Taking my benefits
People retire and take benefits for different reasons and at different ages. Find out more about your options here.
If you are no longer paying in to the Pension Scheme then you may wish leave them in the scheme until retirement (Deferred benefits) or to transfer your benefits to another pension arrangement. You may wish to take independent financial advice before deciding to do so, given the importance of such a decision.
For more information on taking your benefits, some frequently asked questions are answered here.
When can I take my benefits?
Your normal pension age is linked to your state pension age (with a minimum of age 65). Your Normal Pension Age is the age from which you can retire and receive your pension in full.
You can check your Normal Pension age by looking up your current State Pension Age at www.gov.uk/calculate-state-pension.
You can also take your benefits before or after your normal pension age.
It is also possible to take your deferred benefits at any age on the grounds of ill health. But this must be approved by your former employer, and you will not be awarded any enhancement.
Before determining whether to agree to a request your old employer must obtain a certificate from an independent registered medical practitioner qualified in occupational health medicine. This must state that in their opinion you are permanently incapable of discharging efficiently the duties of your relevant employment because of ill-health or infirmity of mind or body and, if so, whether that condition is likely to prevent you from obtaining gainful employment (whether in local government or otherwise) before reaching your normal retirement age, or for at least three years, whichever is the sooner.
If you think payment of deferred benefits on the grounds of ill health could apply to you please contact your former employer.
Can I have my contributions back?
If you have less than 2 years Scheme membership and have not transferred pension rights in from another pension scheme you can apply to get a refund of your contributions.
Only your own contributions are refundable, those paid by your employer are not. There will be deductions to account for tax relief and, if applicable, National Insurance.
Can I transfer my benefits?
You may be able to transfer your benefits to another pension scheme as long as the new scheme is one approved by HMRC and is willing to accept the transfer.
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If you want to transfer your benefits you should tell your new scheme that you hold benefits within the LGPS.
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They will approach us for a transfer value and let you know what the benefits are worth in their scheme.
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Your new employer or pension scheme will then work with you over whether to go ahead with the transfer.
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If you decide that you want to go ahead with the transfer they will ask us to pay the transfer payment over to your new pension scheme.
Deciding to transfer your benefits is an important decision. You may wish to take independent financial advice.
Beware of pension scams
Should you decide to transfer your benefits, you should be aware of potential pension scams. Educating yourself and remaining vigilant are key to minimising the risk posed by pensions scams.
Listed here is a summary of the Financial Conduct Authority's (FCA) four key steps to protect your pension:
Step 1 – Reject unexpected offers
Scammers are often unknown contacts who will attempt to gain your trust through false claims. They will likely claim to be authorised by the FCA and will present you with unsolicited, attractive investment opportunities in an attempt to gain control of your pension pot. In other circumstance the money may be stolen outright. If an offer seems too good to be true, it likely is just that.
Step 2 – Check who you're dealing with
Remember that it isn’t usually possible to cash in your pension before the age of 55, except in cases of ill-health or where you have a protected retirement age that is below 55. Equally, you should be wary of offers for “free” pension reviews, “guaranteed” returns on pension investments or complicated, long term investments plans. FCA regulated advisors would never offer such services and opportunities. If you’re concerned about a potential scam you should report your suspicions to Action Fraud or the Financial Conduct Authority.
Step 3 – Don't be rushed or pressured
High pressure sales tactics are a common sign of a pensions scam. You should be wary of time limited offers to get the “best deal”. Be wary of promised returns that sound too good to be true and don’t be rushed or pressured into making a decision.
Step 4 – Get impartial information or advice
If you are deciding to transfer your benefits, consider consultation with an FCA regulated advisor before doing so. Those over 50 with a defined contribution pension, should consider booking an appointment with Pension Wise.
Can I take my benefits early?
You can take your benefits before your normal pension age but in some cases you may need your employer's permission and your benefits may be reduced.
Early retirement at your request
You can take your benefits from age 55. Your benefits may be subject to reduction to reflect the fact they are being paid earlier. Your employer can then decide if it wishes to waive any of these reductions. You will need to contact them to find out what their policy is.
If you choose to take your benefits before your normal pension age they may be reduced because they will be paid earlier and for longer than had you waited.
How much your benefits are reduced by depends on how long before your normal pension age you take your benefits.
Example
Stan is 64 when he decides to retire and take his benefits. His normal pension age is age 65.
His benefits are:
Pension = £4,000 a year
Lump sum = £11,500
As he is retiring 1 year early his benefits are reduced.
The benefits he will actually be paid are:
Pension = £3,796 a year (a 5.1% reduction)
Lump sum = £11,235.50 (a 2.3% reduction)
Can I take my benefits late?
You can choose to take your deferred benefits after your normal pension age but you must take them before you are 75.
If you take your benefits after your normal pension age, your benefits are increased because they are starting later than expected.
Can I take a lump sum?
When you retire, you can take part of your benefits as a lump sum, this is normally paid tax free.
If you were a member of the Scheme before 1 April 2008 you are automatically provided with a lump sum in respect of that membership. You can also decide to give up some of your pension for an additional lump sum.
If you joined or were a member after 1 April 2008 the Scheme no longer provides an automatic lump sum for this part of your membership, but you can give up some of your pension for a lump sum.
If you want to take a lump sum, or increase the size of your lump sum you have to give up £1 of pension to earn lump sum of £12.
You must tell us if you want to give up pension for lump sum before your benefits are paid.
Example
When Jane retires she has built up the following benefits:
Pension = £6,667 a year
If Jane wants to take a £20,000 lump sum she will need to give up £1,667 of her pension.
Lump sum ÷ 12 = amount of pension you need to give up.
Her benefits will be:
Pension = £5,000 a year
Lump sum = £20,004
Will my pension increase?
Your deferred benefits will be reviewed each year and kept in line with the cost of living, until they start to be paid.
Once it starts to be paid your pension will continue to be kept in line with the cost of living and we will also contact you each April with details of any changes.
How will my divorce impact my benefits?
You and your partner will need to consider how to treat your pension as part of any divorce/dissolution settlement.
Please contact us for more information.
Life cover
As a member of the Scheme you have valuable life cover, which is a lump sum paid on your death.
If you have previously nominated your husband, wife or civil partner to receive this, you may want to fill in a new nomination of beneficiary for death payment form (see 'Resources' section) to let us know of any changes.
Small pension and trivial commutation
Member's who hold only a small entitlement to pension benefits when they come to draw their pension have options in how the receive their benefits. Members who are eligible may elect to receive their benefits as a one-off payment called a 'trivial commutation'. To find out more please follow this link.