Retirement

Voluntary retirement

The normal pension age for the 2015 Fire Pension Scheme is age 60. This is the earliest date that you could leave active employment and receive your benefits in full.

It is possible to take your benefits from age 55 but they would be subject to reductions. These reductions are based on the number of years and months between your age at date of retirement and age 60 and get smaller the closer you get to age 60.

The early retirement reduction factors for an retirement from active service can be found in section 2 of the Government Actuary's Department guidance - Early payment reductions.

Example – How an early reduction percentage is worked out for active retirement

A: Age at date when benefits are paid = 55 years 0 months

B: Normal Pension Age = 60 years

Number of years and months between A and B = 5 years 0 months

Early reduction factor = 0.787

Percentage reduction = 1 - 0.787 = 0.213 x 100 = 21.3%

Ill health retirement

You may receive your pension early if you have to leave your job because of ill health. Speak to your employer if you think you may be entitled to receive your pension on ill health grounds. It is the employer’s responsibility to determine if you are entitled to an ill health pension.

The conditions which have to be met for an entitlement to an ill health pension are as follows:

For a Lower Tier Ill Health Pension you must:

• have a minimum of 3 months qualifying service
• be incapable of performing any of the duties of the role in which you were last employed, because of incapacity of mind or body which will continue until normal pension age (60)

For a Higher Tier Ill Health Pension you must:

• have a minimum of 5 years qualifying service
• be entitled to a Lower Tier Ill Health Pension
• also, because of incapacity of mind or body which will continue until normal pension age, be incapable of undertaking regular employment*.

*Regular employment means employment for at least 30 hours a week on average over a period of not less than 12 consecutive months, beginning with the date on which the issue of your capacity for employment arises.

A Higher Tier Ill Health Pension is payable immediately, with no reductions and will be based on the Lower Tier Ill Health Pension plus an enhancement of 2% of the gross Lower Tier Ill Health Pension before any commutation multiplied by your assumed period of pensionable service from date of retirement to normal pension age.

Example – Lower Tier Ill Health Pension

Earned pension before commutation = £10,000

Pension after commutation = £8,000

Annual pension payable = £8,000

Example – Higher Tier Ill Health Pension

Earned pension before commutation = £10,000

Pension after commutation = £8,000

Period of assumed pensionable service from date of retirement to age 60 = 20 years

The Higher Tier Ill Health Pension element is calculated as:

Lower Tier Ill Health Pension + 2% x earned pension before commutation x period of assumed pensionable service

= Lower Tier Ill Health Pension + 2% x £10,000 x 20

= £8,000 + £4,000

Total gross pension payable = £12,000

Exchanging pension for lump sum

When you retire, you can if you wish, give up part of your annual pension entitlement to receive a lump sum payment. This is called commutation.

For every £1 of annual pension you give up you get £12 of lump sum. HM Revenue and Customs limit the amount you can commute to 25% of your total pension.

The only pension that can not be commuted is a Higher Tier Ill Health Pension.

Example – exchanging pension for lumps sum

Retirement pension = £16,000

Commutation option = maximum 25%

Commuted pension = £16,000 x 25% = £4,000

Annual pension payable = £16,000 - £4,000 = £12,000

Lump sum = £4,000 x 12 = £48,000

Claim your pension

There are a few things that you can do to ensure that there are no delays with paying your pension.

You should inform your manager that you are retiring. It is preferable, but not essential that you give two months’ notice so that your employer and Hampshire Pension Services have enough time to prepare your retirement benefits.

Your manager will inform your employer's payroll provider and in turn they will prepare the necessary leaver form with your pay and service details and send to Pension Services.

You will need to complete the Retirement Declaration form and return to Hampshire Pension Services, together with any relevant certificates.

Hampshire Pension Services will process your retirement within 15 working days of receiving all the necessary paperwork from both you and your employer. They will send you written notification of your actual retirement benefits.