Author: Peter Lester (2001)

Peter Lester looks at augmented benefits and continued working after early retirement.
(taken from Issue No 17 –  October 2001) 

1. Introduction

1.1 This article is concerned with the situation where the trustees of a final salary scheme have discretions:-

1.1.1 to pay at his or her request an immediate pension to a member aged at least 50 who leaves before normal retirement date (NRD) otherwise than on grounds of ill-health – incapacity pensions raise their own special questions and are outside the scope of this article. This pension will be based on the deferred pension to which the member would be entitled at NRD but reduced to take account of early retirement so that broadly it is equivalent in value to the deferred pension i.e. the substitution is cost neutral so far as the scheme is concerned;

1.1.2 to augment (usually with the approval or at the request of the employer and subject to Inland Revenue limits not being exceeded) the 1.1.1 pension. Typically the augmentation will restore the actuarial reduction but (subject to Inland Revenue limits) more generous treatment may be made available.