If you’ve deferred your benefits, they’ll become payable when you reach 65, unless you qualify under the Rule of 85 to receive them earlier or choose to retire early or late.
Deferred benefits - including the lump sum - increase in April in line with inflation over the 12 months to the previous 30 September.
How much you’ll get
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.
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.
Retiring early
You can choose to retire between 55 and 59 if your employer agrees, or from 60 onwards without employer consent. If you voluntarily retire early, your pension will be reduced unless you qualify under the Rule of 85.
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, so consider taking financial advice.
More information
A Guide to the Local Government Pension Scheme has full details of the LGPS. If you would rather receive a copy by post, contact us.