Retirement benefits

You will generally receive a pension at your Normal Retirement Date from the DB Section equal to 1/60th of your Final Pensionable Earnings for each year of Pensionable Service. Some members may accrue (build up) a different amount of pension, particularly those who joined the Company before April 1986. For most members your Normal Retirement Date is your 60th birthday. You will have been told if you have a different Normal Retirement Date. Your pension will be paid monthly for the rest of your life. At retirement, you will also have the option to exchange up to 25% of your pension for a one-off lump sum, which is normally tax-free.

Example: The example below shows the pension payable to a member retiring at their Normal Retirement Date with Final Pensionable Earnings of £20,000 and Pensionable Service of 15 years.


Complete months of Pensionable Service count as a proportion of a year.

However, if you joined the DB Section before April 1986, the calculation of your pension may be more complex than in the above example - please contact the Administration Team for details of how your pension is calculated. Benefits provided by the DB Section are subject to HMRC limits.

Calculating Final Pensionable Earnings

Final Pensionable Earnings is calculated as the higher of:

  1. Your basic salary earned in the 12 months immediately before leaving Service, ignoring any additions such as bonuses or overtime;
  2. Your highest annual salary in any one tax year in the last five years before leaving Service; or
  3. Your average annual salary over the best three consecutive tax years in the last 10 years before you leave Service.

Using the example below where a member left the Scheme on 17 January 2018, their Final Pensionable Earnings is £37,400 as this is the higher of the three definitions above.

Basic Salary

Annual Salary


Salary (£)

Tax year

Salary (£)

1 April




1 April




1 April



1 April



1 April



1 April



1 April



1 April



1 April



1 April




Salary (£)

38,000 x
(292 days / 365 days)



35,000 x
(73 days / 365 days)



Full tax year earnings of




(33,499 + 32,019 + 43,835)
/ 3





  1. Your salary (either basic or annual) is subject to a maximum each year (the Scheme Earnings Cap). Further details, including a full list of the Scheme Earnings Caps for the last 10 years are shown below.
  2. For the purpose of the calculation of Final Pensionable Earnings, your basic salary is your contracted salary as at 1 April each year whilst your annual salary is the total basic salary paid to you during a tax year.

Scheme Earnings Caps

Tax year Cap
19/20 £166,200
18/19 £160,800
17/18 £154,200
16/17 £150,600
15/16 £149,400
14/15 £145,800
13/14 £141,000
12/13 £137,400
10/11 £123,600

Guaranteed Minimum Pension (GMP)

From 6 April 1978 until 5 April 2016 (inclusive), the DB Section was contracted out of the State Second Pension Scheme (S2P), formerly known as the State Earnings Related Pension Scheme (SERPS). If you were an Active member of the DB Section during this period you will have built up a Guaranteed Minimum Pension (GMP) for the period you were contracted out of SERPS before 6 April 1997.

To watch a short video explaining more about the State Pension please go to the Videos page of this website.

video thumbnail

Options at retirement

When you retire you will have the option to choose:

Tax-free lump sum 

You may exchange (or commute) up to 25% of the value of your benefits for a one-off lump sum. Under current legislation, the lump sum is normally tax-free. Taking a tax-free lump sum will lead to a reduction in your annual pension calculated by applying a rate specified by the Trustee (based on advice it receives from the Scheme Actuary). The actual amount of cash you can receive for each £1 of pension given up will depend on the rates in force at the time.

Your tax-free lump sum may be restricted to ensure the pension you receive is not less than any GMP you have built up within the DB Section.

Extra pension for Dependants 

Under the Scheme’s Trust Deed and Rules your Spouse or Civil Partner is automatically entitled to a pension on your death. Before you retire you may also choose to ask the Trustee to give up part of your pension to provide additional benefits (payable on your death) for your Spouse, Civil Partner or a Dependant(s).

The State Spreading Option 

If you take your pension from the Scheme before reaching your State Pension Age, your retirement income will not include any State Pension. This is because the State Pension is only payable from State Pension Age.

However, in certain circumstances the Trustee gives you the option of electing to receive a total retirement income which will broadly be the same both before and after the age expected to be your State Pension Age. This is called the State Spreading Option and works as follows:

• You surrender, for the remainder of your lifetime, part of your DB Section pension in exchange for a temporary additional pension payable from the Scheme from your date of retirement until you reach your expected State Pension Age; and

• At your expected State Pension Age, this temporary additional pension will stop and your State Pension will start to be paid by the Government. Details of this option will be provided shortly before retirement or on request from the Administration Team.

For the purposes of taking the State Spreading Option, your State Pension Age is the age from which your State Pension is due to be paid, on the day you retire. If the Government increases your actual State Pension Age after you take the State Spreading Option, the temporary increase will still only apply until the date you expected to be your State Pension Age, on the day you retired (not until your actual increased State Pension Age).

For more information on retirement please refer to the Retirement How to Guides which can be found in the How to Guides section of this website.

You can also watch a short video explaining the retirement process on the Videos page of this website.