When an employee retires

Pensions and retirement


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

If employees retire at state pension age, they will need to make a claim for the state pension or consider options to defer it.

State pension

Currently, the state pension age for men and women is 66. Under current law, the state pension age is due to increase to 68 between 2044 and 2046. However under plans currently being reviewed there is a proposal for the state pension age to increase to 68 between 2037 and 2039 - this would require approval by Parliament before they are agreed.

You can check your state pension age

It would be helpful to confirm that they have received a claim pack from The Northern Ireland Pension Centre, which will normally write to invite a claim around four months before a person reaches state pension age. A claim pack will be unavailable prior to the four month period.

However, if your employee hasn't received a claim pack or wants more information on the state pension, including how to defer it, they should contact The Pension Service. Northern Ireland Pension Centre contact details.

Occupational pensions

If you run an occupational scheme and your employee is a member of it, 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 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.

The options for money purchase funds and provider duties have changed. Individuals should be advised they may have an opportunity to transfer to different pension providers and that different pension providers offer different options, including flexible options for using their pension pot, in addition to the option to select an annuity.

Find free and impartial pensions guidance from MoneyHelper's Pension Wise service.

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.

Your employees may also benefit from independent financial advice. Read MoneyHelper's guidance on choosing a financial adviser. Use the Personal Finance Society's tool to find an adviser.

Providing employees with tax free pensions advice

You may therefore wish to consider providing this advice as an employee benefit. An Income Tax exemption is available to cover the first £500 worth of relevant pensions advice provided to an employee. For further details see pensions advice provided by an employer: exemption from charge.

Find pensions and retirement guidance from MoneyHelper.