Reasons for retirement
Retiring early
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 table below provides details of the percentage reductions that would be applied to your pension benefits, the percentage to be applied depends on the number of years before your Normal Retirement Age you access your pension.
| 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 |
* The maximum reduction applied to your automatic lump sum for membership to 31 March 2008 is 10 years as the protected normal pension age is 65 and the earliest you can retire is age 55. There is no automatic lump sum for membership after 31 March 2008 although you can convert some of your annual pension to a lump sum.
85 year rule explained
If you were a member of the Local Government Pension Scheme (LGPS) before 1 October 2006, your benefits may be protected from the reductions under the ’85 year rule’. Further details can be found here.
Retiring at your normal pension age
Your Normal Pension Age is linked to your State Pension Age (with a minimum of age 65). This is the age from which you can retire and receive your pension in full.
To find out your Normal Pension Age look up your current State Pension Age at www.gov.uk/calculate-state-pension
Retiring after your normal pension age
You can carry on working after State Pension Age and continue to pay into the scheme, accruing further benefits. You will receive your pension when either:
- You retire, or
- You reach the eve of your 75th birthday
Whichever occurs first. Please note that you must access your pension at age 75 at the latest.
If you draw your pension after State Pension Age, the benefits accrued will be increased to reflect the fact that these are being paid later.
Flexible retirement
If you have at least 2 years total membership in the scheme or have transferred membership into the LGPS, you may wish to discuss the possibility of flexible retirement with your employer. Flexible retirement is at the discretion of your employer and they must set out their policy on this in a published statement. Flexible retirement allows you to draw the pension benefits you have already built up and ease yourself into retirement.
In order to access your pension benefits under flexible retirement you must be at least age 55 and reduce your hours or move to a less senior position, with the full agreement of your employer i.e. you agree a new contract with your employer and they also agree to release of your pension benefits.
If you take flexible retirement before your normal retirement age, your benefits may be reduced to take account of their early payment unless your employer agrees to waive the reduction. You can continue paying into the LGPS on your reduced hours or in your new role to build up further benefits in the scheme.
Ill Health retirement
If you have to leave work due to illness you may be able to receive immediate payment of your benefits.
To qualify for ill health benefits you have to have met the 2 years vesting period in the scheme and your employer, based on an opinion from an independent registered medical practitioner, must be satisfied that you will be permanently unable to do your own job until your Normal Pension Age and, that you are not immediately capable of undertaking gainful employment*.
*Gainful employment means paid employment for not less than 30 hours in each week for a period of not less than 12 months.
Ill health benefits can be paid at any age and are not reduced on account of early payment, in fact, your benefits could be increased to make up for your early retirement. There are graded levels of benefit based on how likely you are to be capable of gainful employment after you leave.
There are three tiers of ill health retirement benefits in the LGPS.
Tier 1
If you are certified as permanently incapable of doing the duties of your current employment or any other gainful employment until Normal Pension Age, the fund will pay an ill health pension with benefits based on the membership you have in the scheme, plus an enhancement of 100% of your potential membership (pro-rata if you work part-time) through to your Normal Pension Age.
Tier 2
If you are certified as permanently incapable of doing the duties of your current employment and unlikely to be capable of any gainful employment for at least three years, but it is likely you can resume gainful employment before Normal Pension Age, the fund will pay an ill health pension based on the years you have in the Scheme, plus an enhancement of a quarter (25%) of your potential membership (pro-rata if you work part-time) to Normal Pension Age.
Tier 3
If you are certified as permanently incapable of doing the duties of your current employment but you are judged to be capable of obtaining gainful employment within three years, the fund will pay a benefit based on your accrued membership at your date of leaving (no enhancement). Payment of these benefits will be stopped after 3 years.
You will be required to have a review after 18 months, at which point your employer can determine whether to carry on with payment for the full 3 years, cease payment of the pension or uplift the pension to a tier 2.
The award of an ill health retirement is at the discretion of your employer, and as such they will be required to request a pension estimate.
What if I leave on the grounds of redundancy or efficiency?
If you are age 55 or over
If you are age 55 or over You have the right to draw your pension benefits immediately and unreduced if you are dismissed by your employer on the grounds of redundancy or efficiency.
Your employer will notify us if you are being made redundant or being retired on the grounds of business efficiency and we will start to work out your pension benefits.
If you are under age 55
If you’re under 55 when you are made redundant or retired on business efficiency, you will become a deferred member of the scheme. A deferred member has a pension benefit that is retained in the Local Government Pension Scheme (LGPS) until it becomes payable, or is transferred out of the scheme. Further details can be found here.