Rather than continuing in your job to your normal pension age or beyond, you may wish to consider the possibility of flexible retirement.
From age 55 and if your employer agrees, you can reduce your hours or move to a less senior position and take some or all of the pension benefits you have built up - helping you ease into retirement. Your employer will have a policy on flexible retirement. You can ask your employer for details of their policy.
If your employer agrees to flexible retirement, you can still pay into the LGPS in your job on the reduced hours or grade as long as you are under age 75. You build up further benefits in the scheme.
Taking your pension
If you take flexible retirement, subject to your employer's consent, you can elect to take:
- all of your benefits that relate to any pre 1 April 2008 membership and
- all, none or some of the benefits that relate to your membership between 1 April 2008 and 31 March 2014 and
- all, none or some of the benefits that relate to your membership from 1 April 2014.
Reductions
If you take flexible retirement before your normal pension age your benefits may be reduced for early payment.
The reduction is calculated in accordance with guidance issued by the Government Actuary's Department (GAD). We must use factors provided by GAD for calculations. These factors can change from time to time.
The reduction is based on the length of time (in years and days) that you retire early. This is the period between the date your benefits are paid to your normal pension age. The earlier you retire, the greater the reduction.
If you were a member of the LGPS on 30 September 2006 some of your benefits paid early could be protected from the reduction if you meet the 85 year rule.
As a guide, the percentage reductions for early retirement are shown in the table below. Where the number of years is not exact, the reduction percentages are adjusted accordingly.
| Number of years paid early | Pension reduction | Lump Sum reduction (for membership to 31 March 2008) |
|---|---|---|
| 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% | 15.5%* |
| 12 | 41.8% | 15.5%* |
| 13 | 43.9% | 15.5%* |
The number of years early used to determine the reduction applied to your benefits built up before 1 April 2014 is the number of years before your protected normal pension age which, for most members, is age 65. Benefits built up after 1 April 2014 have reductions applied up to your State Pension age (SPa).
*The maximum reduction applied to your automatic lump sum for membership to 31 March 2008 is 10 years as the protected normal pension age is 65 and the earliest you can retire is age 55. There is no automatic lump sum for membership after 31 March 2008 although you can convert some of your annual pension to a lump sum. View further information about Converting your pension to a lump sum.
Your employer can agree to waive any reduction. You can ask them what their policy on this is.
Flexible retirement after normal pension age
If you take flexible retirement after your normal pension age your pension, and any lump sum, will be increased to reflect late payment.
Retirement process
Find out about the retirement process
Converting pension to lump sum
It is possible to convert some of your annual pension to provide an extra tax-free lump sum. Find out about converting some of your pension to a lump sum
Pre retirement course
We offer a free pre retirement course for those who have contributed to to the LGPS and are within 18 months of taking their pension. Find out about the pre retirement course
Additional Voluntary Contributions (AVCs)
If you take benefits on flexible retirement and your AVC contract started on or after 13 November 2001 you can choose to take all of your AVC fund at the time you take your flexible retirement benefits, and, if you wish, continue paying AVCs. If your AVC contract started before 13 November 2001 your AVC contract will cease and you will have to use all of your AVC fund at the time you take your flexible retirement benefits in one of the following ways:
- Buy an annuity
- Buy a Top-up Local Government Pension scheme (LGPS) pension
- Take your Additional Voluntary Contributions (AVCs) as cash
- Buy extra membership in the Local Government Pension Scheme (LGPS)
Change in legislation
The government announced that the earliest age that you can take your pension will be age 57 from 6 April 2028. Currently it is age 55. This does not apply to retirements on ill health which can be paid at any age.