Retirement Finances - When You Retire


Unlike most company pensions, the additional pension from the state is fully protected against inflation once it has been awarded. It goes up each April along with the basic retirement pension. However, your company pension may well not go up with inflation. And the GMP remains fixed at the amount calculated when you retire.

Each year the DWP calculates the additional pension you would have received had you remained within the SERPS. If that additional pension is more than the GMP (not the pension you actually get), the DWP pays the difference as an addition to your basic retirement pension. It is called payable additional pension. As time passes, most people find that they get some payable additional pension as well as their company pension.

Many people have been confused by receiving a letter from the DWP setting out their pension entitlement with the phrase 'guaranteed minimum pension' and a figure by it. Naturally enough they have assumed that they would get that amount as a pension. In fact, they do not. It just lets you know the minimum pension you should get from your company scheme, and that if you do not the DWP will make it up.

The system is slightly different for people who receive a pension from the civil service or a local authority or any other public service paying authority such as a nationalized industry. But the result is the same. see http://www.dwp.gov.uk/


Retirement and financial planning

Retirement Finances - Other Matters


If you do not retire and draw your pension at sixty or sixty-five, your additional pension will be increased by 0.01 for each seven weeks you delay. However, it will not be increased if you are drawing any other social security benefit such as invalidity pension or widow's benefit instead of drawing retirement pension.
A widow or widower normally inherits the additional pension from their late husband or wife. But there is a limit to how much can be inherited if the widow or widower has their own additional pension as well. In that case the total additional pension paid cannot be more than someone of the same age could have earned on maximum earnings since April 2012
You can be paid an additional pension on your . . . ... see: Retirement Finances - Other Matters