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Retirement

You can look forward to enjoying a guaranteed package of benefits when you retire. In this section we look at how your retirement benefits are worked out and when you can retire if you pay into the LGPS.

Planning my retirement

    • Read the ‘preparing for retirement checklist’ on www.moneyadviceservice.org

    • Review your annual benefit statements.  Find out what your LGPS pension will provide you in retirement

    • Make sure you really understand your LGPS options at retirement and when you will be eligible to receive it

    • Find out what basic state pension you’re entitled to at www.gov.uk

    • 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

    • Will you find another job, perhaps part time? Think about how much you’ll need from your pension, to bridge the gap with any earnings

    • Think about whether you’d like to take a regular income from your pension or whether you would prefer a pot of cash, including any tax free allowance, to do something different in retirement

    • 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

    • Plan what will happen to your pension and estate if you die including any tax implications

    • If necessary obtain financial advice or independent guidance

  • Step 1 – Request an estimate of your pension benefits from the Cheshire Pension Fund by completing the online form here

     

    Step 2 – The Fund will provide estimated figures

     

    Step 3 – If you wish to proceed to retirement, find out if your employer offers a pre retirement course and register your interest

    • Review your pension statements to get an accurate picture of your income in retirement

    • Find out what basic state pension you’re entitled to, and when you will be eligible to receive it www.gov.uk

    • Determine the best option/s for taking your pension savings to meet your financial and lifestyle needs (i.e. regular payments or a lump sum)

    • Update your LGPS beneficiary information

    • Set a date for a pre-retirement meeting with your employer

    • Let the taxman know you’re retiring because your change of status will affect your tax code

    • Check whether you have any pensions you may have forgotten about? Visit www.gov.uk/find-lost-pension for more information.

    • Budget for changes in your day-to-day spending after you retire

    • If necessary obtain financial advice or independent guidance

    • It’s not too late to get free and impartial guidance www.pensionwise.gov.uk

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.

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. Ministry for Housing, Communities and Local Government (MHCLG) 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.
 

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.

  • 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.

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    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
    4.90%
    1.70%
    2
    9.30%
    3.30%
    3
    13.50%
    4.90%
    4
    17.40%
    6.50%
    5
    20.90%
    8.10%
    6
    24.30%
    9.60%
    7
    27.40%
    11.10%
    8
    30.30%
    12.60%
    9
    33.00%
    14.10%
    10
    35.60%
    15.50%
    11
    39.50%
    N/A
    12
    41.80%
    N/A
    13
    43.90%
    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.

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    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.

  • 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.

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    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 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.

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    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. 

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    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. 

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    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.

How do I retire?

The following is a step by step guide for employees who are aged 55 or over, who are retiring and accessing their Local Government Pension Scheme (LGPS) benefits.  Please note this process is not for employees leaving on Redundancy, Flexible or ill health grounds.  

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Step 1 – You will need to agree the retirement date with your employer

Step 2 – Your employer should request an estimate of employee pension benefits from the Cheshire Pension Fund

Step 3 – The Fund will complete and return the estimate along with additional forms (if applicable) to the employer

Step 4 – Your employer is to issue the estimate (and any additional forms) received to you, the employee, along with a Retirement Pack

Step 5 – You will need to complete all forms in the retirement pack and return to your employer.  Along with relevant certificates as outlined in the retirement pack

Step 6 – Your employer will obtain the final pay details as soon as possible after the final pay run.  Once the pay details are available the Employer will notify Cheshire Pension Fund

Step 7 – Cheshire Pension Fund will process the final benefit calculation and send you, the employee a letter confirming the final pension benefits
 

*If you are employed by Cheshire West and Chester Council or Cheshire East Council the process above does not apply to you, and you should contact your Human Resource Department.

 

Important Information

The Cheshire Pension Fund make pension payments between the 18th and 21st of the month and aim to make first pension payment within 45 days after the retirement date.  However (depending on the retirement date, the employer’s pay run dates, and whether any overtime was earned in the final month) this could take longer. 

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The Fund aim to pay retirement lump sums within 10 working days of retirement or the receipt of all relevant information from the employer and member.  This payment is often made before the first monthly payment.

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If the employee pays into an AVC the processing of pension may take significantly longer.  Cheshire Pension Fund cannot release LGPS benefits until the AVC has been released by the provider.  Employees are recommended to cease paying into the AVCs in the months prior to retirement.

Reasons for retirement

  • 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.

    ​

    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.

    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.

  • 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.

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    To find out your Normal Pension Age look up your current State Pension Age at www.gov.uk/calculate-state-pension

  • 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:

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    • 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.  

  • 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.

  • If you have to leave work due to illness you may be able to receive immediate payment of your benefits.

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    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.

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    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.

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    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.

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    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.

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    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. 

  • 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.

Getting an estimate

Before requesting an estimate it is important to note:
 

  • You are entitled to two estimates only in any 12 month period.

  • Do not use this form for flexible retirement, redundancy/efficiency and ill health retirement estimates. These must only be requested by your employer.

  • Please be aware if you have invested in AVCs this will not be included in your estimate as standard.

  • Please note if you are in the process of retiring please follow the step by step process.  You do not need to request an estimate.
     

Click here to access the estimate request form.

Can I take my pension as a lump sum (one-off payment)

Taking all of your pension as a one-off lump sum is called ‘Trivial Commutation’. The government sets strict rules about who can trivially commute their pension, and it is generally only available for small pension values.

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Not everyone will be able to take their pension as a one-off payment, therefore the assessment is made after you have submitted your completed retirement forms, and we have brought your pension into payment and paid your tax free retirement grant lump sum (if applicable).

  • In all cases if you paid into the Local Government Pension Scheme (LGPS) before 6 April 1997, you must be at least age 60 for a woman and 65 for a man to be eligible for trivial commutation.

    If you paid into the LGPS on or after 6 April 1997, you must be at least age 55 (or any age if you retired due to ill health) to be eligible for trivial commutation.

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    You may be eligible for trivial commutation when you leave as long as:

    • you trivially commute all your LGPS pensions at the same time

    • any trivial commutation payments you received from other pension schemes were paid to you in the last 12 months (unless you received them before 1 April 2006 – trivial payments before this date can be ignored)

    • you have not used up all your Lump Sum Allowance (Taking a lump sum : LGPS) (lgpsmember.org)
       

    In addition to these initial criteria, either:

    • the value of all your pensions, including those outside of the LGPS, apart from State Pension, cannot be more than £30,000
       

    or, if you are receiving a trivial commutation payment from the LGPS only:

    • you must have left the LGPS on or after 01/04/2008

    • the value of all your LGPS pension benefits, including those held outside of Cheshire Pension Fund, when paid as a trivial commutation payment is less than £10,000

    • you have not transferred any pension out of the LGPS in the last three years, and

    • you are not a ‘controlling director’ or someone connected with a ‘controlling director’, of an LGPS employer.
       

    To check your eligibility, we will need details of your other pension values held outside of the LGPS, therefore it is important that you include all other pension providers on your Form 1 of your retirement pack.

  • To check whether you meet the criteria for trivially commuting your pension we will need to work out the pension fund value of your LGPS pension. This is not the same as your annual pension and is calculated as:

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    20 x annual pension + automatic lump sum (if applicable) + value of AVC fund (if applicable).

  • The pension fund value is not the amount you will receive.

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    Calculating the trivial commutation payment is complicated. We work out the payment using factors issued by the Government Actuary’s Department (GAD) which are based on your age and the value of your pension.

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    Income Tax will also be deducted from the amount you receive.

    More information about tax on trivial commutations is available in the HMRC Pensions Tax Manual.

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    Once we have processed your trivial commutation payment, we will write to you confirm the amount (before tax) that will be paid, along with the date of payment.

  • Before deciding whether to take a trivial commutation payment, you should consider whether this is your best financial option.

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    Taking your pension as a one-off lump sum means that:

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    • you will not receive monthly pension payments

    • we will have no liability for you in the LGPS

    • if you were to pass away before your spouse, civil partner or cohabiting partner, they would not receive a survivor's pension

  • Deciding how you would like your LGPS pension paid is a very important decision.

    We recommend getting guidance or independent financial advice where possible

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