When can I retire?
Your 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 after age 55, provided you have met the 2 years vesting period in the scheme.
If you voluntarily choose to leave employment before, on, or after your Normal Pension Age you can defer drawing your benefits but you must draw them before age 75. If you choose to take your pension before your Normal Pension Age it will normally be reduced, as it’s being paid earlier (details of the reduction factors are shown below). If you take your pension after your Normal Pension Age, your benefits will be paid at an increased rate to reflect late payment.
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 the 85 year rule. Further details of this protection are shown below.
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. Please see the reasons for retirement section for further details.
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 work 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 take flexible retirement any 85 year rule protection will apply to the benefits you’ve built up to the date of flexible retirement but, will not apply to benefits you build up after the date of flexible retirement.
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 and a reduction will be applied to your benefit. However, your employer has discretion to allow the rule of 85 to apply. You will need to ask your employer what their policy is on this matter.
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 voluntarily retiring or asking for flexible retirement before your Normal Pension Age, please contact us to request an estimate of your benefits. If you are thinking of asking for flexible retirement you should firstly contact your employer to check what their policy is for this type of retirement.
| 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 will be age 60 or over by 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 build up to 31 March 2016 will not be reduced. Benefits after this date will be reduced accordingly. |
| If you will be under age 60 by 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 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 between 1 April 2008 and 31 March 2020 will not have a full reduction. Benefits after this date will be reduced accordingly. |