Early retirement
If you have the Trustees’ consent, you can currently retire and draw a pension at any age from 50 onwards. From 6 April 2010, however, this goes up to age 55 onwards.
Your pension is worked out in exactly the same way as if you retired at 65, but using:
- your final pensionable salary and pensionable service built up at the date you actually retire; and
- the lower earnings limit averaged over the last 12 months of pensionable service.
As a result, the pension will be smaller than if you had worked to age 65.
Your pension may then be reduced further to take account of its early payment – that is, the expectation that you will receive it for longer than if you had started it at age 65. The reduction is 5% for each year you retire before age 65. However, different terms may apply to you, depending partly on when you joined the plan, and partly on Unilever’s ‘discretionary practice’ for early retirement benefits.
If you joined the Unilever UK Pension Fund or the Unilever Superannuation Fund after 1 October 1987, you have the right to take your pension benefits without any reduction from age 65. However, it is currently Unilever’s discretionary practice to apply a reduction only to benefits drawn before age 60.
If you joined the Unilever UK Pension Fund or the Unilever Superannuation Fund on or before 1 October 1987, your benefits are affected by the rule changes to make men’s and women’s retirement ages equal at 65:
- If you are a woman, you have the right to take all your pension benefits from age 60 without any reduction.
- If you are a man, you have the right to take the pension benefits you built up from 17 May 1990 from age 60 without any reduction. The pension you built up before 17 May 1990 is subject to Unilever’s discretionary practice (see above).
(17 May 1990 is the date of the ‘Barber’ verdict – the court case resulting in equal treatment of men’s and women’s pension benefits from that date.)
Please be aware that Unilever’s discretionary practice may change in the future, and that different terms may apply if you leave the plan before you retire (see Drawing your deferred pension for details).
Example
To follow the earlier example using final pensionable salary £24,000 – if you retired in April 2010 from Unilever with Trustee consent at 55 after 30 years’ service, and the discretionary practice still applied, your pension would be:
1/60 x £24,000 x 30 years = £12,000
less
1/80 x £4,940 (again, the lower earnings limit for the 2009/2010 tax year) x 30 years = £1,852.50
works out to £10,147.50 a year -
then reduced by 5% x 5 (number of years retiring before age 60) = 25%
gives a pension of £7,610.63 a year.
If you retire early, your income will normally receive an increase at State pension age, when you start receiving your basic State pension on top of your plan pension. You may have the option to draw a higher level of plan pension (up to the basic State pension amount) before State pension age, then a lower level afterwards, so that your overall income remains constant. If you are interested in ‘levelling out’ your pension in this way, details will be available in the run-up to retirement.
This chart shows the key dates on a timeline:
So, women who joined on or before 1 October 1987 have the right to their whole pension from age 60 without a reduction. Men who joined on or before 1 October 1987 have the right to the pension they built up after 17 May 1990 from age 60 without a reduction, but the discretionary practice applies to the pension they built up before then.
For anyone who joined after 1 October 1987, the discretionary practice applies to all their benefits.