Deferred members - New scheme
Introduction
This section gives you information about your deferred benefits and includes answers to some of the questions you may have, such as are my deferred benefits increased every year, can I transfer my benefits and when will my benefits be paid.
What is a deferred benefit?
A deferred benefit is a pension benefit that is retained in the Local Government Pension Scheme (LGPS) until it becomes payable. Your pension will continue to receive cost of living increases every year, as it is paid to you - although special rules apply if your benefits are in payment before age 55.
What benefits will I receive?
The deferred pension benefits you will receive depends on your dates of membership.
Keeping in touch
It is important that you let us know if you change address so we can keep in touch with you whilst you are a deferred member and to arrange for the payment of your pension benefits when they become due.
Full details of how to notify us of a change of address can be found on the change of address page.
When will my deferred benefits be paid?
Deferred benefits normally become payable at age 65, unless you opt to defer payment beyond that age.
Can they be paid earlier?
Yes, your deferred benefits can be paid earlier for the following reasons:
- You elect to receive your deferred benefits, at or after age 60. Your pension will be subject to reductions if paid before age 65 to take account of early payment, although some or all of your benefits could be protected from the reduction if you joined the LGPS before 1 October 2006 and you are a protected member
- You elect to receive your deferred benefits between the ages of 55 and 59 with your employer’s consent.
- You can request early payment of your deferred benefits on the grounds of ill health at any age, without reduction, if you are no longer capable of performing the duties of your old job. You should contact your former employer to arrange a medical, if this applies to you.
- You can request early payment of your deferred benefits on compassionate grounds. Your former employing authority will have discretion to waive any reduction on compassionate grounds. The percentages will differ from those shown where benefits are paid with the former employing authority's consent before age 55.
Are my deferred benefits increased every year?
From April 2011, the value your deferred benefits are increased in line with the Consumer Price Index (CPI) , previous to this your deferred benefits were increased in line with the Retail Price Index (RPI) These pension increases are not limited to a maximum percentage per annum as in many other occupational pension schemes. Details of the latest pensions increase can be found on the pensions increase page.
What will happen if I die before receiving payment of my deferred benefits?
If you die with deferred benefits in the LGPS, the following benefits are payable:
- An ongoing pension for your spouse, civil partner or nominated cohabiting partner , which will increase every year in line with the cost of living. In most cases this pension is payable for the rest of their life.
- Children’s pensions for your eligible children, which will increase every year in line with the cost of living and are payable to eligible children.
Members who have pre and post April 2008 membership of the LGPS
If you become a deferred member after 1st April 2008 and have service prior to 1st April 2008, your pre 1st April 2008 membership provides a deferred pension and an automatic tax free lump, calculated using the 1997 LGPS (old scheme) regulations and will provide the following benefits- .
- A pension calculated at 1/80th of your final year's pay.
- An automatic tax free lump sum based on 3/80th of your final year's pay
- The option to convert some of your pension to obtain a higher lump sum by commuting or swapping, £1 of your annual pension for £12 of lump sum.
The benefits based on your pensionable service after the 31st March 2008 provides a deferred pension, calculated using the New Look 2008 LGPS regulations and will provide the following benefits-
- A pension calculated at 1/60th of your final year's pay.
- The option to receive a tax-free lump sum by commuting, or swapping, £1.00 of your annual pension for £12.00 of lump sum. You are allowed to receive up to 25% of the capital value of your pension pot when you retire.
The two amounts of pension and tax free lump sum will then be added together to give you your total deferred benefit.
Members who have post 31st March 2008 membership only
If you joined the LGPS after 31st March 2008 your deferred benefit will be calculated using the New Look 2008 LGPS regulations and will provide the following benefits:-
- A pension calculated at 1/60th of your final year's pay.
- The option to receive a tax-free lump sum by commuting, or swapping, £1.00 of your annual pension for £12.00 of lump sum. You are allowed to receive up to 25% of the capital value of your pension pot when you retire.