What is Bridging Pension?

Full Definition

A bridging pension is a feature offered by some defined benefit (final salary or career average) occupational pension schemes that allows a member retiring before State Pension age to receive a higher scheme pension in the years before their State Pension begins, with the scheme pension then stepping down (once the State Pension starts) to a lower ongoing amount for the rest of their life. The purpose is to smooth out the member's total retirement income: rather than a sudden jump in income once the State Pension kicks in, the member effectively receives an advance on part of their future scheme pension during the "bridging" years, since without this feature many members retiring early would face a noticeably lower income in the years before State Pension age than afterwards. Worked example: a scheme member retiring at 60 with a State Pension age of 67 might, under a bridging pension arrangement, receive an occupational pension of £18,000 a year from age 60 to 67, then see the scheme pension reduce to £12,000 a year once State Pension age is reached and the State Pension (say, roughly £6,000 a year based on 2026/27 rates) begins, keeping total income roughly level across the transition rather than jumping up when the State Pension starts on top of an unreduced £18,000 scheme pension. The precise bridging amount and step-down mechanics are set out in the scheme's rules and actuarial factors, and are not identical across schemes, so members should check their own scheme booklet rather than assuming a standard formula. A bridging pension is entirely separate from a "pension bridging loan" or from simply drawing down a defined contribution pot faster before State Pension age, and members considering early retirement with a defined benefit scheme offering this feature should factor in that any future increase to State Pension age (which has already risen and is legislated to rise further) can leave a gap between when the higher bridging pension stops or reduces and when the State Pension actually begins, unless the scheme rules are linked dynamically to the member's actual State Pension age rather than a fixed assumed age.

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