What do I do if a member is retiring? (DC Schemes)

Retirement for Defined Contribution (DC) members

When your employee joined the Defined Contribution (DC) Scheme, they will have had the option to choose the date they want to retire. This is known as a Selected Retirement Date (SRD). The member will have been able to choose from the age from 55. If they didn't choose a date, a retirement of age 65 will automatically have been selected for them.

Members who joined the scheme before 6 April 2006 may be able to take their benefits from age 50, subject to certain conditions. Contributions can continue to be paid into the scheme at any age, as long as the member is still working.  

Members aged 75 or above don't get tax relief on contributions. Benefits can be taken any time on or after the members chosen retirement date.

When a member is approaching their selected retirement date, we will trigger the retirement process automatically. Approximately 12 months before the member's retirement date, we'll send your employee a current fund value and also access to our “At Retirement” tool.  

This will let the member begin to look at the potential benefits they will receive at retirement. Three months before the member’s date of retirement, we'll send them a retirement pack. As an employer, you'll need to:

• advise us if the member decides to retire at short notice, so a retirement pack can be issued.
• submit the final contribution, as part of the normal monthly submission process.
• enter the date of leaving within your monthly submission.

Please refer to the Employer Help Guides for help on submitting the information online.

• complete a withdrawal form if the member has a Defined Benefit section as part of their membership. If possible, please complete this three months before the member’s retirement date.

We will:

• contact the member and advise them of their benefits and the options available to them.
• send them the relevant forms for completion.
• advise the likely timescales for settlement of benefits.
• provide information about where to get financial advice.

This information will be issued either on receipt of the withdrawal form or three months prior to the member's normal retirement date. Once the fund value has been paid, the member's record will be closed as no benefits will remain in the Scheme.

If the member leaves the Scheme and starts to receive benefits, but remains employed, you may be required to re-enrol them into a scheme at a future date if they meet the auto-enrolment conditions.

Payment of benefits

The benefits payable are determined by the final value of the fund including the final contribution. This means that if a member remains in the scheme until their retirement date, there will be a delay in receiving their benefits. The reason for this is that the final contribution may not be paid into the Scheme until several weeks after the retirement date. 

That final contribution would then need to be invested into the member’s fund before the retirement benefits could be paid. You will need to make sure that your employee understands that there will be a delay.

Change of retirement date

Should the member decide not to retire at their Selected Retirement Date, they'll need to let us know as soon as possible. If the member has selected the default Target Date Fund investment option, their investments would be switched to a new Target Date fund.