Minimum pension age

The minimum pension age is the earliest age you can choose to retire and start receiving your pension. Effective from 6 April 2010 this is changing from age 50 to age 55.

Background

You may remember that in 2006 we told you that, because of a change in the law, the minimum age at which most employees will be able to draw their benefits from the O2 Pension Plan (‘the Plan’) was going to increase from age 50 to age 55. This was part of the tax changes introduced known as ‘A Day’.

This change is required to prevent any benefits paid out to you before that age being classed as unauthorised payments by HMRC, which would have tax implications for both you and the Plan.

The change will come into effect on 6 April 2010. This means that, after this date, you may have to wait until age 55 before you can request an early retirement pension from the Plan. This will depend on your circumstances and the Section of the Plan you participate in, as explained below.

What does this mean for me?

Section 1 members

From 6 April 2010, you will not be able to request an early retirement pension - or any related tax-free lump sums - from the Plan until you reach age 55. The only exception to this is if you become entitled to an incapacity pension under the Plan Rules - you will not be prevented from taking an incapacity pension before age 55. Pensions which come into payment before 6 April 2010 will not be affected (see below for further details).

Section 2 and 3 members

When the change in the minimum pension age was originally announced in December 2003, a decision was made by the Government to protect the minimum pension ages of certain employees. These protected employees are broadly those employees who were members of their employers' pension arrangements before 6 April 2006 and who had, under the rules (as they applied at December 2003), an unqualified right to take their benefits before age 55.

If you are a Section 2 or Section 3 member, then you will have had - and will continue to have - an unqualified right to early retirement (unlike Section 1 members, whose right to request an early retirement pension is dependent on company consent). You will therefore continue to be able to take early retirement benefits from age 50, provided certain legal conditions are met.

These are that:

you must become entitled to all of your benefits under the Plan at the same time. We expect that this would be the case for most people. However, if you have built-up other benefits under the Plan (e.g. additional voluntary contributions) then from 6 April 2010 if you want to take your Section 2 or 3 benefits before age 55, you must draw all of these other benefits from the Plan at the same time ; and
you must not become employed by any employer participating in the Plan after you become entitled to your early retirement benefits. In other words you can’t take your pension early and keep working for O2.

What if i start taking my pension before 6 April 2010?

If, before 6 April 2010, you start to take your benefits in accordance with the Plan Rules but you are not yet age 55, those benefits can continue to be paid after 6 April 2010 as usual. If you are a Section 1 member and you have other benefits in the Plan which will not come into payment until after 6 April 2010, you must wait until you reach the normal minimum pension age of 55 to draw these further benefits. (This restriction will not apply to Section 2 or 3 members for the reasons described above.)

Where can I get more information?

If you have further questions around how this may affect you and your retirement plans, please contact o2admin.hrservices@accenture.com or call Talk2hr and ask to speak to the pensions team.