Retirement

When you retire, you can look forward to receiving a pension that increases every year in line with the cost of living, for the rest of your life.  You are also able to give up some of your pension to receive tax free cash.

There is scope to retire voluntarily and draw your benefits from as young as age 55, right up to age 65 and even beyond. In cases of ill health, there is no age limit at all.

• Early Retirement

  If you have at least 3 months total membership you can, upon retirement from office at any time on or after age 55, elect in writing to your Council to receive your Local Government Pension Scheme (LGPS) benefits.

  Also, upon retirement from office between ages of 50 and 55 you may elect to receive your LGPS benefits, but only if your Council gives their consent. This is a Council discretion and under the LGPS your Council's policy with regard to this must be included in their Policy Statement.

  Will my pension and lump sum be reduced if I retire early?

  If you join the LGPS after 30 September 2006 and retire before age 65, your pension and lump sum will be reduced. The reduction is calculated in accordance with guidance issued by the Government Actuary Department (GAD). As a guide, the percentage reductions for early retirement are shown in the table below. Where the number of years is not exact, the reduction percentages are adjusted accordingly.

  Number of Years Paid Early to your NPA	The Pension Reduction for Men	The Pension Reduction for Women	The Reduction to the Automatic Lump Sum for both Men & Women
  0	0%	0%	0%
  1	5.6%	5.2%	2.9%
  2	10.8%	10.1%	5.7%
  3	15.5%	14.6%	8.5%
  4	20.0%	18.8%	11.2%
  5	24.0%	22.7%	13.7%
  6	27.8%	26.4%	16.3%
  7	31.4%	29.8%	18.7%
  8	34.7%	33.0%	21.1%
  9	37.7%	36.1%	23.4%
  10	40.6%	38.9%	25.6%
  11	44.2%	42.2%	Not Applicable
  12	47.6%	45.5%	Not Applicable
  13	50.9%	48.6%	Not Applicable

  If you were contributing to the Scheme on 30 September 2006, some or all of your benefits if paid early could be protected from reduction if you are a protected member. For further information, please contact the Dyfed Pension Fund.

• Normal Retirement

  You can retire and receive your Local Government Pension Scheme (LGPS) benefits in full once you have attained age 65. The Scheme also makes provisions for the payment of your LGPS benefits if you take early retirement or have to retire early on the grounds of ill health.

  You are able to retire voluntarily from age 55, but your retirement benefits will be subject to an actuarial reduction to take account of the early payment.

  The reductions applied to the early payment of retirement benefits can be seen in the table below:

  Number of Years Paid Early to your NPA	The Pension Reduction for Men	The Pension Reduction for Women	The Reduction to the Automatic Lump Sum for both Men & Women
  0	0%	0%	0%
  1	5.6%	5.2%	2.9%
  2	10.8%	10.1%	5.7%
  3	15.5%	14.6%	8.5%
  4	20.0%	18.8%	11.2%
  5	24.0%	22.7%	13.7%
  6	27.8%	26.4%	16.3%
  7	31.4%	29.8%	18.7%
  8	34.7%	33.0%	21.1%
  9	37.7%	36.1%	23.4%
  10	40.6%	38.9%	25.6%
  11	44.2%	42.2%	Not Applicable
  12	47.6%	45.5%	Not Applicable
  13	50.9%	48.6%	Not Applicable

   

• Late Retirement

  If you carry on in office after age 65 you will continue to pay into the Scheme, accruing further benefits. You can receive your pension when you retire, or when you reach the eve of your 75th birthday, whichever occurs first.

  If you draw your pension after age 65 it will be increased to reflect the fact that it will be paid for a shorter time.

  Your pension has to be paid before your 75th birthday, but you can continue in Office.

• Ill Health Retirement

  If you have at least 3 months total membership of the Local Government Pension Scheme (LGPS) and our approved Independent Registered Medical Practitioner certifies that you have become permanently unable (until your 65th birthday) to perform your role in office efficiently because of ill health or infirmity of mind or body, you will receive your pension and lump sum immediately. 

  How is an ill health pension and lump sum calculated?

  Your retirement benefits are calculated as normal, except that the total membership used in the calculation will be increased if your total membership, excluding any additional membership granted by your employer, is 5 years or more. The amount by which it will be increased is shown in the table below.

  Total Membership	Enhancement Awarded
  Less than 5 years	Actual Membership Only
  5 to 10 years	Membership Doubled
  10 to 13 years 122 days	Membership increased to 20 years
  13 years 123 days or more	Membership increased by 6 years 243 days

  What if I do not qualify for an ill health pension and lump sum?

  If you have less than 3 months total membership you will receive a refund of your contributions.

  Please Note

  Your increased membership, however, must not exceed the total membership you would have accrued had you continued in office until age 65.

  Your pension benefits will not be increased if you have previously been awarded an ill health pension under the Scheme.

  When, at the date of retirement, the Fund is satisfied that there is a life expectancy of less than a year, the Fund may commute the pension into a lump sum equal to 5 times the annual amount of pension given up.

  Ill health pensions are increased each year in line with the appropriate Cost of Living Index.

• Calculating your Benefits

  When you retire, you will receive a pension and a tax-free lump sum from the Local Government Pension Scheme (LGPS). At State Retirement Age you will also receive the basic flat rate State Retirement Pension if you have paid sufficient National Insurance contributions during your working life.

  How much will my pension be?

  Your pension is based on your total membership and your Career Average Pay. The example below shows how your pension is calculated by dividing your career average pay into 80ths and multiplying this figure by your total membership to give you your annual pension.

  How will my Career Average Pay be calculated?

  Your pension benefits are calculated by reference to a revalued average of your pensionable earnings assessed over your whole period of membership in the LGPS. The earnings are increased (other than the pay in the final year commencing 1 April) by the rise in the Consumer Price Index (CPI). The total of your revalued pay is then divided by your period of membership to calculate your career average pay.

  Example

  An elected member has been a member of the LGPS for 5 years.  His / her Career Average Pay is calculated as follows:

  Year 1:   Earnings £10,000  x  CPI  =  £10,250
  Year 2:   Earnings £10,500  x  CPI  =  £10,750
  Year 3:   Earnings £11,000  x  CPI  =  £11,250
  Year 4:   Earnings £11,500  x  CPI  =  £11,750
  Year 5:   Earnings £12,000  x  CPI  =  £12,250

  Total  £56,250

  £56,250  /  5 years  =  £11,250

  The Consumer Price Index (CPI) shows the changes in the cost of living.  It reflects the movement of prices covering a range of goods and services over time. The amount by which pensions are increased annually is based on the movement in the Consumer Price Index.

  How much will my lump sum be?

  The lump sum automatically paid on retirement is 3 times your annual pension and is tax-free. Like your pension, it is based on your Career Average Pay and your total membership. The calculation for the lump sum is 3/80ths of your Career Average Pay for every year of total membership.

• Exchanging your Pension

  Upon retirement, you will have the option to exchange some of your pension to receive a larger tax free lump sum. You will be able to take up to a maximum of 25% of the Capital Value of your pension benefits as a tax-free lump sum.
   
  Any amount you take as a lump sum above the automatic lump sum would be achieved by exchanging part of your annual pension for a one off tax free cash payment. For each £1 of annual pension given up you will receive £12 lump sum.

  As your election to commute should be made in writing to the Dyfed Pension Fund before your benefits are paid, it is important you contact us well in advance of your intended retirement date so that the Fund can provide you with further details about this option and the necessary paperwork.

  Your lump sum will be increased and your pension reduced in accordance with any commutation election you make. Any subsequent widow’s, widower’s, civil partner’s and children’s long term pensions will be calculated by reference to your pension before any reduction.