Redundancy Frequently Asked Questions


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Redundancy Frequently Asked Questions

We have compiled a series of frequently asked questions in relating to retirement from the LGPS on Redundancy or Business Efficiency grounds.

What happens to my pension if I am made redundant?

If your employer makes you redundant or retires you in the interests of business efficiency and you are aged 55 or over and have at least two years of scheme membership, your benefits are payable immediately without reduction.

What happens if I am made redundant but under the age of 55?

If you are under the age of 55 at the point of being made redundant then unfortunately your pension cannot be released at this stage. Instead your pension is deferred for you within the Fund and can be released from age 55 at the earliest but with an actuarial reduction applied if claimed before your Normal Pension Age (NPA).

Will my pension be enhanced in any way?

Your pension is not automatically enhanced if you are made redundant. However at their discretion, your employer can award an additional amount of pension to improve your retirement benefits. Your employer is required to produce and publish a statement of policy setting out how it intends to use this and other discretions available to it under the Scheme regulations.

Will my pension be reduced?

If you are made redundant your pension benefits will be calculated up to your date of redundancy and released to you without an early retirement percentage reduction being applied. Please note the benefits will not automatically be made up to the value at your Normal Pension Age.

How do I obtain a redundancy quotation?

If you would like an estimate of your pension entitlement assuming you were to be made redundant please contact your employer directly. Unfortunately we are unable to provide redundancy figures directly to scheme members but your employer can request such an estimate on your behalf.

How do I claim my pension if I am made redundant?

If you are aged 55 or over at the point that you are made redundant then your employer's payroll department will contact us directly with confirmation of your leaving details. Once this is received we will calculate your pension entitlement and contact you to arrange payment or your benefits.

Can I defer payment of my redundancy pension until a later date?

No, we are obliged to pay your pension to you at the point you are made redundant.

When will my redundancy pension commence?

Your redundancy pension will be payable from the day after your employment ceases. Your pension is then payable to you for your lifetime on the last working day of every month.

Am I entitled to a lump sum from the pension fund if I am made redundant?

If you have built up membership prior to 1 April 2008 you will be entitled to an automatic tax-free lump sum from the pension fund. If you joined the LGPS after 1 April 2008 you will not be entitled to an automatic lump sum, however, you will have the option of converting some of your annual pension to purchase a lump sum.

Will I still be entitled to my pension if I take voluntary redundancy?

Yes, if you retire through forced redundancy or voluntary redundancy then you will automatically be entitled to your pension if you are aged 55 or over and have at least two years membership of the Scheme.

If I am in receipt of my redundancy pension what happens if I become re-employed?

If you become re-employed your pension will be unaffected. We will continue to pay your pension in the normal way.

Can I still convert part of my annual pension to purchase additional tax-free cash?

Yes, if you are made redundant you will still be able to convert part of your annual pension into additional tax-free cash. You are allowed to exchange £1 of annual pension for an additional £12 tax-free cash up to a maximum of 25% of the capital value of your total 'pension pot'. You will be provided with details of how this option applies to you before your benefits come into payment, as you will need to decide if you wish to convert any part of your pension into additional tax-free cash before that time.