Your benefits at retirement

Retirement guide
When a member requests to take their retirement benefits from the Scheme, they will be sent a retirement pack containing the forms they need to complete in order to start receiving their benefits.

We know that the forms can seem complicated, so we are pleased to provide the below video to act as a guide for members who are in the process of completing their forms.


 

If you have any questions about the forms or your retirement options please contact us.


Pensionable age (usually 60)

The Scheme’s Normal Retirement Age (NRA) is 60, unless members qualify for early payment of pension because of redundancy (with certain conditions), in which case NRA is the later of age 50 or the date of redundancy.

Taking your benefits before age 60

The Scheme’s NRA is 60. You can take benefits at a reduced rate before you reach 60.

The earliest age members can take their pensions varies:

Reduced benefits at age 50
, for most members, the earliest age they can take reduced benefits is age 50.

Reduced benefits at age 55, in 2010, the earliest retirement age for UK pension schemes increased to age 55. Most BCSSS members were unaffected by this change. (The Scheme administrator has told the small number of members who are affected and whose earliest retirement age is now 55 instead of 50). Please note, this retirement age is due to increase from age 55 to age 57 in 2028.

Unreduced benefits at age 50, under an arrangement operated by British Coal some members who were made redundant have the right to take payment of unreduced benefits from age 50. (The Scheme administrator has told those members who are covered by this arrangement). Members can choose to defer payment of their benefits up to age 60, in these cases, their pension will be increased by 0.5% for each complete month between age 50 and the date they start to draw their benefits. The rate of deferred retirement uplift is reviewed from time to time, and is in addition to other Scheme pension increases.

Notifying you of your benefits and options

About three months before you reach age NRA, the Scheme administrator will send you a statement of benefits and options, as long as we have your home address or email address.

Please help us keep your records up to date - tell us if you change your home address or your email address.

Benefits and options (including your tax free lump sum at retirement)

Your statement of benefits and options will clearly set out your pension and tax free lump sum entitlement.

Your entitlement to a fixed or optional tax - free lump sum at retirement is determined by the date you left service, and your options will be clearly set out in the retirement benefits and option statement you receive from the Scheme administrator at the time of your retirement.

In addition, the statement will provide information on: 

AVCs

If you paid Additional Voluntary Contributions (AVCs) you will have an AVC fund with the Prudential Assurance Company Limited which will provide you with additional benefits.

You can take your AVC benefits at any time from age 55. There are different options including:

  1. Buying an annuity.
  2. To provide all or some of your BCSSS tax-free cash on retirement (you can only do this if you are taking your BCSSS pension at the same time).
  3. Taking the whole of your AVC fund as a cash lump sum, the first 25% will be tax free, and the remaining 75% will be added to your income in the tax year you take it and you will be taxed accordingly.

You don’t have to take your AVCs at the same time as you start to draw your BCSSS pension, you can take both benefits at different times to suit your circumstances.

If you need help deciding what to do you can get help from Pension Wise, a service set up by the Government to provide free and impartial guidance to help you understand what you can do with your AVC pension pot.

To contact Pension Wise call 0800 138 3944 or visit https://www.pensionwise.gov.uk 

Lifetime Allowance

The Lifetime Allowance (LTA) was introduced in 2006, and is a limit on the amount of pension benefits that can be drawn from pension schemes, whether lump sums or retirement income (pension), without triggering an additional tax charge. The LTA amount changes each year, the current and previous LTA rates can be found at https://www.gov.uk/guidance/pension-schemes-value-your-pension-for-lifetime-allowance-protection

 While most people aren’t affected by the LTA, if the value of your pension benefits is approaching or above the LTA, you may want to seek advice from an independent financial adviser.

Industry Wide Coal Staff Superannuation Scheme (IWCSSS)

Members who transferred to one of the Industry Wide Schemes due to privatisation may be entitled to early payment of their BCSSS pension.This will depend on certain British Coal redundancy arrangements which include: 

Ill health early retirement (IHER)

Current contributors

Current contributors to the IWCSSS who are given an ill heath retirement pension from the IWCSSS will automatically become entitled to payment of their deferred BCSSS benefits. Payment will be due from the same date as IWCSSS benefits.

Deferred members 

 Deferred members in the IWCSSS who apply for ill heath retirement from the IWCSSS won’t automatically receive payment of their deferred BCSSS benefits. Early payment of BCSSS benefits is separately assessed. 

Redundancy or IHER after taking early retirement from BCSSS 

BCSSS members who take a reduced early retirement pension may later receive unreduced benefits in the IWCSSS due to redundancy or ill health retirement. If so, the BCSSS pension will be increased to the full amount of pension due from redundancy or ill health retirement, calculated at the date of redundancy or the date the IWCSSS pension starts. 

What tax code will be applied to my first pension payment?

Your first pension payment is taxed using an emergency tax code. Once your first pension payment has been made, details of your pension are sent to HM Revenue and Customs (HMRC) who then provide the Scheme administrator with the correct tax code to use for future payments.

Overseas pensioners are treated in the same way for their first pension payment and will initially pay tax. If you live overseas and do not think you should pay UK tax please contact HMRC; if they agree they will send the Scheme administrator a revised tax code.

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