Retirement

When can you retire?

There is scope to retire and draw your benefits from age 55 right up to the eve of your 75th birthday. In cases of ill health, there is no lower age limit at all.

• If you were paying into the LGPS on 31 March 2008, this change doesn't apply until 1 April 2010. You may be able to retire and receive your benefits from as young as age 50 provided you retire and elect to receive your benefits before 1 April 2010. You must have your employer's consent to draw your benefits before age 60.

There is one important condition – to be entitled to retirement benefits you must have at least 3 months membership, or have brought in a transfer from another pension scheme, or already have a deferred benefit in the LGPS in England or Wales.

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Early Retirement

Early retirement before age 65 is available but you may need your employer’s permission and your benefits may be reduced.

• If you were paying into the LGPS on 31 March 2008, you may have a protected earliest retirement age.

Early Retirement Reductions

If you choose to retire before age 65 your benefits will be reduced to take account of being paid for longer.

How much your benefits are reduced depends on how early you draw your benefits – how early you retire.

• If you were a member of the LGPS on 30 September 2006, some or all of your benefits paid early could be protected from the reduction if you are a protected member.

Your employer can agree not to make any reduction on compassionate grounds.

Benefits Reduction Table

If you choose to retire early – your benefits will be reduced.  The reduction is calculated in accordance with guidance issued by the Government Actuary from time to time. The current reductions are shown in the table below.

Where the number of years is not exact, the reduction percentages are adjusted accordingly.

If your benefits are paid before age 55, with your employers consent, the percentages shown above will differ.

The reduction is based on the length of time (in years and days) that you retire early - from the date your benefits are paid to age 65.

If you were a member of the LGPS on 30 September 2006, some or all of your benefits paid early may not be reduced if you are a protected member.

Protected Member

• If you were a member of the LGPS on 30 September 2006, you may have protected rights regarding the early payment of your benefits.
• If you will be age 60 or over by 31 March 2016 and choose to retire before age 65, then, provided you satisfy the 85-year rule when you start to draw your pension, the benefits you build up to 31 March 2016 will not be reduced.
• If you will be under age 60 by 31 March 2016 and choose to retire before age 65, then, provided you satisfy the 85 year rule when you start to draw your pension, the benefits you build up to 31 March 2008 will not be reduced. Also, if you will be aged 60 between 1 April 2016 and 31 March 2020 and meet the 85 year rule by 31 March 2020, some or all of the benefits you build up from 1 April 2008 will not have a full reduction.

You can find more information about protected rights on early payment of your benefits from this flowchart  (42 KB).

Please note that not all membership may count towards the 85 year rule. If you are thinking of voluntarily retiring before age 65 and you wish to receive a quotation of the benefits payable, taking account of your protected rights under the 85 year rule please contact the Pension Section for a quotation.

Your employer can agree to waive any reduction on compassionate grounds.

85 Year Rule

The Rule of 85 is satisfied if your age at the date you draw your benefits and your scheme membership add up to 85 or more (part years are ignored). If you are part-time, your membership counts towards the rule of 85 at its full calendar length.

If your benefits are deferred the rule is satisfied if your age at the time you draw your benefits and the membership you would have had in the LGPS (if you had stayed in the scheme between the date of leaving and the date you draw your benefits) add up to 85 or more (part years are ignored).

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Early Retirement through Redundancy or Business Efficiently

If your employer makes you redundant or retires you in the interests of business efficiency and you are aged 55 or over, your benefits are payable immediately without reduction.

Your employer may enhance your benefits at their discretion.
At their discretion, your employer can award you with up to 10 years additional membership to improve your retirement benefits. They can also grant you up to £5,000 extra annual pension. These are discretions your employer can use if they so wish and they will publicise their policy on this for your information.

Augmentation
Employees who are members of the LGPS have the option either to take the combined value as a lump sum payment or to take only the statutory sum and use the balance to purchase an additional period of membership in the LGPS (known as augmentation). An employee who wishes to purchase additional membership of the LGPS, must opt to do so before their last day of service.

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Ill-health Retirement

If you have 3 months membership or more, your employer can award you ill health benefits at any age, as long as you meet various conditions.

In assessing this, they will consult a specially qualified doctor and will then make various decisions about the impact of your condition on your own job and your capability for other gainful employment.

There are 3 tiers of benefits based on how likely you are to be capable of obtaining gainful employment after you leave.

The 3 tiers of ill-health benefits are:

• If you have no reasonable prospect of being capable of obtaining gainful employment before age 65, ill health benefits are based on the membership you would have had if you had stayed in the Scheme until age 65.
• If you are unlikely to be capable of obtaining gainful employment within 3 years of leaving, but you may be capable of doing so before 65 then ill health benefits are based on your membership built up to leaving plus 25% of your prospective membership from leaving to age 65.
• If you are likely to be capable of obtaining gainful employment within 3 years of leaving, ill health benefits are based on your membership at leaving. Payment of these benefits will be stopped after 3 years, or earlier if you are in gainful employment or become capable of undertaking such employment.

Gainful employment means paid employment for not less than 30 hours in each week for a period of not less than 12 months.

If you are part-time, any extra membership awarded due to ill-health retirement will be reduced to reflect your part -time hours at leaving, disregarding any reduction in hours due to your illness.

You may have a protected level of ill- health retirement benefits.

If your employer decides before 1 October 2008 to retire you due to permanent ill-health, or you were in the LGPS on 31 March 2008 and were aged 45 or over on that date, there are protections to ensure your ill health retirement benefits are no less than they would have been under the Scheme as it applied before 1 April 2008.

For more information on ill-health retirement, contact your employer.

Illness and injury allowances

If your illness is a result of an injury sustained at work or disease contracted at work, you may be entitled to an injury allowance. This is separate from your LGPS benefits and is paid by your employer. They decide, at their discretion, how much is payable – contact your employer if this applies to you.

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Late Retirement

If you choose to carry on working after age 65 you will continue to pay into the LGPS, building up further benefits.

You can receive your pension when you retire or you reach the eve of your 75th birthday, whichever comes first. Also, if you retire on or after age 65 you can, if you wish, defer drawing your pension but you must draw it before age 75.

If you draw your pension after age 65 your pension will be paid at an increased rate.

Flexible Retirement

Rather than continuing in your job to 65 or beyond you may wish to consider the possibility of flexible retirement.

From age 55, if you reduce your hours or move to a less senior position, and provided your employer agrees, you can draw all of the pension benefits you have built up - helping you ease into retirement.

You can still draw your wages / salary from your job on the reduced hours or grade and continue paying into the LGPS, building up further benefits in the Scheme.

You must have your employer's consent for the payment of your pension benefits under flexible retirement. Your election to receive benefits has to be made to your pension fund administrator.

• If you were in the LGPS on 31 March 2008, you may have an earlier age you can ask for flexible retirement.

If you take flexible retirement before age 65 your benefits will be reduced to take account of being paid for longer. How much your benefits are reduced by depends on how early you draw your benefits.

Your employer may, however, determine not to apply all or part of any reduction.

• If you were a member of the LGPS on 30 September 2006, your benefits paid early on flexible retirement could be protected from the reduction if you are a protected member.

If you take flexible retirement after age 65 your benefits will be increased to reflect late payment.

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Pensions Increase

To maintain the purchasing power of pensions the pension is increased annually in line with the increase in the Consumer Price Index (CPI) as at the previous September.

The increases are payable from the first Monday following the 5th April in each year and each retired member is notified of the increase.

If a retired member has not been retired for a whole year they will receive a proportion of the full increase in the first year.

If retirement occurs before age 55, other than on ill health grounds, the increase will not be payable until the retired member attains age 55.

The increase paid on 7th April 2009 was 5%.

Payment Information

Pensions are paid monthly in arrears on the last banking day of each month. The pension is paid directly into the pensioner's bank or building society account via BACs (bank automated clearing system).

Pension advice slips are only sent out in April each year unless the net payment changes by £1.00 or more, or if you change your address, tax code or bank / building society account.

Please notify change of bank or building society account by letter or by completing a Bank Form  (213 KB).

Please notify change of address by letter or by completing a Change of Address form  (4 KB).

Deferred Pensioner

If you leave employment before normal retirement age your pension benefits will be deferred and you will become a deferred pensioner.  

Deferred pensions can also be known as preserved pensions, or frozen pensions.

When you leave you will be notified of the value of your deferred pension benefits and receive an Annual Benefit Statement.

The benefits can be paid to you at the minimum age of 60, with possible reductions.  However, you may defer payment until no reductions apply.

If you change your address after becoming a deferred member please keep us informed by letter or by completing a Change of Details Form  (4 KB).

Death in Service

If an active Scheme member dies a Death Grant equivalent to 3 times the pensionable pay earned in the last 12 months of employment is payable.

The Death Grant will normally be paid to the nominated person on the Death Grant Nomination Form  (69 KB).

Or

If the member has not completed a Death Grant Nomination Form the Death Grant will be paid to the member’s estate.

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