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 regulations do not effect 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 left the LGPS before 1 April 1998
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:
- Age 60, if by that age you would have built up 25 years membership if you had remained in the scheme until then, or
- 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
- 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.
If you left the LGPS on or after 1 April 1998
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.
Early payment of deferred benefits due to 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.
What are the reduction factors?
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 are shown in the table below. Where the number of years is not exact, the reduction percentages are adjusted accordingly.
| Number of Years Paid Early | Pension reduction | Lump Sum (for membership to 31 March 2008) |
|---|---|---|
| 0 | 0% | 0% |
| 1 | 5.1% | 2.3% |
| 2 | 9.9% | 4.6% |
| 3 | 14.3% | 6.9% |
| 4 | 18.4% | 9.1% |
| 5 | 22.2% | 11.2% |
| 6 | 25.7% | 13.3% |
| 7 | 29.0% | 15.3% |
| 8 | 32.1% | 17.3% |
| 9 | 35.0% | 19.2% |
| 10 | 37.7% | 21.1% |
| 11 | 41.6% | N/A |
| 12 | 44.0% | N/A |
| 13 | 46.3% | N/A |
If you were in 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.
85 Year rule protection
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:
- 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 would not satisfy the 85 year rule by the time you are 65 | All your benefits are reduced if you choose to draw your pension before your Normal Pension Age. The reduction will be based on how many years before your Normal Retirement Age (protected Normal Pension Age for pension built up before 1 April 2014) and new Normal Pension Age (linked to State Pension Age) for pension built up from 1 April 2014) you draw 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 need your employer permission to apply the rule of 85.