The retirement process

Here is a step by step guide of what to expect when you retire from the Local Government Pension Scheme.

Step 1: Leaving employment

Your employer will confirm your leave date and pass your salary details to the Clwyd Pension Fund after you have left employment and received your last salary payment.

We’ll use this information to work out your final pension benefits.

Step 2: Receiving your retirement pack

We’ll then send you a retirement pack. If you use Member Self Service (MSS) we’ll upload the pack to your MSS account. Otherwise, we’ll post it to your home address. The retirement pack will include:

• Your pension figures and options
• Forms for you to complete and return
• A link of where to find our Guide to Retiring on our website

Your pension figures will show your main annual pension, as well as any of the following you have paid:

• Additional voluntary contributions (AVCs)
• Additional pension contributions (APCs)
• Additional regular contributions (ARCs)
• Added years

You will need to use the figures in the pack to choose whether to turn some of your annual pension into a one-off tax-free lump sum.

£1 annual pension turns into £12 tax free cash

You cannot turn all of your annual pension into a tax free lump sum. The pack will show you the highest tax-free lump sum you can have (including any AVCs), and the amount of annual pension you’d have left as a result.

Step 3: Making choices and filling in the forms

Please make sure you read your options letter carefully and choose the one you want. You will need to fill in and return the following:

• Retirement Option Form
• Pension Bank Form
• Lump Sum Bank Form
• Lifetime Allowance Form
• Personal Details Form

You must also send us copies of certificates that apply to you. For example, this could be your birth certificate, your partner’s birth certificate, your marriage certificate, or your final order. Note: a final order used to be called a decree absolute. For proof of date of birth, we can accept a photocopy of your driving licence or passport instead of a birth certificate.

If you use MSS, you can upload your completed forms and certificates to your account instead of sending them to us by post.

We must receive all your forms and certificates before we can start paying your pension.

Step 4: Paying your pension

After receiving your forms, Clwyd Pension Fund will work out your pension based on the choice you have made on your option form.

If you have paid AVCs, this takes longer because the provider has to take the money from where it is invested before we can pay any pension.

You may want to stop paying AVCs the month before your retirement date, as this could help speed up the dis-investment process.

We will then pay your pension and any tax-free lump sum in line with the bank details you’ve given us.

Step 5: How the payments work

• You’ll receive any tax-free lump sum within 7 to 10 working days of our final letter
• You’ll receive your pension on the 28th of each month, or the Friday before if this is a weekend or Bank Holiday. For your first pension payment, we will pay any arrears within 2 weeks of the date of your final letter
• You pay tax on your pension income. HM Revenue & Customs will let us know if you have a new tax code that we should use for your pension. This tax code tells us how much tax to take from your monthly pension payments
• You’ll receive your pension monthly for life

Step 6: Additional information

• If you use Member Self-Service, we’ll upload all future letters, newsletters, pension payslips and P60s to your MSS account for you to view. Please log in by visiting here
• Make sure you let us know if any of your personal details change, such as name, address, or bank details
• We can pay pensions into overseas bank accounts if you move abroad

You may be aware that members of defined contribution pension schemes, where the benefits payable depend on how much they’ve built up in their pension pot, have more flexible options for receiving their income.

These options are:

• Buying an annuity, or annual pension, or scheme pension if offered by the scheme
• Flexi-access drawdown, which means taking income directly from savings, any amount at any time, while still investing the rest
• Taking a number of cash sums at different stages
• Taking the entire pot as cash in one go.

These options do not apply to defined benefit pension schemes, including the LGPS, so they do not apply to your LGPS pension benefits.

Sometimes a member’s annual pension may be such a small amount, they can choose to receive its value as a one-off payment. This is called trivial commutation.

We’ll check to see if you qualify for this option and, if so, we will include the figures in your pack.