You can choose to retire and take your LGPS pension at any time from age 55 to 75, provided you have met the two year qualifying period in the Scheme.
However, the Government has announced that the earliest age you can take your pension will increase from 55 to 57 from 6 April 2028. For more information, see the Pension age changes section.
The Normal Pension Age in the LGPS is linked to your State Pension Age, with a minimum of age 65. If the State Pension Age changes in the future, then this change will also apply to your Normal Pension Age.
When you leave the LGPS you can defer taking your benefits, unless your pension is being paid due to your ill health. You must take your pension no later than your 75th birthday. If you take your pension after your Normal Pension Age, it will be paid at an increased rate to reflect late payment.
If you choose to retire before your Normal Pension Age, your benefits will be reduced because they will be paid for longer. Your benefits are calculated as set out in the How is my pension worked out? section and are then reduced. How much your benefits are reduced by depends on how early you take them. Your Scheme employer cannot decide to waive these reductions.
If you have to leave your office due to ill health, you may be able to receive immediate payment of your benefits.
To qualify for ill health benefits:
Ill health benefits can be paid at any age and are not reduced for early payment. In fact, your benefits could be increased to make up for your early retirement if you are unlikely to be capable of gainful employment within three years of leaving.
If you carry on in your office after your Normal Pension Age, you can continue to pay into the LGPS, building up further benefits. When you eventually retire you will receive your pension unless you choose to delay taking it. Your pension must be paid to you by no later than your 75th birthday. Your pension will be paid at an increased rate because it will be paid for a shorter time.
The Government has announced that the earliest age you can take your pension will increase from 55 to 57 from 6 April 2028. This does not apply if you have to take your pension early because of ill health.
Pension scheme rules allow the Government to protect members who joined the LGPS before 4 November 2021 from these changes. The Government has not yet confirmed whether it will allow LGPS members who joined the Scheme before 4 November 2021 to take their pension from age 55 after April 2028.
Your pension will increase in line with the cost of living each April if you are 55 or over. If you retire on ill health grounds, your pension is increased each year regardless of your age.
When you take your LGPS pension, you can swap part of it for a one-off lump sum. For every £1 of annual pension you give up, you will receive a lump sum of £12.
Most members can take up to 25% of the overall value of their pension as a lump sum. The lump sum will usually be tax-free. HMRC limits the amount of tax-free cash you can take from all UK pension schemes. The limit – known as the lump sum allowance – is £268,275. A higher limit may apply if you hold protection from the lifetime allowance. If you have already taken payment of a pension from any UK scheme, you may have used up some of your lump sum allowance. If you exceed the allowance, you will have to pay tax on the excess at your marginal rate.
Taking a larger lump sum reduces your pension but does not reduce any survivor pension paid after you die to your spouse, civil partner, eligible cohabiting partner or child.Your pension fund will give you more information about the option to swap pension for lump sum shortly before you take your LGPS pension. That is when you will need to decide.
If you pay Additional Voluntary Contributions (AVCs) in the LGPS, you may be able to take your AVC fund as a tax-free lump sum. This option will be open to you if:
Deciding how to use your AVC plan is an important financial decision. You may wish to get advice or guidance to help you choose which option is best for you.
Pension Wise is a government service from MoneyHelper that offers free, impartial guidance about your defined contribution pension options. Your AVC plan is a defined contribution pension that is attached to your LGPS pension.
Your pension fund is not allowed to proceed with your application to take AVCs until you tell them you have either received guidance from Pension Wise or you do not wish to take it. This is a legal requirement.
At retirement, you may be able to use your AVC to:
You do not have to pick a single option; you can use more than one option that is open to you.
You can transfer your entire AVC fund to a different pension arrangement. You can only do this before you take your LGPS pension.
Your pension fund will give you more details about your AVC options shortly before you take your LGPS pension.