Early retirement
Voluntary retirement from age 55 and before Normal Pension Age (NPA)
If you leave your employment, you are aged 55 or over and have at least 2 years of LGPS membership you have a right to apply for the release of your pension benefits without the need for your employer's consent.
Please note: payment will be made subject to a reduction to reflect early payment of your benefits before your NPA. Your NPA is linked to your State Pension Age (SPA) with a minimum age of 65.
Important: If you are intending to retire and claim your pension before your Normal Pension Age, a minimum three-month notice period is required by the pension team. Please email your notice to info@berkshirepensions.org.uk
If you are claiming your pension from your NPA we do not require a separate period of notice. We will automatically contact you on receipt of your leaving details from your employer.
Redundancy
If you are made redundant, are aged 55 or over and have at least 2 years LGPS membership of the Scheme you will become entitled to the immediate payment of your LGPS benefits.
For more information on redundancy retirement please visit our Redundancy- FAQs section.
Business Efficiency
This is a term used when it is efficient for your employer (they make savings) to retire you early. This may be as a result of a re-structuring exercise or job evaluation exercise for example. If you are aged 55 or over and have at least 2 years membership of the Scheme, you will be entitled to the immediate payment of your LGPS benefits.
Your benefits will not be reduced if you are retired early on efficiency grounds.
Please note: In a redundancy/business efficiency situation your pension is calculated to your date of leaving and released with immediate effect without any actuarial reduction. Your benefits are not enhanced automatically to your Normal Pension Age (NPA). At their discretion, your employer can award you additional annual pension. This is a discretion your employer can use if they so wish subject to their published policy statement.
Rule of 85 and drawing your pension voluntarily on or after age 55 and before age 60
If you have any 85-year rule protection and it is your intention to retire and claim your pension from the age of 55 but before the age of 60 protection does not automatically apply.
In order for protection to be applied in these circumstances your employer can exercise their discretion and 'switch' the 85-year rule on. 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.
Rule of 85 and drawing your pension voluntarily after age 60
If you are retiring voluntarily from age 60 onwards any 85-year rule protection you have will automatically be applied to your pension benefits.
85-year rule protection is not applicable if you are retired on redundancy, efficiency or ill-health grounds.
Benefit reduction table for early retirement
If you claim your pension from age 55 onwards, before you have reached your Normal Pension Age an actuarial reduction to your benefits will be applied to reflect the early payment of your pension. The reductions are applied in line with the following percentages supplied to us by the Government Actuary's Department (GAD). The reductions below came info force from 3 July 2023. The table below displays the reduction percentages in whole years, but any reduction applied to your pension benefits will be calculated based on your exact date of leaving the pension scheme.
| Number of Years 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 |
Please note: You cannot take your benefits built up to 1 April 2014 separately from the benefits you build up from 1 April 2014. All your pension would have to be drawn at the same time (except in the case of partial Flexible Retirement).
A note about AVCs
If it is your intention to claim your AVC at the point you retire you may wish to consider ceasing your AVC contributions approximately two months beforehand in order to allow time for your AVC benefits to be calculated and released to you in a timely manner. If you have an AVC Fund and you would like details of the current value please contact Prudential directly on 0345 6000343.
If you are unclear about when your benefits are payable or the amount of reduction that may apply please contact the pensions team directly on 01628 796 668 or email info@berkshirepensions.org.uk