GCI Blog

Impending retirement is not a barrier to the Cycle to Work Scheme

A growing number of workers in their sixties and beyond are shunning traditional retirement and opting to work for longer.  According to data from the Centre for Aging Better’s latest research, around one in nine individuals are continuing to work past their 65th birthday (compared with one in 20 in 2000).  Retaining knowledge and experience can be crucial for many organisations, however it can raise several questions about the employee benefits available to this demographic, particularly salary sacrifice schemes such as the Cycle to Work Scheme.

The team at pioneering Cycle to Work Scheme provider, Green Commute Initiative (GCI), are often asked whether an employee approaching their retirement can use the Cycle to Work Scheme.  The answer is a resounding yes.  We believe this growing demographic should be able to reap the rewards of the scheme’s tax savings and also the health and life benefits of cycling.

Confusion about scheme participation can arise from previous experience with traditional scheme providers who use combined hire and salary sacrifice agreements.  This limits options for both employers and exiting employees.  However, when GCI launched in 2016, we uniquely decoupled these agreements so they run independently and between different parties. Therefore, changes to one agreement does not impact the other.

A growing number of workers in their sixties and beyond are shunning traditional retirement and opting to work for longer.

For employers, the key is to ensure the salary sacrifice period is for a sufficient period so the employee approaching retirement is able to fulfil the agreement before leaving.  Even then, if the retirement period is less than a year away, as long as at least three months of salary reductions have taken place, the balance due can come out of the final gross salary payment.  This means they can still make the significant tax savings available through the scheme.  You do need to be prudent to ensure that the final payment does not take the employee below National Minimum Wage.  GCI can advise on the options here.

The hire agreement, and subsequent loan agreement, is with GCI and is therefore not impacted by employment status so the employee can retire without worrying about this aspect of the scheme.  GCI liaises directly with the employee (or ex-employee) without any interaction required from the employer.

This older demographic of workers possesses a wealth of experience and knowledge that’s invaluable to employers and colleagues. Their expertise can be instrumental in mentoring younger employees, offering guidance, and contributing to the success of organisations. Its key for HR leaders to ensure that benefits packages are inclusive and reward older and younger workers alike.  The Cycle to Work Scheme has an important role to play in fulfilling this requirement.

Photo credit: #BikeisBest

#cycling #retirement #salarysacrifice #activetravel

  • 10th November 2023