If you left the LGPS on or after 1 April 1998
Your deferred pension benefits are normally payable in full at your Normal Pension Age in the LGPS. From 1 April 2014 your Normal Pension Age is linked to your State Pension Age (but with a minimum of age 65). The Normal Pension Age for benefits built up before 1 April 2014 is age 65 (in almost all cases). You do not have to take your deferred pension benefit at your Normal Pension Age, you can take it at any time between the ages of 55 and 75; it can also be paid from any age if you suffer permanent ill health.
However, if your pension is not in payment at age 60 (women) / 65 (men), the Guaranteed Minimum Pension (GMP) element (if any) of your pension may have to be paid from that date - this will depend on when you left the scheme and if you are still in employment.
If you left the LGPS before 1 April 1998
Your deferred pension benefits are normally payable in full at your Normal Retirement Date (NRD). Your Normal Retirement Date is different to the Normal Pension Age for members who left on or after 1 April 1998. Your Normal Retirement Date is:
- age 60, if by that age you would have built up 25 years membership if you had remained in the scheme until then, or
- the date you would have achieved 25 years membership if you had remained in the scheme, if that date falls between your 60th and 65th birthday, or
- age 65 if, by that age, you would not have had built up 25 years membership if you had remained in the scheme until then.
You do not have an option to defer payment of your benefits beyond your Normal Retirement Date i.e. you have to take payment of your benefits at that date if they are not already in payment.
You have the option of taking your deferred pension benefit early from age 55 and it can be paid from any age if you suffer permanent ill health.
If you left the LGPS on or after 1 April 1998
Your deferred benefits are payable in full from your Normal Pension Age in the LGPS. You do not have to take your deferred benefits at your Normal Pension Age, you can take them at any time between age 55 and 75. If you were a member of the Scheme before and after 1 April 2014, the benefits built up before 1 April 2014 will have a protected Normal Pension Age – usually age 65.
Choosing to take your deferred benefits early
You can choose to take your deferred benefits from age 55 onwards. You do not need your former employer’s consent to take your pension early. See the LGPS member site to find out the early retirement reductions.
If you were a member of the LGPS at any time between 1 April 1998 and 30 September 2006, some or all of your benefits could be paid in full before age 65 if you are protected by the 85-year rule. Find out more about the 85-year rule in the section above.
Taking your deferred benefits from your Normal Pension Age
If you do not take your deferred benefits early, they will normally be paid from your Normal Pension Age. You can choose to delay payment beyond that age.
If you take your deferred benefits after your Normal Pension Age your pension benefits will be increased. You must take your deferred benefits by age 75.
If you have a Guaranteed Minimum Pension, it may not always be possible to delay payment of your whole pension, however you can contact us for more information on this.
Taking your deferred pension if you are too ill to work
If you are too ill to work, you can ask for your deferred pension to be paid immediately, whatever your age.
Your former employer will need to consider if you are permanently unable to do your old job because of your ill health. If you left the LGPS after 31 March 2008, they would also need to consider whether you are able to undertake any gainful employment in the next three years.
Gainful employment is paid employment of at least 30 hours per week that lasts for a year or more.
If your application is successful, your deferred benefits would be paid to you immediately. Your benefits would not be reduced for early payment.
If you left the LGPS before 1 April 1998
Your deferred pension benefits are normally payable in full at your Normal Pension Age. Your Normal Pension Age is:
- age 60, if you would have built up 25 years membership if you had remained in the scheme until then, or
- the date you would have built up 25 years membership if you had remained in the scheme, if that date falls between your 60th and 65th birthday, or
- age 65 if, by that age, you would not have built up 25 years membership if you had remained in the scheme until then.
You must take your benefits from your Normal Pension Age if they are not already in payment.
Early payment of deferred benefits at your request
You can choose to take payment of your deferred benefits from age 55. You do not need your former employer’s consent to take your pension early. See the LGPS member site to find out the early retirement reductions.
Early payment of deferred benefits on compassionate grounds
You can ask your former employer to pay your benefits early on compassionate grounds. If your former employer agrees, your benefits will not be reduced for early payment. This is a discretion and you can ask your employer what their policy on this is.
Early payment of deferred benefits due to permanent ill health
You can apply for payment of your deferred benefits because of your health at any age. Your former employer would need to consider whether you are permanently incapable of doing the job you were working in when you left the LGPS. If your application is successful, your pension benefits will be paid immediately and would not be reduced for early payment.
If you are deferred member considering retirement, here is an example of the typical retirement process:
Step 1 - Check your pension statement
You can review your deferred benefit statement using your Pensions Portal account. If you are retiring earlier than your normal pension age, your benefits will be reduced. To access the early retirement reductions before applying to access your pension, please visit LGPS Reductions
Step 2 - Apply to access your pension
We will write to you or email you around your eligible payment date detailing your deferred retirement options. If you want to access your deferred retirement benefits anytime from age 55 to age 60, please contact us for a retirement application pack. If there is a reason why we are unable to provide your retirement options, you will be notified accordingly.
Step 3 - Reply
If you wish to proceed, please send back your forms together with any other documents requested as soon as possible after receipt. Photocopies of certificates are acceptable.
Step 4 - Payment
You will receive a letter confirming the date of payment of your lump sum and when the payment of your pension will commence. Your LGPS pension is a taxable income, but any lump sum is paid tax free. The amount of tax that you pay on your pension depends on your income and your personal circumstances. Your first pension payment will be subject to a 0T tax code unless we have received a P45 with your forms, this means that you will be taxed at 20% or 40% dependent on the gross amount paid. The HM Revenue and Customs Tax Office will then determine your tax code and send details to us electronically, which will then generate a tax refund if applicable on the next payment made to you. You will also receive a pension advice slip prior to your first pension payment.
Please return only one set of forms, and ensure that all details are thoroughly checked before returning your forms to us.
We are moving towards a more digital way of working, and as a result you may receive a copy of your retirement forms by email in addition to your paper copy.
You can complete and sign these forms electronically, and this will be accepted as long as the required identification is also provided.
We have set out some instructions to how you can enter an electronic signature below:
- Write your signature on a white piece of paper.
- Scan the page and save it on your computer in a common file format: .bmp, .gif, .jpg, or .png. If you do not have a scanner available, take a close-up picture of the signature with a smartphone and send the image to your email address.
- On your PC/laptop find the scanned image or find the emailed image in your inbox (check your junk folder) and save it on your computer in a common file format: .bmp, .gif, .jpg, or .png.
- To insert and add your signature to the forms click insert and then locate the file where you saved your signature and double left click.
Your LGPS benefits are made up of:
- A pension that, after leaving, increases every year in line with the cost of living for the rest of your life, and
- The option to exchange part of your pension for a tax-free lump sum that is paid when you draw your pension benefits
In addition, if you were a member of the LGPS before 1 April 2008 you will also have built up an automatic lump sum - see How your pension is calculated section for more information.
When you draw your pension benefits you will have the option to exchange part of your pension for lump sum, within certain limits set by HM Revenue and Customs. For every £1 of pension you exchange you will be provided with £12 of tax free lump sum.
If you elect to exchange pension for lump sum your pension will be reduced accordingly. Any subsequent pension for your spouse, civil partner, eligible cohabiting partner or eligible children will not be affected.
If you have a Guaranteed Minimum Pension (GMP), you may not reduce your pension to below the level of your GMP.
To get an idea of how much lump sum you may be able to take on retirement, check your deferred benefit statement using the Pensions Portal and use these details in the Lump Sum Calculator. If you are retiring earlier than your normal pension age, your benefits will be reduced. Here are details of the early retirement reductions so that you can apply these to your deferred benefits before using the calculator.
You can apply for payment of your deferred benefits at any age without reduction if, due to your health, you would be permanently incapable of the job you were working in when you left the LGPS. If you left the LGPS after 31 March 2008, there is a further requirement that you are unlikely to be capable of undertaking any gainful employment within 3 years of applying for the benefit or by your Normal Pension Age, whichever is the earlier. In this context gainful employment means paid employment for not less than 30 hours in each week for a period of not less than 12 months.
For more information on accessing your deferred pension early, please visit the following links:
Have you started thinking about retirement, or is there too much to think about? How much will your pension be? Can you afford to access your deferred pension?
Most of us spend more time planning for a two-week holiday than the biggest holiday of our lifetime - retirement!
Whatever your retirement looks like, the West Midlands Pension Fund is here to help you. We have produced some useful links and guides to ensure you can successfully plan for your future.
To find out how much your pension is or to calculate estimates, you will need to log onto the Pensions Portal.
Why not take the 5 steps to being Pension Smart?
Do you know how much State Pension you are entitled to? Please check your forecast.
Your LGPS pension is one of the most valuable asset you have, so when planning, prepare but beware of scammers who may try to get their hands on your hard earned benefit. For tips how to spot the signs and avoid a scam, please visit The Pension Regulator's.
When preparing for retirement, it is always helpful to produce a budget planner, for tips and advice and help on budgeting for the future please visit Citizen Advice.
The LGPS Member website has all the information about you need to know about the rules and regulations of the scheme.