
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If the beneficiary is not your husband, wife or civil partner, then they
will need to still be dependant on you when you die if they are to
receive a pension.
If you are interested in this option, contact your pension administrator to
find out how this will affect your pension. They will tell you what to do
next.
