Although the normal retirement age for all members of the Local Government Pension Scheme (LGPS) is 65, you may not wish to work to this age. You may decide to retire earlier and as a member of the Local Government Pension Scheme, this option is available to you.

Sometimes it is a necessity rather than a choice to retire early because of deteriorating health or redundancy. In these circumstances, your LGPS benefits can provide you with an immediate retirement pension, which could even be enhanced.

New pension tax simplification rules

From the 6th April 2006, HM Revenue and Customs introduced new simplified rules around how pensions are taxed. These rules introduced a lifetime allowance which is the total capital value of all your pension arrangements, but not your state pension, which you can build up without paying extra tax. Members with pensions payable from the 6th April 2006, are required to declare all occupational and personal pension entitlement (except state, survivor’s or dependant’s pensions) before their pension can be paid.

Retirement options available

The retirement options which may be available to you are summarised below:

When can I retire?
Can I retire early?
Can I have a gradual move into retirement?
Will my pension and lump sum be reduced if I choose to retire early?
What happens if I have to retire early due to ill health?
What happens if my employer retires me on the grounds of redundancy or efficiency?
What if I carry on working after age 65?

The retirement benefits available to you are summarised below:

What will my retirement benefits be?
How much will my pension be?
Can I give up some of my pension to increase my lump sum?
What if I am a part time employee?

When can I retire?

You can retire and receive your Local Government Pension Scheme (LGPS) benefits in full from age 65. The scheme also makes provisions for the early payment of your LGPS benefits, if you retire on the grounds of ill health, early retirement (redundancy or efficiency) or take flexible retirement.

Can I retire early?

If you have at least three months total membership or have brought a transfer value into the LGPS, you can elect in writing to your employer, to retire and receive your LGPS benefits at any time from age 60 onwards.

Between and including the ages of 55* and 59 (*age 50 for pre 1st April 2008 members retiring up to 30 March 2010) you may also elect to retire and receive your LGPS benefits, but only if your employer gives their consent.

Can I have a gradual move into retirement?

If you have at least three months total membership or have brought a transfer value into the LGPS you may wish to consider the possibility of flexible retirement . Rather than continuing in your job to 65 and drawing your pension from then, you could from age 55 (age 50 for pre 1st April 2008 members retiring up to 30 March 2010), with your employer’s consent, reduce your hours or move to a position on a lower grade and elect in writing to your administering authority to draw the pension benefits you have already built up helping you ease into retirement, whilst still drawing your wages/salary from your job on the reduced hours or grade.  You can continue paying into the LGPS to build up further benefits in the Scheme.

You must have your employer’s consent to draw your pension benefits under flexible retirement.

A fact sheet about flexible retirement is available to download, print or read on-line on the Scheme Guides/leaflets page,

Will my benefits and lump sum be reduced if I choose to retire early?

If you join the LGPS after 30 September 2006 and retire before age 65, your benefits will be reduced. The reduction is calculated in accordance with guidance issued by the Government Actuary. If you are contributing to the scheme on 30th September 2006 some or all of your benefits paid early could be protected from the reduction.

For both employer consent and flexible retirements, your employer may, at their discretion, determine not to apply all or part of any reduction.

What happens if I have to retire early due to ill health?

If you have at least three months total membership or have brought a transfer value into the LGPS and an administering authority approved independent registered medical practitioner certifies that you have become permanently unable (until your 65th birthday, or until age 70 in the case of Coroners) to do your job, or any comparable job with your employer, efficiently because of ill health or infirmity of mind or body, you will receive your benefits immediately. The medical practitioner must be qualified in occupational health medicine and must not have previously been involved in your case.

What happens if my employer retires me on the grounds of redundancy or efficiency?

If you are aged 55 (age 50 for pre 1st April 2008 members retiring upto 30 March 2010) or over and have at least three months total membership of the LGPS or have brought a transfer value into the LGPS, you will be entitled to the immediate unreduced payment of your LGPS benefits

What if I carry on working after age 65?

If you carry on working after age 65 you will continue to pay into the scheme, accruing further benefits.  You can receive your pension when:

• you retire, or
• you reach the eve of your 75th birthday,
• you have your employer’s consent for flexible retirement

whichever occurs first.

If you draw your pension after age 65 the pension you accrued prior to age 65 will be increased to reflect the fact that it will be paid for a shorter time.

Your pension has to be paid before your 75th birthday. Please note that if you are a coroner you should substitute ’70th birthday’ where ’75th birthday’ is quoted above.

What will my retirement benefits be?

When you retire, the benefits you will receive will depend on the date you commenced paying into the LGPS.  If you commenced before 1st April 2008 you will receive a pension and a tax free lump sum from the LGPS.  If you commenced after 31st March 2008 you will receive a pension from the LGPS,there is no automatic lump sum but you will be given the opportunity to give up part of your pension for a tax free lump sum.  Regardless of your date of commencement in the LGPS, you will also receive the basic flat rate state pension, at state pension age, if you have paid sufficient National Insurance contributions during your working life. More details regarding your state pension can be found at The Pension Service website www.thepensionservice.gov.uk/, which is part of the Department for Work & Pensions.

How much will my pension be?

Your pension is based on your total membership and  the best one of the last three years' whole time equivalent pay, but scheme members who downgrade (other than as a result of flexible retirement) can choose to have benefits calculated on the average of the best three consecutive years' pay in the last ten years of service (ending on a 31st March).  If your pay is reduced because of sickness, the final year's pensionable pay is taken to be the pay you would have received had you not been sick.

For further information on how your benefits will be calculated, please refer to the scheme booklet available on the Scheme guides/leaflets page.

Can I give up some of my pension to obtain a lump sum?

On retirement you will be given the opportunity to exchange some of your pension to receive a tax-free lump sum.
You will be able to take up to a maximum of 25% of the capital value of your pension benefits as a tax free lump sum or, if lower, 25% of the lifetime allowance less an adjustment for the value of any other pension benefits you are already drawing. For each £1.00 of annual pension given up you will receive £12.00 of lump sum. You may not reduce your pension to below your Guaranteed Minimum Pension.

What if I am a part time employee?

For part time employees, the same calculation is used, but the total membership will reflect the part time hours worked and will be less than the calendar length.  The final year's pensionable pay will be the full time equivalent for your post.  If you do not have any contractual hours, the total membership for each year in the LGPS will be calculated on average weekly hours worked during each year.

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