Redundancy and Efficiency
If you are aged 55 or over and have paid pension contributions into the scheme for two years or more, your pension benefits can be paid to you if you have retired because of redundancy or business efficiency.
Although you may be leaving before your normal retirement age (NRA), your annual pension will be paid immediately and with no early retirement reductions applied for taking it early.
However, if you have bought additional pension either through Additional Regular Contributions, Additional Pension Contributions, or Added Years, that additional pension will always be paid to you at a reduced rate if the retirement happens before your previous NRA. (For most members, the previous NRA was age 65 before the scheme changed on 1st April 2014).
If you are below the age of 55 at the point of leaving employment due to redundancy or business efficiency, you will not be entitled to have your pension released to you. In this case, your pension will be deferred with the Fund and can be released from age 55 onwards with an actuarial reduction applied.
Redundancy Payments from your Employer
You may be entitled to a statutory redundancy payment regardless of whether you are a member of the Local Government Pension Scheme (LGPS). You may also be entitled to a discretionary compensation payment from your employer. You should speak to your employer directly about this.
The redundancy payment does not affect your LGPS benefits, so you could be entitled to two tax free lump sums upon being made redundant from age 55:
- Your tax free retirement grant from the Clwyd Pension Fund (also known as tax free lump sum)
- A redundancy / severance payment from your employer (redundancy payments are tax free up to a limit of £30,000. If this is exceeded then the excess is liable for tax.)
If you leave on redundancy grounds or efficiency of the service and are aged 55 or over, your employer will contact the Fund directly with confirmation of your leave details. Once this is received, we will calculate your pension entitlement and send you an estimate and a retirement pack which includes some forms for you to complete. Once we receive the completed forms from you, we will put your pension into payment.
If you have received a redundancy or compensation payment from your employer, you may have to pay it back to them if you re-join the LGPS within one month and one day of your leave date. If you re-join LGPS after one month and one day of your leave date, the redundancy or compensation payment would not need to be paid back.
Future Changes to Redundancy / Efficiency Retirement
New regulations are likely to come into force in the future that will limit the total cost that your employer can pay for you to retire on redundancy or efficiency grounds. If these regulations do change, this could mean that your LGPS benefits may need to be reduced when you retire on redundancy or efficiency grounds. We will update our website with details as and when information on this becomes available.