If you’ve deferred your benefits, they’ll become payable when you reach 65, unless you choose to retire early or late.
Deferred benefits - including the lump sum - increase every year in line with the retail prices index (the cost of living). You can find out how this is calculated on the calculating your pension increase page.
How much you’ll get
A deferred pension is paid as normal when you reach 65. Your pension is based on how long you were a member of the scheme (total membership) and your final pay when you left the scheme. It is also increased in line with the cost of living every year. On retiring, you receive a lump sum payment and an annual payment.
For most people, for service up to 31 March 2009, the annual pension payment is worked out by dividing your final pay by 80 (by 60 for service after 31 March 2009) and multiplying this by your total membership.
The lump sum is worked out by dividing your final salary by 80, multiplying this by your membership up to 31 March 2009, and then multiplying the final figure by 3. For more details on working out your pension, see what you receive in the employee member section of the site.
Retiring early
You can choose to retire between 50 (55 from 1 April 2009) and 59 if your employer agrees, or from 60 onwards without employer consent. If you voluntarily retire early, your pension will be reduced. For more details on how this reduction is calculated, download A Guide to the Local Government Pension Scheme.
Ill health
If you retire early due to ill health, and you have more than 2 years in the pension scheme your pension will be paid immediately without reduction. You may also be awarded additional service (ill-health enhancement).
Retiring late
You may choose to put off retiring or receiving your local government pension. If you do this, the lump sum and annual payments you receive will increase, because it will be paid for less time. Your pension must be in payment before your 75th birthday.
Changing your lump sum
As with a non-deferred pension, you can choose to have a bigger lump sum payment if you reduce your yearly pension payments, as long as the final lump sum is less than 25% of the capital value of your pension.
This isn’t for everyone, because you will have less to live on each year unless you invest your lump sum in a way which gives you a regular income. Remember that you can get free independent financial advice relating to your pension if you are part of the scheme.
More information
You can download A Guide to the Local Government Pension Scheme, with full details of all the features and how to take advantage of them, to print out and read when you want. If you would rather receive a copy by post, contact us.
If you’ve got further questions, visit the deferred member frequently asked questions page of this site.