Retirement

You can look forward to a pension that increases every year in line with the cost of living for the rest of your life.

There is scope to retire and take your benefits from as young as age 55 (with employer consent), right up to your normal pension age and even beyond (although you must take your benefits by age 75). In cases of ill health, there is no MINIMUM age limit at all.

To be entitled to benefits you must have at least 2 years membership or have transferred other pension rights into the Scheme.

You can even have a gradual move into retirement - find out more about flexible retirement.

When can I retire?

Your normal pension age is now linked to your State Pension Age (with a minimum of age 65). Your normal pension age is the age from which you can retire and receive your pension in full.

You can check your normal pension age by looking up your current State Pension Age at www.gov.uk/calculate-state-pension.

There are specific rules relating to each type of retirement and this section looks at the different retirement options.

Retirement options

Retiring at my own request

Early retirement due to redundancy or efficiency

Ill health retirement

Retirement after age 65

*The pension you receive will include any extra pension you have purchased


How are my benefits worked out?

Any pension built up in the scheme from 1st April 2015 will be on a Career Average Revalue Earnings (or CARE) basis. Visit 'How a CARE scheme works' to find out more.

If you have membership before 1 April 2015, the pension you earned will be worked out as:

From 1 April 2015 you will build up a pension of 1/49th of your pensionable pay each Scheme Year and this will be added to your Pension Account.

The amount of pension in your Pension Account will be re-valued every year to keep it in line with the cost of living - currently measured by the Consumer Prices Index (CPI).

If you have more than one job in the LGPS, then you will have more than one Pension Account - one for each of your jobs.

For any period you are in the 50/50 section the pension you build up will be half your normal rate (currently 1/98th).

You can take part of your pension as a tax free lump sum but you will have to give up some of your pension for this.

If you joined the Scheme for the first time on or after 1 April 2009, your benefits are worked out as:

Pension = final pay x membership ÷ 60

You can take part of your pension as a tax free lump, sum but you will have to give up some of your pension for this.

If you have membership before 1 April 2009, the benefits you earned before 1 April 2009 are worked out as:

Pension = final pay x membership ÷ 80

Lump sum = pension x 3

You can choose to give up some of your pension for a bigger lump sum.

If you have membership both before and after 1 April 2009 the two amounts of pension and tax free lump sum will then be added together with your CARE benefit to give you your total benefits.

Example of how benefits are worked out

What if I work part time or term time?

If you work part time your pay used to work out your benefits for membership before 1 April 2015 will be your full time equivalent rate. Your membership will be proportionate based on the actual hours you worked. For membership on or after 1 April 2015 your pension account will be based on the actual pay from which your pension contributions were deducted.

Example of how benefits for someone working part time are worked out

Example of how my benefits are worked out

Bob earns £20,000 a year as at April 2015.

Bob has built up 20 years membership before 1 April 2015 and will build up another 5 years membership in the Scheme before he retires.

Year Pensionable pay Pension earned Brought forward Revalued value

2015/16

£20,000

£408.16

£0

£407.76

2016/17

£20,400

£416.32

£407.76

£832.32

2017/18

£20,808

£424.65

£832.32

£1,294.68

2018/19

£21,224

£433.14

£1,294.68

£1,771.02

2019/20

£21,648

£441.80

£1,771.02

£2,268.14

The above is based on actual revaluation for 2015/16, 2016/17 and 2017/18 financial years.  It is assumed that his pay will increase each year by 2% throughout and cost of living will rise by 2.5% each year from 2018/19. So the pension for the period from 1 April 2015 to 1 April 2020 is £2,268.14 a year.

Pension = final pay x membership x 1/60

Pension = £21,648 x 6 ÷ 60 = £2,164.80 a year

Pension = final pay x membership x 1/80

Pension = £21,648 x 14 ÷ 80 = £3,788.40 a year

Lump sum = £3,788.40 x 3 = £11,365.20

Pension = £8,221.34 a year (£2,268.14+ £3,788.40 + £2,164.80)

Lump sum = £11,365.20

Bob can also choose to give up some of his pension for an even bigger lump sum.

Example of how my benefits worked out if I work part time

Sue works part time and earns £10,000 a year, as at April 2015, her full time equivalent pay is £20,000.

She has worked for 20 years before 1 April 2015 and will work for another 5 years before she retires.

Sue has always worked half the hours of a full time colleague and so her membership used to work out her retirement benefits will be 7 years before 1 April 2009 and 3 years after 1 April 2009.

Year

Pensionable pay

Pension earned

Brought forward

Revalued value

2015/16

£10,000

£204.08

£0

£203.88

2016/17

£10,200

£208.16

£203.88

£416.16

2017/18

£10,404

£212.33

£416.16

£647.34

2018/19

£10,612

£216.57

£647.34

£885.51

2019/20

£10,824

£220.90

£885.51

£1,134.07

The above is based on actual revaluation for 2015/16, 2016/17 and 2017/18 financial years. It is assumed that her pay will increase each year by 2% throughout and cost of living will rise from 2018/19 by 2.5% each year

So the pension for the period from 1 April 2015 to 1 April 2020 is £1,134.07 a year.

Pension = final pay (full time equivalent) x membership (proportionate to part time hours) x 1/60

Pension = £21,648 x 3 ÷ 60 = £1,082.40 a year

Pension = final pay (full time equivalent) x membership (proportionate to part time hours) x 1/80

Pension = £21,648 (full time equivalent) x 7 ÷ 80 = £1,894.20 a year

Lump sum = yearly pension x 3

Lump sum = £18974.20 x 3 = £5,682.60

Pension = £4,110.67 a year (£1,134.07 + £1,894.20 + £1,082.40)

Lump sum = £5,682.60

Sue can also choose to give up some of her pension for an even bigger lump sum.


Can I take a lump sum when I retire?

When you retire, you can take part of your pension as a lump sum; this is normally paid tax free.

  • If you were a member of the Scheme before 1 April 2009 you are automatically provided with a lump sum.

  • If you joined after 1 April 2009 the Scheme no longer provides an automatic lump sum, but you can give up some of your pension for a lump sum.

If you want to take a lump sum, or increase the size of your lump sum you have to give up £1 of pension to earn lump sum of £12.

Example

When Jane retires she has built up the following benefits: 

Pension = £6,667 a year

If Jane wants to take a £20,000 lump sum she will need to give up £1,667 of her pension.

Lump sum ÷ 12 = amount of pension you need to give up.

Her benefits will be: 

Pension = £5,000 a year, Lump sum = £20,004

Please note

You must tell us if you want to give up pension for lump sum before you retire.


Will my pension increase?

Once it starts to be paid your pension will receive a cost of living increase each year.

But if you retire early before age 55 your pension will be paid at its initial amount until you are 55.

At that point we will apply pensions increases to bring the pension to the level it would have been, had it been increased each year since your retirement.

If you are retired on ill health grounds, your pension is increased each year regardless of your age.

We will contact you each April with details of your pension increase.


Retiring early

You can retire before your normal pension age but your pension may be reduced and you would also need your employers consent in some circumstances.

Early retirement at your request

Subject to your employer giving its consent you can choose to retire early from age 55. If you choose to retire before your normal pension age your benefits are likely to be reduced because they will be paid earlier and for longer.

How much your benefits are reduced depends on how early you retire.

Please contact us if you want to talk about your individual situation.

Early retirement through redundancy or business efficiency

If your employer makes you redundant or retires you in the interests of business efficiency and you are aged 55 or over, your pension will be paid immediately without reduction.

Example

Stan is 64 when he decides to retire. His normal pension age is age 65.

His benefits are:

Pension = £4,000 a year

Lump sum = £11,500

As he is retiring 1 year early his benefits are reduced.

The benefits he will actually be paid are:

Pension = £3,760 a year (a 6% reduction)

Lump sum = £11,155 (a 3% reduction)


Retiring after age 65

If you keep working after your normal pension age you will continue to pay into the Scheme, building up further pension.

You can take your pension when:

  • you retire, or

  • you reach the eve of your 75th birthday, or

  • you have your employer's permission for flexible retirement, whichever occurs first.

If you take your benefits after your normal pension age, in addition to the extra membership you build up in the Scheme, your pension can be increased because if it is starting later than expected.


Flexible retirement

From age 55, if you reduce your hours or move to a less senior position, you may be able to start receiving some or all of the pension benefits you have built up even though you are still working - helping you to ease into retirement. You can still build up further benefits in the Scheme.

You must have your employer's permission for flexible retirement.

Will my benefits be reduced if I take flexible retirement?

If you take flexible retirement before age 65, your benefits may be reduced just as if you were retiring early.

If you are interested in flexible retirement please ask your employer what options they offer.


Ill health retirement

The Scheme offers protection to members who become too ill to work.

If you have to leave work at any age due to an illness which means you cannot carry out your current job you may be able to have your pension paid immediately as long as you meet certain conditions.

What might my benefits be?

You may get your pension and any lump sum without any early retirement reductions, based on your current membership plus an enhancement as shown below.

How much enhancement depends on how likely you are to be able to carry out gainful employment in the future.

The different levels of benefit are:

  • Tier 1 - Unlikely to be capable of undertaking gainful employment before reaching normal pension age
  • Tier 2 - Not entitled to a Tier 1 benefit but is likely to be able to undertake gainful employment before reaching normal pension age

Example

If you reduced your hours due to your ill health immediately prior to your ill health retirement your enhancement can be based on your situation before the reduction of hours.

Tier 1 - Unlikely to be capable of undertaking gainful employment before normal pension age

Your pension will be based on your current membership plus an enhancement to replace what you would have built up to your normal pension age, if you had stayed in the Scheme until then.

Tier 2 - Not entitled to a Tier 1 benefit but is likely to be able to undertake gainful employment before reaching normal pension age.

Your pension will be based on your current membership plus 25% of the enhancement to replace what you would have built up to your normal pension age, as if you had stayed in the Scheme until then.


Further examples of ill health retirement

Example 1

Lisa is about to be retired on ill health. She is aged 45, so has 22 years left to her normal pension age (age 67).

There is NO prospect for her obtaining gainful employment before normal pension age
She is therefore being retired under Tier 1 conditions.

Her benefits will be based on any membership prior to 1 April 2015 plus the value in her pension account with an enhancement to replace the pension she would have built up by age 67.

Example 2

Donna is about to be retired on ill health. She is aged 45, so has 22 years left to her normal pension age (currently age 67).

There is NO prospect for her of gainful employment in the short term, but there IS a prospect of gainful employment before her normal pension age.

She is therefore being retired under Tier 2 conditions.

In this case her enhancement is 25% of the membership she would have built up by her normal pension age of 67.

Current membership: 20 years

Membership she would have built up to age 67 had she continued working x 25%: 5.5 years

Helpful information