Retirement
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Read the ‘preparing for retirement checklist’ on www.moneyadviceservice.org
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Review your latest annual benefit statement. Find out what your LGPS pension will provide you in retirement
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Make sure you really understand your LGPS options at retirement and when you will be eligible to receive it
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Use the My Cheshire Pension online modeller to work out your estimated retirement income for different dates.
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Find out what basic state pension you’re entitled to www.gov.uk
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Consider which costs you will still need to meet in retirement? Be realistic about expenses such as utility bills, internet costs, mobile phone charges, and holidays
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If you’re 50 or over you can also access free and impartial guidance from www.pensionwise.gov.uk, this service is available on the internet, over the telephone or face-to-face
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Plan what will happen to your pension and estate if you die including any tax implications
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If necessary obtain financial advice or independent guidance
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Step 1 – Request an estimate of your pension benefits from the Cheshire Pension Fund by completing the request an estimate online form
Step 2 – The Fund will provide estimated figures
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Review your pension statements to get an accurate picture of your income in retirement
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Find out what basic state pension you’re entitled to, and when you will be eligible to receive it www.gov.uk.
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Determine the best option/s for taking your pension savings to meet your financial and lifestyle needs (i.e. do you want to consider exchanging some of your regular pension income to increase your tax-free retirement lump sum)
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Update your LGPS beneficiary information
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Let the taxman know you’re retiring because your change of status will affect your tax code
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Check whether you have any pensions you may have forgotten about?
Visit www.gov.uk/find-lost-pension for more information. -
If necessary obtain financial advice or independent guidance
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It’s not too late to get free and impartial guidance www.pensionwise.gov.uk
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Contact the Fund to request a retirement pack to enable you to complete the forms required to claim your deferred pension form your retirement date
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When can I retire?
Deferred benefits are usually payable without reductions from normal pension age (NPA) which will be between ages 60 and 68 depending on when you joined the scheme. If you take your benefits after your NPA they are increased due to late payment.
You can request early payment of your deferred benefits from age 55. If you choose to take your deferred benefits before your Normal Pension Age, your benefits will normally be reduced to take account of their early payment and the fact that your pension will be paid for longer. How much your deferred benefits are reduced by depends on how early you take them. The reduction is calculated in accordance with guidance issued by the Government which can change from time to time. These are shown in the table below.
LGPS reductions do not affect you if you are retired on the grounds of ill health. In this instance you may be able to receive your benefits unreduced, regardless of your age. If you think this applies to you then you should contact your employer as they will have a discretions policy in place to deal with these sorts of requests.
The Government has announced that the earliest age you can take your pension will increase from age 55 to 57 with effect from 6 April 2028. This does not apply if you have to take your pension early because of ill health.
It has not yet been confirmed whether the change will apply to all members. For instance, it is possible that you could be protected from this increase if you joined the LGPS before 4 November 2021. It is also possible that you could be protected if you transferred a previous pension into the LGPS if certain conditions are met. The Department for Levelling Up, Housing and Communities (DLUHC) makes the LGPS rules. It has not yet confirmed if it will allow members who qualify for protection to take their LGPS pension before age 57 from 6 April 2028 onwards.
We will update this page when DLUHC changes the Scheme rules to reflect the increase in the normal minimum pension age.
Your deferred pension benefits are normally payable in full at your Normal Retirement Date (NRD). Your Normal Retirement Date is different to the Normal Pension Age for members who left on or after 1 April 1998. Your Normal Retirement Date is:
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Age 60, if by that age you would have built up 25 years membership if you had remained in the scheme until then, or
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The date you would have achieved 25 years membership if you had remained in the scheme, if that date falls between your 60th and 65th birthday, or
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Age 65 if, by that age, you would not have had built up 25 years membership if you had remained in the scheme until then.
You do not have an option to defer payment of your benefits beyond your Normal Retirement Date i.e. you have to take payment of your benefits at that date if they are not already in payment.
You have the option of taking your deferred pension benefit early from age 55 and it can be paid from any age if you suffer permanent ill health.
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Your deferred pension benefits are normally payable in full at your Normal Pension Age in the LGPS. From 1 April 2014 your Normal Pension Age is linked to your State Pension Age (but with a minimum of age 65). The Normal Pension Age for benefits built up before 1 April 2014 is age 65 (in almost all cases).
You do not have to take your deferred pension benefit at your Normal Pension Age, you can take it at any time between the ages of 55 and 75, it can also be paid from any age if you suffer permanent ill health.
You can apply for payment of your deferred benefits at any age without reduction if, because of your health, you would be permanently incapable of the job you were working in when you left the LGPS.
If you left the LGPS after 31 March 2008 there is a further requirement that you are unlikely to be capable of gainful employment within 3 years of applying for the benefit, or before age 65 if sooner. In this context, 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 do not elect for early payment of deferred benefits they will be paid from age 65 unless you opt to delay payment beyond that age. If you draw your deferred benefits after age 65 they will be paid at an increased rate. Deferred benefits must be paid before age 75.
However if your pension is not in payment (at age 60 for women, age 65 for men), the GMP element (if any) of your pension must be paid from that date or from the date you leave if later.
The reduction is calculated in accordance with guidance issued by the Government Actuary. The reduction is based on the length of time (in years and days) that you retire early i.e. calculated as the period between the date your benefits are paid and your Normal Pension Age.
As a guide, the percentage reductions for retirements up to 13 years early can be found here. Where the number of years is not exact, the reduction percentages are adjusted accordingly.
If you were a member of the LGPS at anytime between 1 April 1998 and 30 September 2006, some or all of your benefits could be protected from an early payment reduction under what is called the 85 year rule. If you have 85 year rule protection this continues to apply from 1 April 2014. The only occasion where this protection does not automatically apply is if you choose to voluntarily draw your pension on or after age 55 and before age 60.
To have protection under the 85 year rule you must satisfy the following condition at the date you draw your pension benefits:
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Your age (in whole years) plus your scheme membership (in whole years) must add up to 85.
If you worked part-time, your membership counts towards the rule of 85 at its full calendar length. Not all membership may count towards working out whether you meet the 85 year rule.
If you choose to voluntarily draw your pension on or after age 55 and before age 60 and you have rule of 85 protections, these will not automatically apply. Your employer can choose to allow the rule of 85 to apply. This is a discretion and you can ask your employer what their policy is on this matter. If you choose to voluntarily draw your pension on or after age 55 and before age 60 and your employer does not choose to allow the rule of 85 to apply, your benefits are reduced.
The table below will help you work out your general position in relation to the 85 year rule, however, you should be aware that the rules governing how the 85 year rule protection applies, and the level of that protection, are quite complex. If you are thinking of accessing your pension benefits before your Normal Pension Age, please contact us to request an estimate of your benefits.
If you were aged 60 or over on 31 March 2016 and choose to draw your pension before your Normal Pension Age
Provided you satisfy the 85 year rule when you start to draw your pension, the benefits you built up to 31 March 2016 will not be reduced. Benefits after this date will be reduced accordingly.
If you were under age 60 at 31 March 2016 and choose to draw your pension before your protected Normal Pension Age
Provided you satisfy the 85 year rule when you start to draw your pension, the benefits you’ve built up to 31 March 2008 will not be reduced. Benefits after this date will be reduced accordingly.
If you reach age 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 between 1 April 2008 and 31 March 2020 will not have a full reduction. Benefits after this date will be reduced accordingly.
Please note. In all cases if you are aged 55 to 60 at retirement, we would need your former employer’s permission to apply the rule of 85.
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How do I retire?
We will contact you automatically approximately two months before your Normal Pension Age detailing the retirement options available to you. It is therefore important that you keep us notified of any changes in your address.
If you wish to claim your deferred pension before your Normal Pension Age please contact Cheshire Pension Fund to arrange for the necessary forms to be provided. You can complete our online enquiry form to request this.
The earliest age from which you can claim your deferred pension is 55. Please note if you claim your deferred pension before your Normal Pension Age an early retirement reduction will be applied to the benefits to reflect their early payment.
If you do not wish to draw your pension on your 60th birthday, we will write to you again at your normal pension age.
Retirement options
The earliest you can take your benefits is from age 55, without your former employer’s consent, but the benefits will be reduced for early payment if you with draw them before your normal pension age (NPA).
Deferred benefits are usually payable without reductions from your NPA which will be between ages 60 and 68, depending on your date of birth and when you paid into the scheme. You can see the percentage reductions that apply for early payment below. If you take your benefits after your NPA they are increased due to late payment.
Although all of your pension benefits must all be paid at the same time, it is important to note that different periods of your scheme membership may have different NPA dates. This means that different parts of your pension benefits may have different percentage reductions applied if you retire early.
The reductions, however, do not affect you if you are retired on the grounds of ill health. In this instance you may be able to receive your benefits unreduced, regardless of your age. If you think this applies to you then you should contact your employer as they will have a discretions policy in place to deal with these sorts of requests.
If you have at least 2 years Scheme membership or have transferred previous membership into the Cheshire Pension Fund, you can leave employment voluntarily, between the ages of 55 and your State Pension Age and receive your pension benefits, but they will be reduced to take account of your early retirement.
Reductions for early leavers & protections
If you choose to retire earlier than your normal pension age (NPA) your pension benefits may be reduced for earlier payment, although there are protections in place for some members of staff who were members of the Scheme prior to October 2006 and who qualified for the 85 year rule protections.
The reduction is calculated in accordance with guidance issued by the Government Actuary Department. The reduction is based on the length of time (in years and days) that you access your pension benefits early i.e. calculated as the period between the date your benefits are paid and your Normal Pension Age.
Details of the percentage reductions that would be applied to your pension benefits can be found here. The percentage to be applied depends on the number of years before your Normal Retirement Age you access your pension.
Your deferred benefits are normally payable at your Normal Pension Age in the LGPS. Your Normal Pension Age is linked to your State Pension Age (but with a minimum of age 65).
If you draw your pension after your State Pension Age, the benefits accrued will be increased to reflect the fact that these are being paid later. You must access your pension benefits by age 75.
You can apply for payment of your deferred benefits at any age, without reduction if, because of your health, you would be permanently incapable of the job you were working in when you left the LGPS and you are unlikely to be capable of gainful employment within 3 years of applying for the benefit, or before age 65 if sooner.
In such circumstances you should contact your previous employer’s Personnel Department, who will arrange an appointment with an independent Doctor qualified in Occupational Health Medicine. They must certify that you are permanently incapable of performing the duties of your former employment until at least your Normal Pension Age.
Getting an estimate
Before requesting an estimate it is important to note:
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The My Cheshire Pension Portal allows you to use an online modeller to work out your estimated retirement income for different dates.
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Cheshire Pension Fund will produce a maximum of two estimates in any 12 month period.
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Cheshire Pension Fund will only provide the two estimates if the provisional dates of leaving are at least 12 months apart
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Do not use this form for retirements relating to your pension being paid on the grounds of ill health; these can only be requested by your former employer.
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Please be aware if you have invested in AVCs this will not be included in your estimate as standard.
Click here to access the estimate request form.
