Early Retirement

Originally written by Paul Geraghty, updated by the editorial team on 4th April 2026

Early retirement is one of the most commonly-offered alternatives to redundancy. Whether it is the best option for you in the circumstances is something that has to be considered very carefully.

If you're being pressured into early retirement instead of redundancy, it's important to understand your legal position by using our free Redundancy Rights Checker.

It is important for you to understand that you cannot be forced into early retirement; and if you are being subjected to pressure, you should resist that pressure if you are not convinced it is the best option for you.

How Early Retirement Affects Your Redundancy Rights

Not everyone is clear about whether or how early retirement intertwines with your redundancy rights. The answer is clear : early retirement is not a form of redundancy; it is an alternative to redundancy. So, if you choose the early retirement option, you will have no redundancy rights. You will not receive a redundancy payment.

Why would you do it then? Good question. Typically, an employer will offer incentives along with the early retirement option, such as a large lump-sum payment.

The state pension age is now 66 for both men and women, and is scheduled to rise to 67 between 2026 and 2028, then to 68 between 2044 and 2046. Private and occupational schemes operate by their own rules to a greater extent. Currently, the soonest you can access a private or occupational pension is at the age of 55. This is scheduled to rise to 57 in 2028.

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Deciding Whether Early Retirement Makes Economic Sense

It is very important to think through the financial implications of a decision to retire early. These are not always readily apparent, and this is a subject on which expert advice is highly recommended. In general, you need to bear the simple arithmetic of the situation in mind : if you retire early, your pension pot will be smaller than it would otherwise have been if you have waited until the normal retirement age; and, you will have to live on it for longer than if you had waited until the normal retirement age. Ignoring other factors, then, your annual pension income will be significantly lower.

A good rule of thumb is said to be that your pension income will ultimately be reduced by 9% for every year of early retirement. Inducements from your employer can bring this down a bit.

It is very important that you consider the financial implications of early retirement carefully before accepting it as an alternative to redundancy. Other people have unwisely opted for it and spent their twilight years living in poverty.

Your situation may be slightly different. ask a question below ↓ and our editorial team will reply with our advice.

Working after Early Retirement

Not everyone is clear about whether they are allowed to work after they have retired early. The answer is yes. You are free to take on other employment, start your own business or do whatever you like and your pension entitlement is not affected in any way. In fact, if you choose to defer your pension because you are still earning an income, it can go on accumulating, meaning that, when you eventually claim it, you will get more than you would have otherwise.

Early Retirement – Conclusion

Early retirement can seem a tempting option, particularly when your employer offers incentives. But you need to think it through carefully to see whether you will really benefit in the long run.

The Next Step

Now that you have read through the advice above, you might want to put it into practice. Our Redundancy Rights Checker lets you answer a few questions about your situation and find out whether your redundancy is fair and legal. Get clear guidance on your rights in under two minutes. Try it now →

26 questions

Ask Redundancy Expert a Question

RedundancyExpert Editor 18/05/2026 at 9:17 am

@B Yes, this is fairly common in local government under the LGPS. At 55 with redundancy, your pension is usually paid unreduced, and you can often take a tax-free lump sum from the pension by commuting some annual pension. The redundancy payment itself is separate, with the first £30,000 tax-free. Speak to your council's pensions team for an estimate showing both figures side by side before you decide.

B 10/03/2025 at 4:31 pm

I am looking to take early retirement (I am 55)but there is also a redundancy payment that has been suggested I can access
I work for a local council - can I take part of the redundancy payment and combine with my retirement lump sum?
suggestion would be appreciated

Hammy 30/11/2020 at 7:02 pm

I am 63 years of age being made Redundant this month after 31 Years with my current Airline employer.

I want to keep my Staff travel concessions etc but this is normally only given if you take early retirement.

So I don't know what to do.

Regards,

Mark

Cambstiger 06/10/2020 at 3:19 am

My job is being made redundant in December, I had already given notice of my intention to take early retirement in January, after my job is made redundant, prior to the announcement. Am I entitled to redundancy?

Ang Wilko ?? 14/08/2020 at 12:17 pm

I’m 65years I have COPD also heart disease I’m on the sick at the moment due to the corvina virus can I ask to be payed off Thanks Angela

Suse 02/08/2020 at 11:28 am

I was made redundant after 30 years working for SBC I am 62 with health problems and think this was my downfall
I really think govement needs to look at firms getting rid of being penalised for being born in the 50s

Poddle 18/07/2020 at 7:19 pm

Hi ive put in for my severance pay and also early retiment im 62 this year will it affect my state pension when im 66 x

Smiles 21/11/2019 at 4:11 pm

I have put in for redundancy after staff restructuring. Headteacher as come back and said because I’m 57 we are offering you early retirement . No figures as yet , but does this have an impact on the amount of money I will receive when I actually retire . Is the pension money a drip feed of amount each month or lump some . Can I refuse taking my pension and leave it for a later date. Because I’m 57 can I now not go back to the headteacher and say I want redundancy. I’m confused . Is taking early retirement better for the school. Do I have reduced pension because I’m taking it early . Thank you

Mel 22/07/2019 at 10:28 pm

Redundancy has been announced for 2021, but I feel my employer may ask for me to be medically retired. What is difference?

Jaykay 29/01/2019 at 12:57 pm

I am retiring in August and my post is not being replaced. Am I entitled to redundancy

RedundancyExpert Editor 18/06/2018 at 11:26 am

The Acas whichshould help answer your question.

Jako 16/06/2018 at 5:28 pm

I have a retail butchers business and I want to retire I am going to close my business what happens about redundancy then, is it paid at the same rate or not at all. Can you give me any information on the subject

Marty 02/05/2018 at 7:53 am

I took my pension pot at 55 and collect £600 per month from my private pension pot - I still work for the same company - looking highly likely that the arm I work in will close

I’m 63 now - will I be entitled to a redundancy payment?

Bongani 10/04/2018 at 5:28 pm

I need help with redundancy linked to retirement.

Andy 13/03/2018 at 4:52 pm

i need some help please
i have cancer & my life expectancy is not good news. I have been told i have between 6-18 months left to live.
i have worked for my company for 25 years
i was offered a redundancy package from the company & was told i could also take my pension to based on ill health (great wife & family could enjoy the time left in good comfort)
then i was told i can not have both, it is either 1 or the other.
questions i have
i i took the redundancy package
then 3 months later my doctor wrote to the company pension stating i have x amount of time to live, can i take my pension lump sum tax free (ill health less than a year to live)

KPW 04/03/2018 at 2:21 pm

My organisation is being restructured and my salary halved in the process. I am 56 and have worked in the same organisation for 27 years. Please could you advise if I triggered early pension what the implications would be? Or is it advisable to go for a redundancy package? If I offer to go earlier that the restructuring comes into play should I negotiate for a better redundancy package

Babbeen 07/12/2017 at 8:35 am

I retired at 55 ( nhs have worked there for 32 years )and after a months break returned part time on 3 days ! I have worked now for a further 2 years . Am I entitled to redundancy

Monica 04/05/2017 at 2:52 pm

Hi
Thank you for your advice this morning but can I now kindly ask for it to be deleted as it was wrongly input it ment to be private and confidential only and not to be share

Thank you for your time

Monica 04/05/2017 at 10:40 am

Hi I am 60 years old and I am being made redundant after 42 years service with the same employer. I wasnt even allowed to go back to my desk and collect my things nor to discuss it with anyone, can my employer stipulate that I am retire. My manager sent an email to everyone in the company stating that she wish me well in my retirement is this right? all the people that I have worked with didnt know nothing about it and they are very upset saying how can I retire so suddenly so I am very dissapointed
Monica

Dicky 03/05/2017 at 11:41 am

I was made redundant in 2007, on civil service conditions. I chose to receive an immediate lump sum, and monthly payments until aged 60, and then reduced payment until retirement age, then at 65 years. With the retirement age now removed will be eligible to continue to receive payments after reaching 65. Many thanks for any advice.

Jonno 09/04/2017 at 1:41 pm

Hi, I am being made redundant after a 32 year career. I am 48 years old. If at 55 years old I seek early retirement , can my current employer stipulate that I can only work 50% of my current hours or 50% pay if I then seek employment and claim my company pension?

Many thanks

mat 14/07/2015 at 3:28 pm

Husband retires in august 2015. Company asked for voluntary redundancy, he was told he was eligible until after they had signed his offer letter, now they have withdrawn it. withdrawn because his notice was in. He retires after redundancy date. Can they do that after inviting him to apply even though the retirement date was known.

RedundancyExpert Editor 08/04/2015 at 11:46 am

@Gin - According to Acas, employers cannot force employees to retire or set a retirement age unless it can be objectively justified. If you need any further clarification, please give them a call. I hope this helps.

Gin 05/04/2015 at 8:41 am

I'd like to enquire about my Mum who is being asked by her employer to take early retirement.

My mums birthday is 22.11.1948 which makes her 6. towards the end if the year. I have advised her that she cannot be forced to leave before her birthday.

Could you advise me of her rights. She seems to think that women born before 1950 have to retire early than the current age.

Many thanks

Ginette

Jan Editor 19/02/2015 at 2:22 pm

@Wally - sorry to hear this Wally. I would recommend you speak to your company directly. Surely, given the circumstances they will give you the best advice on what they can offer and what they think would be the best way forward. I guess they will want to address the issue as much as you. For you personally perhaps it is time to actually sit back and take some 'you' time. I hope they come up with a good deal and that your treatment is successful so that you can fully enjoy your life.

Wally 18/02/2015 at 9:30 am

I have just turned 59 and have recently been diagnosed with prostate cancer. I have had surgery to remove my prostate and there is still some cancer left, so I am now on hormone therapy and will undergo 6 weeks of radiotherapy in March this year. If this is unsuccessful it could mean Chemotherapy in the future, or the worst-case scenario is that it will be terminal.

I have worked for my current employer since August 2008 (6 years & 6 months) and am considering asking my line manager to propose to the Directors that I retire early on medical grounds as I will be off work for the Radiotherapy, possible Chemotherapy and other times that I could be ill and also to give them the opportunity to train a replacement before I leave. It will allow them to get someone into my job before my boss retires next year, i.e. continuity in the department.

I would like 1 x year's salary as an incentive payment as this would enable me to pay off my mortgage and I could then live reasonably with my military pension payments until I get my state pension at age 66.

Is 1 x year's salary acceptable (or the "norm") in such circumstances where it is not only good for me to go early as my health and possible time off work are unknown factors, but also good for the company as they will get a new replacement trained up and in good time for continuity when my boss retires.

Your comments would be appreciated.

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