The following Q & A’s are based on a member having at least 2 years membership, which can include previous pension rights transferred into the Fund.
I am being made redundant will my benefits be paid immediately?
If you have reached age 55 and you are made redundant or you are retiring with your employer’s consent through business efficiency, then your retirement benefits will be brought into payment immediately.
What happens if I do not qualify for immediate payments of benefits?
Once you have left, your benefits will automatically be preserved and fully inflation-proofed in the LGPS until they come into payment. You can if you wish, choose to transfer the value of them into another pension scheme or arrangement. You can do this at any time before you reach your normal retirement age.
Your preserved benefits will usually come into payment when you reach your normal retirement age. You can, however, choose to take your benefits early from:
- • age 55, however benefits paid before normal pension age will be reduced to take into account early payment, (unless you qualify for the protections of the 85 year rule - see below).
- • any age due to ill-health.
Will my benefits be reduced?
If your benefits are being paid immediately, then it depends on what terms you are leaving. No reductions will be applied to your benefits if:
- • you are made redundant, or
- • you retire with your employer’s consent through business efficiency.
If you retire voluntarily and you commenced in the Scheme after 1st October 2006 your benefits will be reduced if paid before Normal Pension Age.
If you retire voluntarily and you have scheme membership before 1st October 2006 a reduction will only apply if you do not qualify for the protections built into the removal of the 85 year rule.
Will I receive a statutory redundancy payment?
If your employer makes you redundant and you have at least two years continuous service, as well as any immediate benefits you are entitled to receive from the LGPS, you will be eligible for a statutory redundancy payment from your employer.
You will need to contact your employer for details of any statutory redundancy payment.
Will I be granted extra pension?
Not necessarily! Your employer can award additional annual pension, to help to compensate for membership that you may lose because you are being retired early, of up to £6,500 (less any amount of additional annual pension your employer has already contributed towards or is contributing towards under a shared cost additional pension contributions contract.
Additional pension is granted at the discretion of your employer therefore no member has an automatic right to be awarded it.
Because your employer will have to meet all the costs of awarding additional pension they may choose to grant you the maximum or a smaller pension or nothing at all.
How will I know what my employer’s policies are?
All employers have to formulate and publish policies stating how they intend to exercise their discretion in relation to:
- • weekly pay for redundancy purposes
- • augmentation of membership/awarding additional pension
If you haven’t seen a copy of your employer’s policy, contact your Pensions/Personnel Officer.
85 Year Rule
The 85 year rule was removed from the Scheme on 1st October 2006, so if you joined the pension scheme after this date the following does not apply and your benefits will be reduced if you choose to voluntarily retire before age 65. Protections have been built into the Scheme for members who were contributing before this date. The rule of 85 determines whether you can retire without a reduction to your benefits. To satisfy the rule, your age last birthday plus the total amount of your membership of the Scheme in whole years must add up to at least 85. If you meet the rule of 85 before the age of 60 it does not give you an automatic right to retire, any retirement under the age of 60 (other than ill-health) is at the discretion of your employer.
If you were born before 1st April 1956 and choose to retire before age 65 and meet the rule when you retire your benefits will be paid without reduction if you retire before 1st April 2016.
If you were born before 1st April 1960 and are at least age 60 and satisfy the rule and retire by 31st March 2020, your benefits based on your membership to the 31st March 2008 will be paid without reduction, membership from 1st April 2008 to the date you retire will have ‘stepped’ reduction factors applied to them to avoid full reductions.
If you were born after 31st March 1960, and are at least age 60 and you choose to voluntarily retire before age 65 but you would have met the 85 year rule by then, the part of your benefits based on your membership to the 31st March 2008 will be paid without reduction. The rest of your membership will be reduced to take into account early payment.
If you cannot meet the rule before age 65 your benefits would have always been reduced if you choose to voluntarily retire before age 65