Members are now entitled to draw their pension benefits from the scheme in a pensionable employment from their 55th birthday to the eve of their 75th birthday. Please note that actuarial reductions will apply if drawn earlier than your normal pension age. You must have ceased your pension employment before you can draw your pension benefits. If you have opted out of the scheme, this ruling still applies, and you will have had to cease your employment in the relevant post in order to access your pension benefits.
You must have also vested in the scheme in order to be entitled to your pension benefits
To be entitled to your pension benefits you must have:
- You have been a member of LGPS in England and Wales for 2 years or more years, or
- You hold deferred benefits in England and Wales, or
- You are receiving a pensionable income from LGPS in England and Wales (including survivors or pension credit member's pension), or
- Previously transferred pension rights into the LGPS in England or Wales from a previous pension scheme that when added to your LGPS membership totals 2 or more years, or
- Previously transferred pension rights out of LGPS in England or Wales to a pension scheme abroad, or
- You paid National Insurance contributions whilst a member of the LGPS and cease contributions to the LGPS in the tax year of reaching your Normal Pension Age, or
- You reach your 75th birthday and are still contributing into the scheme
- You have transferred previous pension rights from a scheme or arrangement that didn’t permit a refund
If you choose to voluntarily retire before your Normal Pension Age your benefits will normally be reduced to take account of being paid for longer. Your benefits are initially calculated and are then reduced, this reduction depends on how early you draw them.
The reduction is based on the length of time (in years and days) that you retire early i.e. the period between the date your benefits are paid and your Normal Pension Age, meaning that the earlier you retire, the greater the reduction.
As a guide, the current 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.
|Years Early||Annual Pension Reduction||Automatic Lump Sum Reduction|
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 (65 - 55 = 10 years reduction).
However, for the CARE (post 01/04/2014 benefits) there is a possible 13 year reduction if a member retires on their 55th birthday and has a Normal Pension Age (state pension age) of 68 i.e. 68 - 55 = 13 years
Vesting period - Active member after 1st April 2014
The vesting period refers to the period of time that you must be an active member of the LGPS before becoming entitled to benefits under the scheme. In the LGPS this period is 2 years however it can be met before 2 years in certain circumstances; you will meet the 2 year vesting period if any of the conditions below apply:
- You have been a member of LGPS in England and Wales for 2 years or more years
- You hold deferred benefits in LGPS in England and Wales
- You are receiving a pensionable income from LGPS in England and Wales (including survivors or pension credit member’s pension)
- Previously transferred pension rights into the LGPS in England or Wales from a previous pension scheme that when added to your LGPS membership totals 2 or more years
- Previously transferred pension rights out of LGPS in England or Wales to a pension scheme abroad
- You paid National Insurance contributions whilst a member of the LGPS and cease contributions to the LGPS in the tax year of reaching your Normal Pension Age
- You cease contributing to the LGPS at age 75
- You die in service
- you have transferred previous pension rights from a scheme or arrangement that didn’t permit a refund
|Has the vesting period been met by the member?|
|Options Available||Defer your benefits in the scheme These will remain in the scheme, increase in line with inflation and shall be payable once you reach pensionable age||Claim a refund of contributions, less any tax and cost to buy back into the State Second Pension. Cannot claim refund if you have LGPS benefits elsewhere or rejoined the LGPS within 1 month and 1 day of leaving your post|
|You may delay this decision up to a maximum of 5 years or until you reach 75 years old, rejoin the LGPS, transfer your benefits elsewhere or take a refund of contributions.If no decision is made within 5 years a refund is paid!|
|Transfer your pensionable benefits to another pension provider. You must instruct your new pension provider that you wish to do this||Transfer your pensionable benefits to another pension provider. You must instruct your new pension provider that you wish to do this|
Prior to 31st March 2014 the normal pension age was 65 years old meaning that your pre 2014 benefits are payable unreduced from the age of 65.
Following 1st April 2014, the normal pension age has changed to the higher of age 65 or your state pension age, which is the age that your CARE benefits are payable unreduced. You are now able to access all your pensionable benefits from your 55th birthday (subject to actuarial reductions).
A Quick reminder of the Normal Pension Age
This is the age at which you are able to draw your pensionable benefits without any reduction or enhancements. Prior to the introduction of the CARE scheme on 01/04/2014, the Local Government Pension Scheme had a normal retirement age of 65 years old, however since this transition, the normal pension age is now in line with the members New State Pension age (with a minimum of 65 years old) which is linked to increases in life expectancy.
To find out what your New State Pension Age is, please click the below GOV.UK logo
From 1st April 2014, alterations were made to the Normal Pension Age, meaning that the majority of members now hold 2 Normal Pension Ages
Member has New State Pension age of 65 years old and retires on 65th birthday
|Pre 31st March 2014 Normal Pension Age of 65||Post 1st April 2014 Members New State Pension Age is 65 (Normal Pension Age)|
|Pre 31st March 2014 Pension||£5,000||Pre 31st March 2014 Lump Sum||£3,000||Post 1st April 2014 Pension||£1,500|
|Member retired on Normal Pension Age therefore no reductions required|
|Annual Pension = £5,000 + £1,500 = £6,500||Lump Sum = £3,000|
If you carry on working after age 65 you may continue to pay into the Scheme, accruing further benefits. You can receive your pension when you retire, you reach the eve of your 75th birthday, you have your employer's consent to retire (whichever occurs first).
If you draw your pension after your normal pension age both your annual pension and lump sum will be increased to reflect the fact that it will be paid for a shorter time.
The amount of any increase will be based on how many years and days later than your Normal Pension Age you draw your benefits, these can be found below, where pensions are enhanced for payment after pension age by the following percentages.
|Leaving Later Than NPA||Annual Pension||Lump Sum|
Working beyond 75 years old
If a member works beyond their 75th birthday neither the LGPS or auto enrolment requirements apply, meaning that they cannot continue to pay contributions into the scheme and accrue additional pensionable benefits.
You must draw your pension by no later than age 75, meaning that a retirement date shall be defaulted to the eve of your 75th birthday, whilst members can continue to work in their post if they wish.