A bridging pension is a higher pension from a workplace scheme paid until State Pension age, then cut back when the State Pension starts.

Schemes that offer one let you take extra income in the early years of retirement, in return for a smaller pension for life afterwards. That trade is permanent, so it is worth seeing how the numbers are laid out before you choose; if you also have a defined contribution pot, Pension Wise gives free government guidance on it. With your scheme quotation and State Pension forecast to hand, finish the form on this page and, once the call-back arrives, an FCA-authorised adviser will compare them for free.

What is a bridging pension?

The government's explanatory notes to the Finance Act 2013 define it: “A ‘bridging pension’ is the term used to describe a pension that is higher at the outset and then reduced at the age at which the individual can claim for the state pension.” The aim is to even out your income. Without it, a scheme pension that starts at 60 might be followed by a jump in total income at 66 or 67, when the State Pension begins.

Tax rules usually forbid cutting a pension once it is being paid. The same notes say “A pension from a registered pension scheme is not normally allowed to be reduced when in payment.” A bridging pension is one of the named exceptions. The Finance Act 2013 let schemes keep paying it “up to a member’s state pension age” without an unauthorised payments tax charge, where before it had to be reduced by age 65. Since 2016 that permission has sat in HMRC regulations (see the last question below).

In the two company schemes below it is an option you choose when you start taking a defined benefit pension (the kind based on pay and years of service, see final salary pensions). It is separate from the State Pension itself, which DWP pays. Your State Pension age is the earliest age you can start receiving it, and it may differ from the age you can take a workplace pension, as State Pension age explains.

How does a bridging pension step down at State Pension age?

The National Grid UK Pension Scheme prints a worked example in its April 2024 “Bridge the gap” booklet. A member called Alex retires at 60, six years before a State Pension age of 66. Without the option his pension is £11,000 a year for life. With the maximum increase it becomes £17,285 a year until 66, then drops by £8,814 to £8,471 a year, a cut the booklet calls permanent.

National Grid example (as printed, April 2024)Scheme pension a year
Without the option£11,000 for life
With the option, from age 60£17,285
With the option, from State Pension age of 66£8,471 for life

The scheme describes the arrangement as a larger pension until you can claim your State Pension, then a smaller one after that. Its Rules call this the levelling option. Both the higher pension and the cut rise with scheme increases: assuming 3% a year, the booklet shows £20,397 a year just before 66, a cut of £10,401, and £9,996 a year afterwards. Your total income would only be the same just before and just after State Pension age if the cut exactly matched your State Pension, and the amount you actually get depends on your National Insurance record.

The Engineering Employers’ Federation Staff Pension Fund describes the same shape in its 2023 guide: once State Pension age arrives and the State Pension is in payment, the temporary bridging pension “will cease and the income you receive from the Fund will reduce.” Its example starts a member at £10,000 a year for life and raises it to £16,600 a year at 60. Both schemes say their figures are illustrations only.

Not every scheme offers this, and some that did may stop. The EEF guide says the option may not be available to members in the future.

How is a bridging pension amount calculated?

There is no single formula, because each scheme sets its own. The two company schemes above anchor the extra amount to the State Pension, but in different ways. National Grid links it to the basic State Pension paid to anyone who reached State Pension age before 6 April 2016, which it put at £8,814 a year as at April 2024. The EEF fund ties it to the full new State Pension, with the amount set between 25% and 100% of that rate; its retirement pack shows the highest amount you are eligible for.

DWP puts the 2026/27 weekly rate of the full new State Pension at £241.30 (see the State Pension guide). Treat that as a reference for what you may receive, not as a bridging figure, because your own record decides your amount.

On price, the EEF guide says the terms are set so that the value of the bridging pension is expected to be 90% of the value of the Fund benefits exchanged. National Grid says its reduction is set using assumptions about life expectancy, age at retirement and other factors. Your scheme’s retirement quotation then shows the most you can take: National Grid says you can pick a lesser amount, but not a larger one.

So for a figure of your own, start with your scheme’s quotation, and use GOV.UK’s check-state-pension service to see when your State Pension starts.

What to weigh before choosing a bridging pension

Most of these risks come from National Grid’s booklet; another scheme’s terms can differ.

  • You may give up more than you gain. The extra is paid for a fixed period but the reduction lasts for life, so depending on how long you live you could end up repaying more than you received.
  • Choosing cannot be undone. The booklet calls the decision “irrevocable”.
  • Your income may not level out. If your State Pension is smaller than the cut, total income can fall at State Pension age.
  • Tax-free cash can move. In the EEF fund the option can raise the maximum tax-free cash, because it is worked out on the higher bridging pension; National Grid calculates its tax-free cash and death benefits the same way either way.
  • The annual allowance may count the extra. The temporary increase counts, multiplied by 16 when tested against that limit; see the annual allowance.
  • A later State Pension age costs more. If State Pension age rises after you choose, the reduction will be more than was quoted, because the higher pension is paid for longer.
  • Benefits and income tax. A higher income before State Pension age might mean a higher income tax rate and could affect other state benefits.

Whether the exchange suits you depends on health, other income and what you want in your first retirement years. For the defined benefit option itself, the scheme’s own quotation is the place to see its figures. Anyone weighing a bridging offer alongside a drawdown pot could use the call-back form here so that an FCA-authorised adviser examines both, with no fee for the call.

Can you bridge to State Pension age with drawdown instead?

If you also have a defined contribution pot, pension drawdown is another way to cover the years before the State Pension starts. MoneyHelper says drawdown usually lets you take up to 25% as tax-free cash from age 55 (rising to 57 from April 2028) and leave the remainder invested, taking money “when and how you choose”, including gradually over time.

Drawdown carries its own risks. MoneyHelper says “As your pension remains invested, its value can rise and fall until you take the money,” so the income is not guaranteed and what you can withdraw may turn out higher or lower than planned. It lists taking out too much in the early years as a way the money can fail to last, and a bridge is exactly an early-years withdrawal.

Two other points: taking taxable money from a defined contribution pot reduces the annual allowance for paying into pensions from £60,000 to £10,000, and extra income can alter benefits. The tax and timing questions are covered in pension drawdown, how drawdown is taxed and taking your pension early or waiting.

Which schemes offer a bridging pension, and where do you find it?

The examples here come from two company schemes, which publish their options in member booklets. For a public service scheme such as the NHS, teachers, police, civil service or LGPS, the place to look is that scheme’s own member guide or administrator, since each sets its own options. For two of those schemes, see taking an NHS pension early and the LGPS explained.

For how starting early can shrink a pension in the first place, see early retirement reductions. Ask the administrator three things in writing: is a bridging option available to you, what is the maximum amount, and exactly how much does the pension fall at State Pension age.

Smaller points on bridging pensions

Is a bridging pension the same as the State Pension?

No. A bridging pension is paid by the workplace scheme, while the State Pension comes from the government when you reach State Pension age. The scheme cuts its pension at that age so the two combine.

Can I change my mind after choosing it?

National Grid says the decision is irrevocable and you cannot change your mind later. Another scheme’s rule may differ, so ask before you decide.

What if my State Pension starts on a different day?

National Grid says the scheme pension reduces from your State Pension age, even if your State Pension starts on a different day. Your State Pension statement confirms your date.

Can anyone retiring early choose it?

Not always. National Grid excludes members taking their pension on ill-health grounds, and the EEF fund requires you to be at least a year below State Pension age, with eligibility also depending on the size of your pension; its Pension Options Statement shows whether you qualify.

Is the cut made at 65 or at State Pension age?

If your State Pension age falls after 5 April 2016, the Registered Pension Schemes (Bridging Pensions) and Appointed Day Regulations 2016 allow the cut at any point from age 60 up to 65 or, if later, State Pension age, and cap the total cut at 200% of the full rate of the new State Pension. Your scheme’s own rules fix when its cut applies.

Getting the figures read with you

Whether a lower pension for life is worth a bigger one now is a personal sum; an FCA-authorised adviser can discuss it with you, free, after you use the call-back form here. See also taking your pension at 55 and what Pension Wise is.

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