Changes to the Early Retirement Age
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Circular No. NP057/10
11th March 2010
Changes to the Early Retirement Age
From 6 April 2010, the earliest retirement age for any registered pension scheme will be 55, except on the grounds of ill health or for certain specified professions, or where on 5th April 2006 there was contractual right to such arrangements.
Where the pension scheme rules allow it, members who wish to take early retirement between ages 50 and 54 before 6 April 2010 who do not have a protected pension age (see below) must have their benefits in payment by 5 April 2010.
This means that all of the administration procedures needed to start payment must be complete, although it is not necessary for the first payment to have been made; it is acceptable for members retiring on 5 April 2010 to receive their first pension payment in the next available payroll run.
Some RPS sections restricted pension age to 55 for new starters from 6 April 2006, so the rules may not allow payment of benefits between ages 50 and 54 for all members.
Protected pension age
There is protection for members who were in a pension scheme before 6 April 2006 where the rules of their scheme (on 10 December 2003) gave a contractual right to retirement earlier than 55, for example, from age 50.
In the Railways Pension Scheme and British Transport Police Force Superannuation Fund this protected pension age of 50 applies to any member electing to take early payment of benefits immediately on leaving service and employment, even where benefits are paid after 6 April 2010.
Members who joined a scheme on or after 6 April 2006 will no longer be able to apply for early payment of their benefits before age 55 from 6 April 2010, even if the rules have still allowed retirement from age 50 for new starters since 6 April 2006.
The period between 6 April 2006 and 5 April 2010 was introduced as a transitional period by the Government to help schemes, employers and members prepare for the change. However, 5 April 2010 is the absolute cut-off date.
Some RPS members may retain their protected pension age when they transfer between Sections, especially as part of a compulsory change of employment (TUPE). To check an individual member's entitlement to retire before age 55, members should contact their pension provider. Please note that this is not linked to protected status under railways pension legislation.
If members wish to take early payment of their benefits, they should ensure that application for benefits forms are returned to the administrator in good time. For RPS Brass members these must be received by 19 March 2010 to allow time for the funds to be disinvested ready for payment.
rpmi will have resources in place to deal with cases as close to the deadline as possible, but any forms received after 5 April 2010 cannot be processed late. Although 5 April falls over the Easter bank holiday weekend, HMRC have given clear guidance that the only exceptions that will be allowed for retirements over this weekend being processed after 6 April are where a member's 50th birthday falls between 2 and 5 April and the benefits could not have been put into payment in advance.
Please note that preserved members will not be allowed to take their benefits before age 55 after 5 April 2010, regardless of the date they joined their scheme. Members remaining in employment can only apply for payment of their benefits from age 55, even if they would have a protected pension age of 50 if they left service.