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Retirement planning


Retirement Planning

This section of the website is for members currently contributing to the Scheme.

We understand that retirement can be both exciting and stressful, and we will do everything we can to make the process as simple as possible. The section of the website has been developed to provide you with essential information about the LGPS retirement process.

Normal Pension Age (NPA)
Early Retirement
Flexible Retirement
IllHealth Retirement
Redundancy or Business efficiency
Late Retirement

Normal Pension Age (NPA)

NPA is simply the age you can retire without a reduction to your benefits. Your NPA is linked to State Pension Age. Check your State Pension age opens in new window

Process

About 2 months before your NPA we contact you to ask if you are retiring. If you say yes, we will send out a retirement quotation, which will have all of the forms you need to fill out, and provide a link to a guide to the LGPS Retirement Benefits booklet.


If you pay additional voluntary contributions (AVCs), and you confirm you are retiring, we will request details of your AVC options from Scottish Widows, Prudential or Utmost. We will also arrange for the disinvestment of these shortly before your retirement date.

We can’t pay your retirement benefits until we have received the funds from your AVC provider. This is to avoid potential over payments. To have a better chance of receiving your lump sum on or shortly after your retirement date, we suggest that you stop paying your AVCs two months before your retirement date.

 

Early Retirement

You can choose to retire and draw your pension from the scheme at any time from age 55 to 75, provided you have at least 2 years’ service in the scheme. If you choose to take your pension before your Normal Pension Age it will normally be reduced, as it's being paid earlier.

We advise that you first use our online portal, mypension, to run retirement quotes. The portal allows you to run unlimited quotes to help you make an informed decision about your retirement date. The quotes will also take into account any early retirement reductions that may apply.

If you don’t already have an online account, you will first need to register mypension

  If you have AVCs, contact us to request your fund value and retirement options.

  You may also want to approach your HR department and ask if they have any pre-retirement courses you could attend.

  Consider requesting a state pension quote at Check your State Pension forecast opens in new window plus any other pension entitlements you may be due to, this will give you the full picture of your retirement benefits.

Retirement Process - flowchart

If, after considering all your options, you wish to draw your benefits, here is the retirement process we follow:

01

Contact your employer, informing them that you would like to take your pension – and hand in your notice. You will need to check with your employer to find out how much notice they require. You can also notify us of your intended retirement date.

02

If you pay additional voluntary contributions (AVCs), when we are told you are retiring, we will request details of your AVC options from Scottish Widows, Prudential or Utmost. We will also arrange for the disinvestment of these when you come closer to your retirement date

We can’t pay your retirement benefits until we have received the funds from your AVC provider. This is to avoid potential over payments. To have a better chance of receiving your lump sum on or shortly after your retirement date, we suggest that you stop paying your AVCs two months before your retirement date.

03

Your employer will provide us, the LGPS Administering Authority, with all the information we require to calculate your pension, such as your leaving date and final pay figures.

04

Once we receive this information from your employer, we will check it for accuracy. If we think any of the information is wrong, we will query this with your employer. This may cause delays, however if this is the case, we will notify you by email.

05

Once we have everything we need, we will calculate and issue your retirement letter. You will need to complete your retirement forms, selecting your options, before returning the forms to us with all supporting documents. If you prefer to email your documents, you can contact us for a secure link to return your documents to customerservices@sypa.org.uk or by post. If you want your pension paid abroad, ask us for a separate bank form. We transfer money from the UK with Western Union money transfer services.

06

Once you have returned your documents, we check what you have provided. If there is anything missing, or a form not fully completed, we will contact you to request what still needs to be returned or completed.

07

Once we have everything we need, we will process your retirement payment, aiming to pay any tax-free lump sum (if applicable) within 7 working days after your retirement date or the date we receive fully completed information from you. Please note that pensions are payable in arrears and paid on the last banking day of each month, unless you have elected for a quarterly, bi-annual, or annual payment. If you retire part way through the month you will receive a part payment at the end of the month, you will then receive a full month’s payment at the end of the following month and subsequent months. You will receive a letter confirming all this information.

08

In addition, you will receive a text message confirming when the lump sum payment has been paid.


Flexible Retirement

Flexible retirement is at the discretion of your employer. Each employer will have a policy on flexible retirement, and we recommend that you ask your employer for a copy of their policy.

A gradual move into retirement by flexibly retiring. If your employer agrees and you are age 55 or over, if you reduce your hours or move to a less senior position and provided you have met the 2 years vesting period in the scheme, you can draw some or all the pension benefits you have built up, whilst carrying on working.

No. Your employer needs to consider the cost to the pension scheme of letting you draw your pension early and also the effect that you either reducing your hours or taking a lower paid job will have on the service they provide.

As you would still be working you will remain in the pension scheme and build up further benefits until you fully retire. When that time comes, we will then pay you another pension, but you should note that if your full retirement takes place before normal pension age this pension will be subject to an early retirement reduction.

First have a chat with your line manager or HR representative to find out how much of a reduction in pay or hours your employer’s policy on flexible retirement requires and whether they would consider an application from yourself. If flexible retirement is a possibility your employer should then approach us for a quote. Your employer will automatically be sent details of any early retirement costs that arise due to your flexible retirement to help them decide whether to accept your application, and you will receive a flexible retirement quote.

Process

When we receive approval from your employer for your flexible retirement, we will send out a retirement quotation, which will have all the forms you need to fill out, with a link to the LGPS Retirement Benefits booklet.

Prior to approval, all requests for flexible retirement quotes must come via your employer.

If you pay additional voluntary contributions (AVCs), and you confirm you are retiring, we will request details of your AVC options from Scottish Widows, Prudential or Utmost. We will also arrange for the disinvestment of these shortly before your retirement date.

We can’t pay your retirement benefits until we have received the funds from your AVC provider. This is to avoid potential over payments. To have a better chance of receiving your lump sum on or shortly after your retirement date, we suggest that you stop paying your AVCs two months before your retirement date.

Ill-Health Retirement

If you’re unable work due to illness you may be able to receive immediate payment of your benefits.

To qualify for ill health benefits, you must have met the 2 years vesting period in the scheme and your employer, based on an opinion from an independent occupational health physician appointed by your employer, must be satisfied that you will be permanently unable to do your own job until your Normal Pension Age and that you are not immediately capable of undertaking gainful employment.

Ill health benefits can be paid at any age and are not reduced on account of early payment – in fact, your benefits could be increased to make up for your early retirement. There are graded levels of benefit based on how likely you are to be capable of gainful employment after you leave.

The different levels of benefit are:

  • Tier 1: If you are unlikely to be capable of gainful employment before your Normal Pension Age, ill health benefits are based on the pension you have already built up in your pension account at your date of leaving the scheme plus the pension you would have built up, calculated on assumed pensionable pay, until you reached your Normal Pension Age.
  • Tier 2: If you are unlikely to be capable of gainful employment within 3 years of leaving, but are likely to be capable of undertaking such employment before your Normal Pension Age, ill health benefits are based on the pension you have already built up in your pension account at your date of leaving the scheme plus 25% of the pension you would have built up calculated on assumed pensionable pay, until you reached your Normal Pension Age. 
  • Tier 3: If you are likely to be capable of gainful employment within 3 years of leaving, or before your Normal Pension Age if earlier, ill health benefits are based on the pension you have already built up in your pension account at leaving. Payment of these benefits will be stopped after 3 years, or earlier if you are in gainful employment or become capable of such employment, provided you have not reached your Normal Pension Age by then. If the payment is stopped it will normally become payable again from your Normal Pension Age but there are provisions to allow it to be paid earlier. Details would be provided at the time.

Gainful employment means paid employment for not less than 30 hours in each week for a period of not less than 12 months.

Your employer will make the decision. They are required by the pension scheme regulations to seek the opinion of suitably qualified medical practitioner(s) but at the end of the day they make the decision based on all the factors relevant to your case. Contrary to popular belief, a scheme member cannot apply for ill health retirement, the employer must start the assessment process.

The Department for Work & Pensions works to different rules. Basically, they look at a much shorter timescale because Incapacity Benefit is designed to provide income for the immediate future. Employment and Support Allowance can also be withdrawn if your medical condition improves. The ill health retirement assessment is concerned with permanent incapability to do your job, which in some cases can be quite different.

The doctors are working to national guidelines issued by the Association of Local Authorities Medical Advisors. They are looking for evidence that a member has had all available treatment considered usual for their medical problem, including referral to a specialist for treatment. It is only after this course has been followed that a long-term prognosis can be given and thus a decision on permanent incapacity until Normal Pension Age. Sometimes this is "on a balance of probabilities" basis but certainly GP letters of support that are not backed up by specialist opinion specifically concentrating on the pension schemes criteria will not be sufficient.

The Procedure

Explanatory leaflet about the ill health retirement opens in new window

Process

When we get approval from your employer for your ill health retirement, we will send out a retirement quotation, which will have all the forms you need to fill out, with a link to the LGPS Retirement Benefits booklet.

Prior to approval, all requests for ill health retirement quotes must come via your employer.

If you pay additional voluntary contributions (AVCs), when we are told you are retiring, we will request details of your AVC options from Scottish Widows, Prudential or Utmost. We will also arrange for the disinvestment of these when you come closer to your retirement date.

We can’t pay your retirement benefits until we have received the funds from your AVC provider. This is to avoid potential over payments. To have a better chance of receiving your lump sum on or shortly after your retirement date, we suggest that you stop paying your AVCs two months before your retirement date.

Redundancy or Business efficiency

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.

If you are aged 55 or over and you are made redundant, or you are retiring with your employer’s consent through business efficiency, your retirement benefits are paid immediately.

If you lose your job because of redundancy or business efficiency, your main benefits are payable immediately without any early retirement reductions.

If your employer makes you redundant, 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.

Your employer can award additional annual pension, to help to compensate for membership that you may lose because you are being retired early, 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, so 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 pension, a smaller pension, or nothing at all.

All employers must 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 HR Officer.

Once you have left, your benefits will automatically be deferred 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. An option to transfer must be made at least 12 months before your Normal Pension Age. Your deferred 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; benefits paid before Normal Pension Age will be reduced to take into account early payment.

  any age due to ill-health.

If you are made redundant, and you are aged 55 or over, your retirement benefits must be brought into payment. You do not have the option to defer payment.

Process

When we get approval from your employer for your redundancy/efficiency retirement, we will send out a retirement quotation, which will have all the forms you need to fill out, with a link to the LGPS Retirement Benefits booklet.

Prior to the approval stage, all requests for redundancy/efficiency retirement quotes must come via your employer.

If you pay additional voluntary contributions (AVCs), and you confirm you are retiring, we will request details of your AVC options from Scottish Widows, Prudential or Utmost. We will also arrange for the disinvestment of these when you come closer to your retirement date.

We can’t pay your retirement benefits until we have received the funds from your AVC provider. This is to avoid potential over payments. To have a better chance of receiving your lump sum on or shortly after your retirement date, we suggest that you stop paying your AVCs two months before your retirement date.

Late Retirement

Some people carry on working after their normal pension age. If you decide to do this, you can carry on paying into the LGPS until the day before your 75th birthday. We will then increase your pension because you’ll be drawing it later than normal but you must remember that we have to pay your pension to you by your 75th birthday, but you can carry on working.

Process

When you or your employer tells us that you are retiring, we will send out a retirement quotation, which will have all the forms you need to fill out, with a link to the LGPS Retirement Benefits booklet.
Because of tax and the rules of the scheme, your pension must be brought into payment before you turn 75.

If you pay additional voluntary contributions (AVCs), and you confirm you are retiring, we will request details of your AVC options from Scottish Widows, Prudential or Utmost. We will also arrange for the disinvestment of these shortly before your retirement date.

We can’t pay your retirement benefits until we have received the funds from your AVC provider. This is to avoid potential over payments. To have a better chance of receiving your lump sum on or shortly after your retirement date, we suggest that you stop paying your AVCs two months before your retirement date.

Q & A’s – All Retirements

So we can process your retirement quickly and accurately, we ask for quite a lot of information, including:

  Asking you to check your personal details

  Which option for retirement you want

  Your banking details (we can no longer pay you using a cheque)

  Details of any other pensions you have (excluding State Pensions, Spouse or Dependant's Pensions).

We also have to make sure you are who you say you are, so we also ask for copies of:

  Your birth certificate

  Your marriage/civil partnership certificate

  Partner's birth certificate (if married, in a civil partnership or in a co-habiting relationship)

  Your decree absolute/final order, if you are divorced/have had your civil partnership dissolved

  Death certificates (if you are a widow/widower/surviving civil partner)

  Your separation order (If separated by a court order)

We do not ask you to send in your original certificates, just photocopies or scanned copies. That way you can keep the originals safe.

We will always try to pay your benefits as soon as possible. We will send you a letter to confirm the date of payment of your lump sum and the payroll date when your pension will start. If there have been any delays your first pension payment will be backdated to your retirement date.

No, you will not have to pay National Insurance contributions on your pension or lump sum.

More information on retiring covering subjects such as the 85 year rule, early retirement reductions and exchanging pension for lump sum can be found on the national website for LGPS members opens in new window

You can also contact our Customer Centre on 0300 303 6160 or email us at customerservices@sypa.org.uk