Retirement from the Local Government Pension Scheme (LGPS) can be a big step and it can be difficult to know if you are ready to retire. Flexible retirement gives you the option to move gradually into retirement by reducing your hours or moving to a lower grade.
What is Flexible Retirement?
With the agreement of your Employer, you can take the pension benefits you have built up so far, and continue to work for the same Employer, but working reduced hours or in a lower grade.
What is the criteria for Flexible Retirement?
You can only apply for Flexible Retirement if you:
- Are aged 55 or over.
- Have 2 years or more membership in the scheme or transferred in pension benefits from another scheme. If you joined the scheme on or before 31 March 2014, you only need 3 months membership to qualify.
- Have Employer’s consent to reduce your working hours or grade and retire under flexible retirement rules.
What is meant by Employer Consent?
Scheme regulations state that all Employers should have a policy confirming if they will consider applications for Flexible Retirement. The Employer must consider each request and the impact on service delivery and any potential costs involved, before making a decision.
To find out more about your Employer’s policy, please contact your Employer.
What benefits will be payable if I take Flexible Retirement?
- You will receive your annual pension; plus
- You have the option to exchange part of your pension for a tax-free lump sum (this process is known as Commutation).
If you became a member of the LGPS on or before 31 March 2008, you would be entitled to an automatic tax-free lump sum as part of the benefits you built up to this date.
To find out more about your options upon retirement, please refer to the Commutation factsheet.
Will my pension be reduced if I retire before Normal Pension Age (NPA)?
Your NPA under the Scheme is linked to your State Pension Age, with a minimum age of 65. However, the earliest you can retire is age 55.
*The Government has announced that the normal minimum pension age will increase to age 57 from 6 April 2028.
If you agree to have your benefits paid before your NPA, there will be a reduction to take account of the early payment.
However, if you joined the Scheme on or before 30 September 2006 and were granted Flexible Retirement between the ages of 55 and 60, you will be entitled to the protection of the 85 Year Rule. This means that the benefits that you have built up before 01 April 2008 will not be reduced for early payment
If you joined the Scheme on or after 1 October 2006, the 85 Year Rule will not apply, and your benefits will be reduced for early payment. However, the closer you are to your NPA when you retire, the lower the reduction will be to your benefits.
Your Employer has the discretion to decide whether they apply the 85 Year Rule from age 55 to 60. You will need to contact them to find out their policy on this matter.
If you would like to find out more about the 85 Year Rule and the reductions that may apply, please refer to the 85 Year Rule factsheet.
Will I still be able to contribute to the Scheme?
Once you have taken payment of your retirement benefits, you will be able to re-join the LGPS and start building up further pension benefits.
However, if the 85 Year Rule applied to your current period of membership, it will not apply to any new pension benefits you build up in the future.
Reminder
If the State Pension Age changes in the future, remember your NPA in the LGPS will also change.
Reductions
If your employer decides not to meet the cost of the reduction, your benefits will be reduced as follows:
| Years paid early | Pension reduction % | Lump sum reduction% |
| 0 | 0 | 0 |
| 1 | 4.9 | 1.7 |
| 2 | 9.3 | 3.3 |
| 3 | 13.5 | 4.9 |
| 4 | 17.4 | 6.5 |
| 5 | 20.9 | 8.1 |
| 6 | 24.3 | 9.6 |
| 7 | 27.4 | 11.1 |
| 8 | 30.3 | 12.6 |
| 9 | 33.0 | 14.1 |
| 10 | 35.6 | 15.5 |
| 11 | 39.5 | n/a |
| 12 | 41.8 | n/a |
| 13 | 43.9 | n/a |
