What are my retirement options?
Your LGPS pension is payable in full from your Normal Pension Age which is linked to your State Pension Age (but with a minimum of age 65). However, you can choose to retire and draw your pension from the LGPS at any time from age 55 to 75, provided you have met the 2 years vesting period in the scheme. If you choose to take your pension before your Normal Pension Age it will normally be reduced, as it's being paid earlier. If you take it later than your Normal Pension Age it's increased because it's being paid later. You must draw your benefits in the LGPS before your 75th birthday.
If you are obliged to retire because of redundancy, business efficiency or permanent ill health, your LGPS benefits can, provided you have met the 2 years vesting period in the scheme, provide you with an immediate retirement pension, which may even be enhanced.
Ill health retirements are decided by the employer, who will seek a recommendation from an approved medical advisor. Members who wish to investigate whether their retirement could be for ill health reasons should discuss the matter with their Line Manager or Human Resources Officer.
The LGPS website also has information on when you can retire and the 85 year rule , which may affect you if you were a member of the LGPS on or before 30 September 2006.
You can voluntarily retire and draw your pension benefits at any age on or after age 55 and before age 75, provided you have met the 2 years vesting period in the scheme. However, your benefits are only payable in full if you voluntarily retire and draw your benefits from your Normal Pension Age. For benefits built up from April 2014, your Normal Pension Age is linked to your State Pension Age (but with a minimum of age 65). If you choose to take your pension before your Normal Pension Age it will normally be reduced, as it's being paid earlier. How much your benefits are reduced by depends on how early you draw them; use the find out more button on the right hand side of this page called "early retirement reductions" for a guide to the reductions that could be applied.
If you draw your deferred benefits after your Normal Pension Age your pension will be increased by 0.010% for each day payment of your pension is delayed beyond your Normal Pension Age.
Please note that if you were in the LGPS before 1 April 2014 your benefits built up before that date will have a different Normal Pension Age, which for most is age 65.
For further information on when benefits built up before 1 April 2014 are payable, please see the LGPS website.
In order for you to receive your pension benefits in respect of your employment, you must, in most circumstances, actually leave that particular employment. If this is the case, then the pension can be paid. However, there is a facility for an employer to allow a member to receive their pension without leaving that employment, by authorising flexible retirement.
You may wish to consider a gradual move into retirement by flexibly retiring. From age 55, if you reduce your hours or move to a less senior position, provided you have met the 2 years vesting period in the scheme and your employer agrees, you can draw some or all of the pension benefits you have built up, helping you ease into retirement. Your employer will have a policy on flexible retirement. You can ask your employer for details of their policy.
If your employer agrees to flexible 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. Your election to receive benefits has to be made to your Pension Fund.
If an enquiry is made, and the employer is not against the reduction in either hours or grade which is necessary for any flexible retirement to go ahead, then the form FR1 should be completed by your Line Manager or employer.
Once the Pension Section receives the form you will be sent an estimate, so you can decide if you want to go ahead. The person signing the form will also be sent a letter advising whether there are any employer costs. Most employers have a published policy on the criteria that they look for in order to grant flexible retirement.
If everybody is happy and wishes to proceed, then the official approval form FR2 must be completed by the employer and the member, and sent to the Pension Section.
If your employer agrees to flexible retirement then you would have to draw:
- all of the benefits that relate to any pre 1 April 2008 membership, plus
- any additional benefits bought under an added years contract which commenced before 1 October 2006 or as a result of an Additional Voluntary Contributions (AVC) contract that commenced before 13 November 2001
You can choose to draw (subject to the agreement of your employer):
- all, none or some of the benefits that relate to your membership from 1 April 2008 to 31 March 2014
- all, none or some of the benefits that relate to your pension built up from 1 April 2014
- all or none of any additional pension being purchased either through Additional Pension Contributions (APCs), Shared Cost APCs or Additional Regular Contributions (ARCs)
- all or none of any additional benefits bought under an added years contract which commenced after 1 October 2006
- all or none any additional pension awarded by your employer
- all or none of any benefits as a result of an AVC contract that commenced on or after 13 November 2001
Does my employer have to grant flexible retirement?
An employer can agree to you reducing their hours or grade without allowing the release of your pension benefits.
Also, each employer will have a published policy in place to determine the circumstances where flexible retirement is permissible.
You can decide not to go ahead with flexible retirement, and still reduce your hours, safe in the knowledge that your decision will not affect any of the pension that you have already built up, only the pension you build up in the future.
If you are reducing your grade and decide not to go on flexible retirement, then the Pension Section should be contacted for more detailed advice.
Will your pension and lump sum be reduced if you take flexible retirement?
If you take flexible retirement before your Normal Pension Age, your benefits will normally be reduced for early payment. How much your benefits are reduced by depends on how early you draw them; use the find out more button on the right hand side of this page called "early retirement reductions" for a guide to the reductions that could be applied.
If you were a member of the LGPS at anytime between 1 April 1998 and 30 September 2006, some or all of the benefits that are paid early could be protected from the reduction if you are a rule of 85 protected member. You can find out more about rule of 85 protections by using the find out more button called 85 year rule.
Your employer may, however, determine not to apply all or part of any reduction. You can ask them what their policy on this is.
If you receive payment of your benefits on flexible retirement, then your benefits will not be subject to reduction or suspension for re-employment whilst you are in a job with the employer that allowed you to take flexible retirement.
If you take flexible retirement after your Normal Pension Age your pension will be increased by 0.010% for each day payment of your pension is delayed beyond your Normal Pension Age to reflect late payment.
If you are about to retire, you are bound to have some questions at this important time. A short leaflet containing the most commonly asked questions can be downloaded below: