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How to take an early retirement

Published: 28 October 2015

Your retirement age has become the age at which you choose to retire, rather than something imposed on you either by the Government or by your employer 

The phasing out of a default retirement age means that it is now essential for you to discuss with your employer how and when you wish to retire. Here are the top points to consider 

There was a time not long ago when the instant you hit retirement age, you would clear your desk, arrange a few farewell leaving drinks with work colleagues, be presented with a carriage clock and head off into the sunset to play golf or take up bridge…

…Not anymore. In the past couple of years there have been big changes in the way that retirement works, and indeed how retirement is viewed by business and society in general. As a result there is a host of new rules to understand.

The biggest change is that the default retirement age, which was 60 for women and 65 for men, has now been phased out. This means that the age at which you retire and the age at which you start receiving a pension may no longer be the same.

This also means that most people can now work for as long as they want to. Your retirement age has become the age at which you choose to retire, rather than something imposed on you either by the Government or by your employer.

The new retirement rules

Employers are no longer allowed to set a compulsory retirement age unless they can clearly justify it. Assuming there are no such restrictions, you are free to carry on working past state pension age for as long as you want, and if you choose to do this you cannot be discriminated against because of your age or any other factor, either deliberately or inadvertently.

So, for example, you should be able to continue to take advantage of any training opportunities and skills development schemes offered to employees by your employers.

The concept of a fixed retirement age has been replaced by the idea of a state pension age, which is when you become eligible to receive a state pension, assuming you are entitled to one.

The state pension age is gradually being increased for men and women over the next few years. It currently stands at 65 for men and between 60 and 65 for women, but will increase to 66 for both men and women by 2020 and to 67 for both by 2028.

If you continue working past your state pension age you have two options. You can either claim your state pension while also receiving an income from working, or you can put off claiming your state pension for a while.

If you decide to delay claiming it, you may be eligible for a higher rate when you do start to claim it. Either way you will not need to pay national insurance contributions on the money you earn from working, which cease for everyone over state pension age.  

All these changes mean it is essential that you discuss how and when you wish to retire with your employer, well in advance. One option might be to gradually reduce your working hours over a period in a way that suits both you and your employer.



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