Active members

8/18/2021 10:40:07 AM

7. Early retirement

Manage your pension online

'My pension online' gives you 24 hour access to your LGPS pension record. You can produce your own pension quotes to help you to plan for your retirement. You can check your annual benefit statements, read our guidance notes and update your personal details. Register/login at https://ms.buckinghamshire.gov.uk/.

Normal Pension Age

You can retire and draw your benefits in full at your Normal Pension Age. For benefits built up from April 2014 your Normal Pension Age is the same as your State Pension age  (at least age 65).  If you take your pension before your Normal Pension Age, it may be reduced as it's being paid earlier. If you take it later than your Normal Pension Age it's increased because it's being paid later.
 
As Normal Pension Age is now linked to State Pension age, any future changes to State Pension age will apply to all the pension you built up in the scheme since 31 March 2014. This means that the age when you can take your pension without any actuarial reduction/increase to your pension will change too.
 
If you built up membership in the LGPS before April 2014 then you have membership in the final salary scheme. These benefits have a different Normal Pension Age, which for most is age 65. You cannot take the benefits you built up to April 2014 separately from the benefits you've built up since April 2014. Your entire pension must be taken at the same time (except in the case of Flexible Retirement).

Earliest retirement age

You can choose to retire and draw your pension from age 55. You do not need your employer’s consent to draw your pension before your Normal Pension Age. If you choose to retire before your Normal Pension Age your benefits may be reduced to take account of being paid for longer. The reduction to your benefits depends on how early you draw them.

Early retirement reductions

If you were paying into the LGPS on or after 1 April 2014 and you choose to retire before your Normal Pension Age, your benefits may be reduced to take account of being paid for longer. The reduction to your benefits depends on how early you draw them.

The reduction is calculated using guidance issued by the Secretary of State, which changes from time to time. The reduction depends on the length of time (in years and days) that you retire early. That is, the period between the date your benefits are paid and your Normal Pension Age.  The earlier you retire, the bigger the reduction.

 

Number of Years Paid Early

Pension reduction

Lump Sum reduction
(for membership to 31 March 2008)

0

0%

0%

1

5.1%

2.3%

2

9.9%

4.6%

3

14.3%

6.9%

4

18.4%

9.1%

5

22.2%

11.2%

6

25.7%

13.3%

7

29.0%

15.3%

8

32.1%

17.3%

9

35.0%

19.2%

10

37.7%

21.1%

11

41.6%

N/A

12

44.0%

N/A

13

46.3%

N/A

If you were in the LGPS on 30 September 2006, some or all of your benefits paid early could be protected from the reduction.

Protected members

If you were a member of the LGPS on 30 September 2006, some or all of your benefits paid early could be protected from the reduction. This protection is under the '85 year rule'.

You meet the 85 year rule if your age at the date you draw your benefits and your scheme membership (each in whole years) add up to 85 or moreIf you work part-time, your membership counts towards the rule of 85 at its full calendar length. 

If you have 85 year rule protection this continues to apply from 1 April 2014. But this protection does not automatically apply if you choose to draw your pension on or after age 55 and before age 60. Your employer can choose to allow the rule of 85 to apply. This is a discretion and you can ask your employer what their policy is on this matter.

Working out your protection under the 85 year rule can be quite complex, but this could help you work out your position.

  • If you would not meet the 85 year rule by the time you are 65 - All your benefits will be reduced if you choose to draw your pension before your Normal Pension Age. The reduction is based on how many years before your Normal Pension Age you draw your benefits.
  • If you were 60 or over at 31 March 2016 - If you draw your pension before your Normal Pension Age and you meet the 85 year rule when you start to draw your pension, the benefits you built up to 31 March 2016 are not reduced.
  • If you were under age 60 at 31 March 2016 - If you draw your pension before your protected Normal Pension Age and you meet the 85 year rule when you start to draw your pension, the benefits you built up to 31 March 2008 are not reduced.
  • If you will be 60 between 1 April 2016 and 31 March 2020 and meet the 85 year rule by 31 March 2020 - The benefits you build up between 1 April 2008 and 31 March 2020 will not have a full reduction.
 
If you take flexible retirement, any 85 year rule protection will apply to the benefits you’ve built up to the date of flexible retirement. But 85 year rule protection will not apply to benefits you build up after the date of flexible retirementYou can contact us for more information about the 85 year rule.

Early retirement through redundancy or business efficiency

If you are over age 55 and you are made redundant or retire due to business efficiency, your pension benefits are payable immediately without any early retirement reductions. Any extra pension paid for by Additional Pension Contributions or Shared Cost Additional Pension Contributions are reduced if the retirement is before your Normal Pension Age. This is to take account of the extra pension being paid for longer.

If you were a member of the LGPS before 1 April 2014 the pension you built up to that date is based on your final pay when you leave the scheme. If you have bought extra pension by Additional Regular Contributions, the extra pension will be paid at a reduced rate if you retire before your pre-1 April 2014 Normal Pension Age. For most members, their pre-1 April 2014 Normal Pension Age is age 65.

Please note: We are expecting changes to be introduced in the near future that may change these pension options.

For more information about these expected changes, please refer to the 'Exit payment reforms and your pension' webpage.

Flexible retirement

Rather than continuing in your job to your Normal Pension Age, you could consider flexible retirement. From age 55 and with your employer's consent, you can reduce your hours / move to a less senior position and draw some or all of your pension benefits.
 
All employers in the LGPS must have a flexible retirement policy and you can ask your employer for their policy. You must have your employer's consent for the payment of your pension benefits under flexible retirement. Because of this, only your Employer can request a flexible retirement quote from us.
 
If your employer agrees to flexible retirement you will earn a salary based on your reduced hours or grade. You can pay into the LGPS in your new job and build up further benefits in the scheme.
 
If you take flexible retirement before your Normal Retirement Age your benefits will be reduced to take account of being paid for longer. The reduction to your benefits depends on how early you draw your benefits. Your employer could decide not to apply all or part of any reduction. This is an employer discretion and you can ask your employer for their policy on this matter.
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Last updated: 18 August 2021

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