Timeline to retirement
At a glance
Arranging your pension can take a little time, so once you’ve checked the basics and you’re happy that it is the right time to retire, follow the steps below to ensure your pension payments get set up smoothly.
In this section
Within 12 months
The steps to retirement
The right choice for you
Is there a best day to retire?
No, there is not a best day to retire. There are some things to consider when selecting your retirement date:
- Pay: One of the factors used to calculate your pension is your salary (or pensionable earnings). If you have a pension that will be paid from the 1987 or 2006 schemes, the calculation uses the average of your pensionable earnings over the previous 12 months, so if you receive a pay rise you would need to work for a full 12 months to ensure that the full pay rise is considered in your pension payment.
- Salary and pension payments: there may be a period between receiving your final salary payment and your first pension payment. This could be longer than the usual period between paydays so you may need to plan to have enough income for this period. The pay day for your pension may fall on a different date to your salary.
- Tax: The income from your pension is taxed in the same way as salary, so there may be benefits in considering the specific date in the tax year in which you start to receive your pension.
- Reduction in pension: If you take your pension early (before the normal retirement age in the scheme) it might be reduced for early payment.