Your Deferred Pension
A deferred member is a member who is no longer paying into the scheme, and has kept their pension within the Clwyd Pension Fund but who is not drawing their pension yet. All service accrued up until 31/03/2014 is calculated using the Final Salary Pensionable Pay at date of leaving, whereas all post 1st April 2014 benefits shall be calculated as CARE scheme benefits.
If you have left your employment, or decide to opt out of the scheme before your retirement age (and have vested in the scheme), the pension you have built up stays in the Clwyd Pension Fund until:
- you decide to transfer your pension rights to another pension scheme or,
- you qualify for payment
- you rejoin the pension scheme and have the availability to combine both records
As a deferred member, your pension benefits will increase in value each year in line with inflation, and you shall receive an annual deferred benefit statement each year to indicate the current value of your deferred benefits. Pensions increase is paid in line with the annual increase in the Consumer Prices Index (CPI) at the previous September and is currently paid from the first Monday of each new tax year.
You have the option to transfer out your deferred benefits to another pension scheme if you wish. In order to investigate this, you will need to contact the pension scheme to which you intend to transfer your pension benefits to, who will then contact us to arrange for the transfer to take place.
By default a member's benefits will be deferred in the scheme if they are not entitled to immediate payment of their pension.
Even if a member is entitled to immediate payment of their pension benefits they are still allowed to defer their benefits within the scheme if they wish (not available if a redundancy/efficiency/ill health/flexible retirement case is applicable or the member has reached 75 years old).
What do you need to do?
Once you leave or opt out of a pensionable position, your employer will notify the Clwyd Pension Fund by completing a termination form. This termination form will include all your pensionable information since becoming a member of the scheme (service, contributions, pensionable pay etc.).
Upon receipt of this form, we shall post an acknowledgment letter to the member, providing them with an 'Initial Leavers Option Form', this form will allow the member to make an election of what they wish to do with their benefits.
Upon receipt of this Option Form, the Clwyd Pension Fund shall calculate your benefits, and once checked post these details to the member.
If you are entitled to payment of your pension benefits, after leaving a position within the LGPS, your employer shall notify the Clwyd Pension Fund of all your pensionable details by completing a termination form. Upon calculating your pensionable benefits for that single post, we shall write out to yourself with a number of forms to complete and return to ourselves.
Among these forms will be a Retirement Conversion Option Form, which will indicate your options regarding converting pension to lump sum. However, if the benefits are reduced due to early retirement, one option will include to defer your benefits in the scheme until a later date. If this is what you wish to do, we will require you to tick the relevant box, sign and date the form and return it to the Clwyd Pension Fund using the pre-paid envelope provided.
This will remain in the scheme until you reach your Normal Pension Age and have availability to unreduced benefits, or upon written request to draw the benefits from yourself.
After calculating your deferred benefits value, if you hold an active record or multiple active records, you will have an option to combine the deferred benefits with one active record.
Details of how this will affect your pension will be detailed in the letter sent.
Refund of contributions
If you leave the scheme before meeting the 2 year vesting period you can choose a refund of contributions.
A refund of contributions will include:
- any pension contributions you have paid
- any additional pension contributions or AVCs you have paid (other than AVCs paid for additional life cover)
A refund of contributions will have a deduction for tax and also the cost, if any, of buying you back into the State Second Pension (S2P) in respect of membership up to 5 April 2016.
If a refund is not paid within 1 year of you leaving the scheme then interest is payable. The rate of interest is 1% above base rate on a day to day basis from the date you left the scheme to the day the refund is paid (compounded with three monthly rests).
Your refund of contributions must be paid within 5 years of your leaving the scheme (or age 75 if earlier), at that point a refund of contributions is automatically paid to you.
Request payment of your deferred benefits
You can choose to take early payment of your deferred benefits from age 55.
You do not need the consent of your former employer to withdraw your pension before your Normal Pension Age. If you choose to withdraw your deferred benefits before your Normal Pension Age, your benefits will usually be reduced to take account of their early payment and the fact that your pension will be paid for longer.
However, if you meet the Rule of 85 and you want to take your pension benefits before your Normal Pension Age, the Rule of 85 will only automatically switch on from age 60. If you decide to take your pension before age 60 and you meet the Rule of 85, this rule will not automatically switch on. You would need your former employer’s consent for the Rule of 85 to be switched on. If the Rule of 85 is activated, this means that you will have lower reductions taken from your pension compared to if the Rule of 85 is not switched on.
If your benefits were deferred in the Clwyd Pension Fund because you opted out of the scheme, these benefits cannot be paid to you until you finish your employment in the job that you opted out of.
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 which total over 2 years 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
Protection of 2 years membership
Leaving after 31 March 2014 with under 2 years membership but with membership predating the scheme changes on 1st April 2014 puts you in a protected area. You may choose to have a deferred benefit because of the earlier protected status, however you may be entitled to a refund.
The below table shows a members entitlement to a deferred benefit or refund of contributions.
|I only hold pre 1st April 2014 benefits||I hold benefits pre and post 1st April 2014||I only hold post 1st April 2014 benefits|
|Deferred Benefit||Over 3 months membership or vested||Over 3 months membership or vested||Over 2 years membership or vested|
|Refund of contributions||Under 3 months membership and not vested||Under 2 years membership, not vested and no other LGPS benefits||Under 2 years membership, not vested and no other LGPS benefits|
Annual Deferred Benefit Statements
Your pension benefits will increase in value each year in line with inflation, and you will receive a deferred benefit statement each year to indicate the current value of your deferred benefits.
Pensions increase is applied in line with the annual increase in the Consumer Prices Index (CPI) at the previous September, and is applied from the first Monday of each new tax year.
The previous increases were:
If CPI is negative, your deferred benefits will not decrease.
Your deferred benefit statement will only be sent to your home address if you have opted for paper communications from us. If you have not opted for paper communications, your statement will be uploaded to your Member Self-Service account for you to view from there: https://mss.clwydpensionfund.org.uk/home/login/. You will receive an email from the Clwyd Pension Fund each year to let you know when your statement is ready for you to view.
Your deferred statement shows you the value of your pension and how much it has increased by from one year to the next.
It is your responsibility to tell the Clwyd Pension Fund if you change your home address or email address so that we do not lose contact with you. Without up to date contact details for you, we cannot issue you with your annual deferred benefit statement.