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, if you reduce your hours or move to a less senior position, and provided you have been in the scheme for two years and your employer agrees, you can draw 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 – ask them for details.
If your employer agrees to flexible retirement you can still draw your wages / salary from your job on the reduced hours or grade and continue paying into the LGPS, building up further benefits in the scheme.
Do I have to draw all my pension benefits if I take flexible retirement?
If your employer agrees to flexible retirement then you would have to draw:
- all of the benefits that relate to any pre 1 April 2008 membership, plus
- all, none or some of the benefits that relate to your membership from 1 April 2008 to 31 March 2014, plus
- all, none or some of the benefits that relate to your pension built up from 1 April 2014, plus
- any additional benefits bought under an added years contract which commenced before 1 October 2006 or derived from an Additional Voluntary Contributions (AVC) contract that commenced before 13 November 2001, plus
- any additional pension being purchased either through Additional Pension Contributions (APCs), Shared Cost APCs or Additional Regular Contributions (ARCs), any additional pension awarded by your employer and any benefits derived from an AVC contract that commenced on or after 13 November 2001 (should you choose to draw these).
Will my pension and lump sum be reduced if I take flexible retirement?
If you take flexible retirement before your Normal Pension Age your benefits will normally be reduced for early payment.
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 if you are a rule of 85 protected member.
Your employer may, however, determine not to apply all or part of any reduction. You can ask them what their policy on this is.
If you receive payment of your benefits on flexible retirement, then your benefits will not be subject to reduction or suspension for re-employment whilst you are in a job with the employer that allowed you to take flexible retirement. However, if you leave and are re-employed in local government or by an employer who offers membership of the LGPS and part of your pension in payment is in respect of pension you built up prior to 1 April 2014, you must tell the LGPS fund that pays your pension about your new position, regardless of whether you join the scheme in your new position or not. They will let you know whether your pension in payment is affected in any way.
If you take flexible retirement after your Normal Pension Age your benefits will be increased to reflect late payment.
What should you do if you want to take flexible retirement?
You must first speak to your employer as you will need their consent.