What are my retirement options?
You have flexibility as to when you can retire and take your pension in the LGPS. You can choose to retire and draw your pension at any time between ages 55 and 75.
Take a look at this short video to find out more, or, we also have a retirement planning guide on our forms and resources page to help you with all the things you may want to think about before you retire.
If you would like a pensions quote or forecast, you can view these by accessing your online pension account and view the differing types of retirement:
Early retirement
You can choose to retire and take your pension from the age of 55. You do not need your employer’s permission to take your pension before your normal pension age (NPA). However, your pension is normally reduced if it is paid before your normal pension age to take into account it being paid for longer.
Your benefits are worked out to the date you left the scheme and are then reduced. How much your benefits are reduced by depends on how early you take them.
Membership before 1 April 2014 will still be linked to an NPA of 65. This means that you can still take your benefits from this age, however the service built up from 1 April 2014 will be linked to your state pension age (the age at which, based on your date of birth, your state pension will be paid).
So, benefits built up before and after April 2014 will have a different NPA, and a different rate of reduction for each period may be applied depending on when the benefits were built up.
The reduction to benefits is worked out with guidance from the Secretary of State. The reduction is based on the length of time (in years and days) that you retire early – the time between the date your benefits are paid and your NPA. The earlier you retire, the greater the reduction.
The 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.
Reduction factor table for benefits paid up to 13 years early
| Years Early | Pension Reduction | Lump sum (for membership to 31 March 2008) |
| 0 | 0.0% | 0.0% |
| 1 | 4.9% | 1.7% |
| 2 | 9.3% | 3.3% |
| 3 | 13.5% | 4.9% |
| 4 | 17.4% | 6.5% |
| 5 | 20.9% | 8.1% |
| 6 | 24.3% | 9.6% |
| 7 | 27.4% | 11.1% |
| 8 | 30.3% | 12.6% |
| 9 | 33.0% | 14.1% |
| 10 | 35.6% | 15.5% |
| 11 | 39.5% | N/A |
| 12 | 41.8% | N/A |
| 13 | 43.9% | N/A |
Your employer can agree not to make any reduction. This is a discretion and you can ask them what their policy on this is.
Ill-health retirement
An ill-health retirement is a retirement before normal pension age under the grounds of ill-health. To be eligible for an ill-health pension your employer must initiate the ill-health process and certain conditions must be satisfied. It is only possible to receive an ill-health pension if you are currently an ‘active’ member (a scheme member currently paying in pension contributions) of the LGPS who is dismissed on the grounds of ill-health. Therefore, if you voluntarily leave your employment you do not qualify for an ill-health pension.
Ill-health retirement and paying extra
Special rules can apply if you are paying extra pension contributions in the LGPS and you retire with an ill health pension. You can find out more in this section.
Additional Voluntary Contributions (AVCs)
If you are paying Additional Voluntary Contributions (AVCs) in the LGPS and you retire with an ill health pension, there are no special rules. You will have the same choices as you would have had if you took your pension in normal health.
Additional Pension Contributions
You may have bought additional pension by paying Additional Pension Contributions (APCs) or Shared Cost APCs. When you take an ill health pension, it will include the extra pension that you have paid for by lump sum or regular payments. The extra pension will not be reduced for early payment. If you qualify for a Tier 1 or 2 ill health pension, you will be credited with all the extra pension that you set out to buy, even if you have not completed full payment for it.
You can choose to swap some of the extra pension for a cash lump sum in the same way that you can exchange your main LGPS pension.
Additional Regular Contributions (ARCs)
When you take an ill health pension, it will include the extra pension that you have bought by paying Additional Regular Contributions. The extra pension will not be reduced for early payment. If you qualify for a Tier 1 or 2 ill health pension, you will be credited with all the extra pension that you set out to buy even if you have not completed full payment for it.
You can choose to swap some of the extra pension for a cash lump sum in the same way that you can exchange your main LGPS pension.
Buying extra years in the LGPS (added years)
If you are paying for extra years when you take an ill health pension, you will normally be credited with the whole extra period of membership that you set out to buy. This will be the case even if you have not completed full payment for it.
The extra membership is included in your membership built up before 1 April 2014. The extra benefits you will get are based on your final pay when you leave the Scheme.
Ill health retirement – special cases
In some cases, your ill health pension will be worked out differently. You can find out more about the differences in this section. The rules covering these special cases can be very complicated. Your pension fund will let you know if you are affected by them.
- If you were awarded an ill health pension before 1 April 2008 or if you were awarded a Tier 1 pension after 31 March 2008, then your pension will not be increased if you retire due to ill health again.
- If you were awarded a Tier 2 pension after 1 April 2008, then any increase to your pension will be restricted if you retire due to ill health again. If you are awarded a Tier 1 or 2 ill health pension, then the increase to your pension will be based on a maximum of 75% of the number of years from your original ill health retirement to your Normal Pension Age, less the number of years of active membership since the first ill health retirement.
- You may qualify for additional protection apply if you:
- were paying into the LGPS on 31 March 2008
- were age 45 or over on that date, and
- have been in continuous membership of the LGPS.
If you qualify for a Tier 1 or 2 ill health pension, your pension fund will check whether the increase to your pension is at least as good as it would have been under the LGPS rules in force before 1 April 2008. If it is not, your pension will be increased further. This protection will not apply to you if you took flexible retirement before your ill health retirement.
Please speak to your employer should you wish to explore an ill health retirement pension application.
Flexible retirement
Rather than continuing in your job to your normal pension age (the age when you can take your pension without it being reduced for early retirement or increased for late retirement) or beyond, you may wish to think about flexible retirement. From the age of 55, if you reduce your hours or move to a less senior position, and as long as you’ve been in the scheme for at least 2 years, and your employer agrees, you can take some or all of the pension benefits you have built up and keep working, helping you ease into retirement. You can ask your employer for details of their flexible retirement policy.
If you wish to apply for a flexible retirement then this request must be made to your employer. If your employer agrees to flexible retirement then you would have to take:
- all of the benefits that relate to any membership before 1 April 2008, plus
- all, none, or some of the benefits that relate to your membership from 1 April 2008 to 31 March 2014, plus
- all, none, or some of the benefits that relate to your pension built up from 1 April 2014, plus
- any additional benefits including added years, additional pension being bought either through APCs/SCAPCs or ARCs, additional pension awarded by your employer and any AVCs (should you choose to take these).
If you take flexible retirement before your normal pension age your benefits are worked out to the date of the flexible retirement and will normally be reduced for early payment.
If you were a member of the LGPS at any time between 1 April 1998 and 30 September 2006, some or all of your benefits paid early could be protected from the reduction under what is called the 85 year rule.
Your employer may, however, decide not to apply all or part of any reduction. You can ask them what their policy on this is.
If you take flexible retirement after your normal pension age, your benefits will be increased to reflect late payment.
If your employer agrees to flexible retirement, you can still take your wages / salary from your job on the reduced hours or grade and continue paying into the LGPS, building up further benefits in the scheme. If you do not wish to continue paying into the LGPS after flexibly retiring, you must opt out of the LGPS. If you do not opt out your LGPS membership will continue automatically in your job on the reduced hours or grade. If you want to make sure that no pension contributions are taken immediately after flexibly retiring, you should let your employer know before you take flexible retirement. Please do not opt out before you flexibly retire, as this may mean your flexible retirement will be refused.
Redundancy or business efficiency?
What happens to your pension when you are made redundant will depend on your age at that time and the length of your membership in the LGPS.
Scheme members aged 55 or over
As long as you have been a member of the LGPS for 2 years or more, (or less than 2 years, but have transferred other pension rights into your current scheme membership) you will get your unreduced retirement benefits paid immediately.
If the above does not apply to you, you will get a refund of the contributions you have paid into the scheme, as long as the following does not apply:
- You have paid National Insurance contributions whilst a member of the LGPS and you stop paying into the LGPS in the tax year that you reach your State Pension Age
- You are paying into the LGPS with any other job you have
- You have a deferred benefit in the LGPS from any other job
- You are receiving a pension from the LGPS from any other job you have held.
What happens If you have a contract to buy additional membership
If you joined the LGPS before 1 April 2008, started a contract to buy additional membership and the contract has not been completed, you will not be able to buy all of the additional membership you planned
If you are made redundant, you may be able to choose to pay a lump sum to complete the contract. If you wish to consider this, please get in touch
What happens If you get another job following your redundancy
If you get a new job after you’re made redundant and you’re being paid your pension, you cannot transfer these pension rights to your new employer’s pension scheme.
Scheme members under age 55
Over 2 years membership
If you’re under the age of 55 when you’re made redundant, with 2 or more years’ membership (or less than 2 years, but have transferred other pension rights into your current scheme membership), you won’t get your pension paid immediately.
After you have left your job, you’ll be sent a statement giving details of your pension benefits that you’ll get from your normal pension age,( together with a set of notes setting out your options. These pension benefits increase each year in line with the cost of living. Each year, you’ll get a benefit statement showing you the updated value of your pension benefits, which will be available on your online account.
Less than 2 years membership
If you’re less than 2 years membership, you’ll get a refund of the contributions you’ve paid into the scheme as long as the following does not apply:
- You have paid National Insurance contributions whilst a member of the LGPS and you stop paying into the LGPS in the tax year that you reach your State Pension Age
- You are paying into the LGPS with any other job you hold
- You have a deferred benefit in the LGPS from any other job
- You are receiving a pension from the LGPS from any other job you have held.
After you’ve left your job, you’ll be sent a statement showing the value of your refund of contributions and a statement showing how much you’d be able to transfer to another pension provider (if applicable).