Protection for Members
All the pension built up to 1 April 2014 will continue to be calculated in the same way as before the change in regulations and is linked to your salary upon leaving the scheme. Even though a member may leave in the CARE scheme it is the final salary pensionable pay at date of leaving which is used, and not what it was at 31st March 2014 when the scheme changed.
Normal Pension Age
Pension built up prior to 31st March 2014 has a protected Normal Pension Age of 65, meaning that all benefits accrued prior to this date can be payable unreduced at age 65. If drawn before 65, the final salary benefits will be reduced
The Rule of 85
Some members who were in the LGPS prior to 1st October 2006 will have Rule of 85 protection. These protections still apply for members who take their retirement benefits from age 60. These protections have continued into the CARE scheme ensuring that the pension benefits under the final salary scheme are unaffected by the changes.
If you choose to retire earlier than your normal pension age (NPA), your pension benefits may be reduced for earlier payment. The 85 year rule however protects some, all or part of your pensionable benefits from these reductions applicable when leaving the scheme early.
The rule of 85 is satisfied in full if:
- Your age at retirement + LGPS membership in whole years = 85 years or more
- Active member of the scheme between,01/04/1998 and 30/09/2006
- Aged 60 years old or above at retirement
The rule of 85 applies differently dependant upon when a member was born and when they were a member of the scheme. The below table outlines what how certain benefits are affected if the rule of 85 applies to a member.
|Born||Pre 31/03/2008 service||01/04/08 - 31/03/14 service||Post 01/04/2014 service|
|On or before 31/03/1956||Unreduced||Unreduced||Unreduced until 31/03/2016|
|Between 01/04/1956 & 31/03/1960||Unreduced||Tapered Reduction - sliding scale from 31/03/2016||Tapered Reduction - sliding scale from 31/03/2020|
|After 01/04/1960||Unreduced||Full Reduction||Full Reduction|
Please note you will not have any 85 year rule protections if you stopped contributing to the Scheme before 1 April 1998. The Rule of 85 applies in full from aged 60, meaning that a minimum retirement age of 60 is required to fully imply the protection of a members benefits.
What are tapered reductions?
Tapering the reductions made to a members benefits was implemented to ‘fade out’ the protections, meaning that members born on the ‘wrong’ side of the cut off dates.
How does tapering work?
Members who are eligible for the 85 Year Rule have limited protections in place regarding their post 01/04/2008 benefits. This tapering aspect of the reductions allows the member a more beneficial reduction the nearer they are to their normal pension age, due to this ‘fading out’ aspect of the protection.
Previous higher year
If the members final years’ pay is not the most beneficial, the member is able to use the best of the previous three years pay to substitute the final year, ending with the day on which employment ceases.
Alternatively, if a member has been downgraded in their last 10 years or their pay is restricted in that period they have the option to have their benefits based on the average of any 3 consecutive years in the last 10 years (ending on a 31st March) with pensions increase applicable to this figure.
An election does not need to be made by the member themselves and the Clwyd Pension Fund will endeavour to action these but suggest the members' double check their benefits for any cases that slip through the net.
From 1st April 2008 the Certificate of Protection of Pension Benefits has been replaced with an automatic 13 year protection. If a member has been downgraded in their last 13 years or their pay is restricted in that period they have the option to have their benefits based on the average of any 3 consecutive years in the last 13 years (ending on a 31st March) with pensions increase applicable to this figure.
To guarantee that no members within 10 years of age 65 as at 1 April 2012 find themselves worse off, there will be a ‘protection underpin’. This means that those members who would see their normal pension age increase due to the movement in state pension age will get a pension at least equal to that which they would have received in the current scheme, if they retire at age 65 or after.
If you were a member of the Local Government Pension Scheme prior to 31/03/2014 and are nearing retirement there is a protections in place called the Underpin.
This is to guarantee that members shall get a pension that is at least equal to that which they would have received at retirement if the scheme had not changed on 01/04/2014. Some members would have seen an increase to their Normal Pension Age to become in line with their State Pension Age, and therefore an underpin calculation would be guarantee that they would receive the most beneficial pensionable benefits.
- Active member on 31/03/2012
- Within 10 years of your normal retirement age on 01/04/2012 (which is 65 years old)
- You have not had a continuous break in active membership of a public service pension for more than five years (after 31/03/2012)
- You have not drawn any benefits from the LGPS before your Normal Pension Age
- You leave with immediate entitlement to your benefits