Early Retirement Pension
Have you attained the age of 50? Do you plan to retire from your job in a few years time? If your answer to the questions is yes, it is time you started considering different early retirement pension programs which are followed in the financial market today. An early retirement pension plan pays lower than the pension plans you can avail in case of regular retirement but nevertheless it is important and help you to spend a relaxed life after retirement. The amount of early retirement pension that a person receives from his employer depends upon the final pensionable remuneration of the employee and that employee’s pensionable service in the organization.
Requirements to be Eligible for availing Early Retirement Pension Plans
As an employee you will have to keep certain points in mind before availing the benefits of an early retirement pension program. The early retirement pension rules state that only if you choose to retire from the services of your company earlier than your normal retiring age, will you be able to avail the benefits of a pension plan that allows you to withdraw money from the pension account as soon as you have quit your service completely. However, this is not the only prerequisite to acquiring benefits from early retirement pension accounts. There are certain other basic and important guidelines to be kept in mind before you can access this account:
- The rule book of an early retirement pension program varies from one country to another. Early retirement information and guidelines are prepared and dictated by the government authorities of different countries all over the world. Policies of the government on the other hand depend on the basic rules under which servicemen have to operate within their organizations. Quite obviously the rules for both the public and private sectors of service are various in different countries and therefore the early retirement pension rules are also different.
- Early retirement is usually sought by a person when he is no longer physically fit enough to continue with regular service henceforth in life. The governments of every country over the world allow an ill person to retire from his post with an organization earlier than the scheduled date. In the UK, the early retirement handbook underlines that the entire sum in an employee’s pension fund can be given to that person without imposing taxes on that amount if he/she is suffering from a very serous illness. The State Pension on the other hand is paid by the government of the UK only if an employee has attained the age of 60 in the case of women and 65 in the case of men.
- Retirement can occur from an early age of 50 years as opposed to the traditional 60 years. Therefore it is at the age of 50 that a person becomes entitled to the company as well as the personal pensions. However the age of early retirement also varies from country to country and it is fixed at 55 in the US.
- The early retirement pension scheme also puts down the rule that you will need to have at least a year from your services with an organization as a qualifying tax year. The tax year is a year from your service when you have earned a sufficient amount as salary from your organization so that taxes have been contributed from your income to the National Insurance.
Tips to remember before availing Early Retirement Pension
There are certain points that you must keep in mind if you have to avail retirement and pension opportunities before the stipulated age and time. These tips are especially important to keep in mind if you have the membership of a personal pension scheme, a money purchase scheme or a stake holder’s pension scheme.
- Firstly, you need only some years to pay which will result in your pension fund becoming smaller.
- Secondly, the amount you receive as pension after seeking an early retirement will be smaller than the amount you would receive as regular pension because the fund is used to provide an income over a greater period of time.
- Your early retirement pension amount can become higher only if you are the victim of an illness that causes threat to your life. However, this clause can only become applicable at the discretion of an employer. It is an organization that has to agree to pay a higher amount to the retired employee in this case.
In several cases, the amount a person receives as pension is not enough to suffice his regular needs after retirement especially if there is a case of medical mishap. In this case an early retirement pension help comes to your rescue to create final-salary schemes where you can contribute certain amounts of money for future use. Similarly, tax saving investments can also be opted in which an Individual Savings Account can be created to store money as retirement pension. You may also choose to add contributions towards personal or official accounts created at any point of time in your professional journey. In all of the above cases, it is advisable to take the help of a professional financial advisor before making the investments.
How to make early retirement work for you
Early retirement is perhaps something that every worker around the world craves for. Wouldn’t it be nice if you suddenly did not have to attend to your workplace in a regular manner and just have a lovely time throughout the day? If you are planning an early retirement, here are some ways that may help you to enjoy your early retired life without any worries.
- Get your pension papers ready – Speak to a financial advisor and prepare all your pension papers before seeking retirement. Remember that resources are what you will need after retirement. Also keep a health insurance benefit arranged.
- Early Retirement Social Security – Do not seek early retirement too early on in your career. The social security payment that you receive from your employer after retirement is calculated on the basis of the average of your 35 years of professional experience. Therefore if you work experience is not more than 35 years you will end up getting less social security after retirement.
- Invest keeping inflation rate in mind – Though inflation rate does not fluctuate much these days, it is advisable to contribute a sum of money in your retirement savings which will help you to sail through your retired years when you do not have a regular flow of money and the market is affected by inflation.