When you retire from the Local Government Pension Scheme (LGPS), you can look forward to receiving a pension for your lifetime, that will increase annually in line with the Consumer Price Index (CPI). You will also have the option to exchange some of your pension to receive tax free cash (subject to HMRC limits).
You have the flexibility to retire and draw your benefits from age 55 to 75, however, benefits can become payable on ill health grounds at any age.
Your Normal Pension Age (NPA) is linked to your State Pension Age (SPA), which means that any increase in your SPA will reflect in your NPA.
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Early Retirement
If you have been a member of the Local Government Pension Scheme (LGPS) for at least 2 years or have transferred previous pension rights into the scheme, you can elect to retire and receive the payment of your pension benefits at any time from age 55.
However, if you wish to receive the payment of your benefits before your Normal Pension Age (NPA), other than on the grounds of ill health, your benefits will more than likely be actuarially reduced to take account of the early payment.
The reduction to be applied is determined by many factors and is calculated in accordance with guidance issued by the Government Actuary's Department (GAD). As a guideline, the percentage reductions are shown in the table below. Where the number of years is not exact, the reduction percentages are adjusted accordingly.
| Number of Years
Before your NPA |
Reduction to your Annual Pension |
Reduction to your Automatic Lump Sum (if applicable) |
| 0 |
0% |
0% |
| 1 |
5.1% |
2.3% |
| 2 |
9.9% |
4.6% |
| 3 |
14.3% |
6.9% |
| 4 |
18.4% |
9.1% |
| 5 |
22.2% |
11.2% |
| 6 |
25.7% |
13.3% |
| 7 |
29.0% |
15.3% |
| 8 |
32.1% |
17.3% |
| 9 |
35.0% |
19.2% |
| 10 |
37.7% |
21.1% |
| 11 |
41.6% |
21.1% |
| 12 |
44.0% |
21.1% |
| 13 |
46.3% |
21.1% |
Please note
If you wish to retire from age 55 to 60, your Employer will have the discretion as to whether to apply any 85 Year Rule protection that may be applicable to your circumstances.
If you are age 55 or over and you are made redundant or your employment is terminated on the grounds of Business Efficiency, your pension benefits will become payable immediately and will NOT be actuarially reduced.
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Flexible Retirement
If you have been a member of the Local Government Pension Scheme (LGPS) for at least 2 years or have transferred previous pension rights into the scheme, you may wish to consider the possibility of Flexible Retirement.
From age 55 and with your Employer's consent, you are able to either reduce your hours or move to a position with less responsibility, and subsequently draw some or all of your pension benefits, whilst continuing to work. You can then continue to pay into the LGPS under your new contract of employment, building up further benefits in the scheme.
However, if your benefits become payable before your Normal Pension Age (NPA), they may suffer an actuarial reduction to take account of early payment. For further information on this matter, please refer to the Early Retirement section.
Please note
As this option is at the discretion of your Employer, please be advised to refer to their policy on this matter.
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Ill Health Retirement
If you have to leave your employment for health reasons, you may be entitled to the immediate payment of your pension benefits (which may even be subject to an enhancement), with NO actuarial reduction.
If you have been a member of the Local Government Pension Scheme (LGPS) for at least 2 years or if you have transferred previous pension rights into the scheme, you may become entitled to the immediate payment of your benefits if an Independent Registered Medical Practitioner (IRMP) appointed by your Employer certifies that:
- you are permanently incapable of undertaking the duties of your employment; and
- you are not immediately capable of undertaking gainful employment* before your Normal Pension Age.
*gainful employment is defined as 'paid employment for not less than 30 hours per week for a period of not less than 12 months.'
For further information on the '3 Tier' Ill Health arrangement, please contact the Dyfed Pension Fund.
Please note
The ill health retirement process is entirely driven by your Employer. If you believe this to be applicable to your circumstances, please contact your Employer.
If you have previously received a Tier 1 or Tier 2 award from the LGPS, or have been awarded an LGPS ill-health pension before 1 April 2008, any enhancement may be capped or may not even apply if you are to retire again for reasons of ill-health.
Please note
In order to qualify for benefits under the LGPS, you must have been a member of the scheme for at least 2 years or have transferred previous pension rights into the scheme.
If you choose to retire before your NPA, your pension benefits may be actuarially reduced to take account of early payment. Alternatively, if your benefits are paid later than your NPA, they will be actuarially increased to reflect late payment.
If you wish to retire from age 55 to 60, your Employer will have the discretion as to whether to apply any 85 Year Rule protection that may be applicable to your circumstances. For further information on the 85 Year Rule, please contact the Dyfed Pension Fund.
If your benefits become payable on the grounds of Redundancy or because of Business Efficiency, there will be NO actuarial reduction.
