What is phased retirement?
Phased retirement potentially allows you greater flexibility in your employment and pension arrangements. Provided your Employer agrees, it allows you to draw all of your accrued pension and tax-free cash benefits while you continue working, provided you permanently reduce your working hours and salary by at least 40 per cent at the same time.
When is phased retirement available?
If you have completed at least ten years' pensionable employment (i.e. continuous years of employment since becoming a member of the Scheme), then at any time after reaching age 55 (which is the "Minimum Pension Age" under the Scheme Rules) you can ask to receive your pension while continuing in employment with an employer participating in the Scheme.
If you haven't completed ten years' pensionable employment but are nonetheless a "Qualified Member" (which generally means you have completed at least two years' pensionable employment), then you can make the request once you reach age 60.
It is up to you whether or not to ask to take advantage of this option, and it is then up to your Employer whether to agree to your request.
The exact terms of your phased retirement will be decided by the Trustee, agreed with your Employer and notified to you, but this policy forms the basic framework.
Would I have to draw the whole pension at once?
Yes, you would be required to take all of your benefits (100%) at the point of taking phased retirement.
How would phased retirement affect my status in the Scheme?
After you take phased retirement you will be treated as a Pensioner member of the Scheme, which means that any benefits payable on your death will be calculated in the same way as for a complete retiree (see below for more information).
If, after you have retired, you are offered new employment that is pensionable in the Scheme, you can accept the offer but you cannot rejoin the Scheme.
Will my pension be reduced if I retire before 65?
If you take some or all of your pension before 65, it will be subject to a reduction (determined by the Scheme's actuary) to allow for the fact that you are drawing benefits before your Normal Pension Age (i.e. to reflect the fact that early payment of your pension means it is likely be paid to you for a longer period of time).
Will I be able to accrue further pension if I take phased retirement?You will not be able to accrue any further benefits in the Scheme.
What benefits are payable on death in service?
As an active member, if you died before age 65 your dependants would be entitled to receive a death in service lump sum of three times your salary, your spouse or civil partner would be entitled to an annual pension, and your children may also be entitled to a pension. If you died in service aged between 65 and 74 (inclusive), then your dependants would be entitled to a lump sum equal to five times the annual pension you would have been entitled to receive had your pension been put into payment on your date of death, plus a spouse's/civil partner's pension and children's pensions (if applicable).
If you take phased retirement, then although you will still be working, you will be classed as a "Pensioner", so no death in service benefits will be payable under the Scheme.
However, if you join the defined contribution plan (or any other pension scheme) for future accrual, death in service benefits would be payable under that arrangement.
If you die within five years of drawing your pension and before you reach age 75, your dependants will be entitled to receive a lump sum equal to the remainder of any pension instalments you would otherwise have received during the remainder of that five-year period until you reached 75.
What would happen to my AVCs?
You are required draw all of your benefits on taking phased retirement, including the whole of any AVC fund.
Would I still be entitled to my tax-free lump sum?
Yes, as a Phased Retirement Member you would be entitled to exchange part of your pension (within the tax limits) for a tax free lump sum.
Please note that your pension is taxable income, so if it is paid while you are still receiving a salary, more of your pension income will fall outside your personal allowance than it would if you waited until you stopped receiving a salary. We advise you to consider the tax implications before deciding to take phased retirement.
What would happen if I became a Phased Retirement Member but subsequently took ill-health retirement?
Once you take phased retirement you are treated as a Pensioner member of the Scheme and will have drawn all of your benefits in full, so the ill-health retirement provisions of the Scheme will no longer apply to you.
How can I exercise the right to take phased retirement?
Any request to take phased retirement must be made in accordance with the University's existing flexible working policy, which can be found at flexible-working policy/
This policy document is intended as a communication setting out the terms on which you can take phased retirement. It does not in itself create or take away any entitlement, and it is not a substitute for the trust deed and rules, which form the legal basis of the University of York Pension Fund and will take precedence if there is any inconsistency between them and this document or any uncertainty as to any entitlement.
- Last reviewed: 30 June 2013