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Retirements

This section explains retirement options for pension scheme members, including early, normal, late, and ill-health retirements. It outlines the eligibility criteria, processes, and potential costs associated with each type of retirement, emphasizing the importance of obtaining estimates before making decisions. The page also covers employer-led retirements, flexible retirement options, and special provisions such as waiving reductions.

Member led retirements and ill health

Members can retire from the age of 55 with immediate payment of benefits if they have at least two years’ membership. They don’t need your consent but should always ask you for an estimate before deciding to leave. For long-term pension planning, members should refer to their yearly pension statement, which shows benefits at age 55, 60, 65 and normal pension age. When a member is seriously considering retiring within the next six months we tell them to ask you for an estimate so you can give us accurate pay figures. Members can only request an estimate if it is for age retirement between ages 55 and 75. If a member wants an estimate for any other reason, like ill health, you must request this from us.

Note – deferred member: If the member has already left and has been awarded deferred benefits, the early release of their benefits depends on their date of leaving. Further details can be found in the leavers section of the administration guide.

Normal retirement is when a member draws their benefits at the scheme's normal pension age (NPA). For the current CARE scheme this is a members State Pension Age. 

Members with final salary membership with a NPA of 65 receive an increase to that part of their benefits if retiring later than 65.

Members who work beyond their NPA will have their pension enhanced. That enhancement will be calculated in accordance with GAD factors.

Ill health retirement is an employers decision, although an opinion must be sought from an Independent Registered Medical Practitioner (IRMP) it is the employers responsibility to ensure that the IRMP has answered all of the questions and that the opinion of the IRMP is consistent with all of the evidence available.

LGA have provided a guide for employer’s and IRMP’s

To qualify for an ill-health pension under LGPS2014, members must

  • have their employment terminated by their employer because of ill health or infirmity of mind or body
  • be under their LGPS2014 NPA at the date of termination, and
  • have at least two years’ membership at the date of termination.

Before you decide whether a member should have a tier 1, 2 or 3 ill-health pension, you must get a certificate from an IRMP who has not previously advised on, given an opinion on or been involved in assessing the member. The IRMP must be from our approved panel of doctors. The list of approved doctors can be found here.

You should use the IRMP’s opinion and any medical reports available to make your decision whether the member is eligible.

You can get an estimate of the member’s benefits by filling in the Estimate Request on the employer portal. There is a cost to you for ill health retirement but this is recovered through your employer contribution rate and is not an upfront cost.

You need to make an appointment for the member to see the IRMP. The IRMP fills in the ill health certificate - RTM once they have seen the member and returns it to you. If they meet the criteria for ill health retirement the form will indicate which tier in the IRMP’s opinion a member is eligible to be.

Note – ill health retirement: If the IRMP has assessed that they do not meet the criteria for ill health retirement the member does not access their pension benefits but may dispute the decision made through the Internal Dispute Resolution Procedure (IDRP).

Members must satisfy two conditions for ill-health retirement. The pension scheme regulations set out these conditions as follows.

  1. The member is, as a result of ill-health or infirmity of mind or body, permanently incapable of discharging efficiently the duties of the employment the member was engaged in
  2. The member, as a result of ill-health or infirmity of mind or body, is not immediately capable of undertaking any gainful employment, i.e. paid employment for not less than 30 hours per week for a period of not less than 12 months

Assuming the member meets these conditions, the IRMP decides the tier as follows:

  • Tier 1 for members unlikely to be capable of undertaking gainful employment before NPA
  • Tier 2 for members (a) not entitled to tier 1 benefits and (b) unlikely to be capable of undertaking any gainful employment within three years of leaving that employment, but (c) likely to be able to undertake gainful employment before they reach NPA
  • Tier 3 for members who are likely to be capable of undertaking gainful employment within three years of leaving that employment, or before NPA if this is earlier

If the IRMP ticks the box on the ill-health certificate (RTM) to say the member’s hours were reduced because of their medical condition, adjust the APP to take the reduction in hours into account and make it up to the value based on the original hours.

The enhancements for ill-health retirement in LGPS2014 are as follows:

  • Tier 1 we adjust the members’ pension accounts by adding the equivalent of the pension the member would have built up between the day following the date of termination and their NPA, or 1/49th of APP for each year and fraction of a year in that period. It doesn’t matter if the member is in the main or 50/50 section at the time
  • Tier 2 we adjust members’ pension accounts by adding 25% of the tier 1 adjustment as above.
    Complete the Retirement Notification before the member is due to retire. We also need the RTM form which can be posted to us or scanned across to us in an e-mail.

Assumed Pensionable Pay

The enhancement for tier 1 or tier 2 ill health retirements is calculated by using the APP. Calculate APP using the average of the pensionable pay for the 12 weekly (or 3 monthly) complete pay periods before the leaving date. Don’t include lump sums but do include any APP already credited for those 12 weeks or 3 months. ‘Gross up’ the 12 week or 3 month figure to an annual figure. You can add back into the APP any lump sums paid in the 12 months before the leaving date if you’re likely to pay that kind of payment regularly.

Note - APP: your calculation can include pensionable pay paid before 1 April 2014, in other words when the 12 weeks or 3 months goes back to before 1 April 2014. The pre 1 April 2014 pay to include is pensionable pay as defined under LGPS2008. If you don’t have 12 complete weeks (or 3 complete months) use the complete periods you do have.

Note – ill health APP: if the pensionable pay the member received was reduced as a result of absence due to strike or authorised absence, the reduction is to be ignored for the purposes of calculating the member's assumed pensionable pay.If the IRMP certifies that the member worked reduced contractual hours during the relevant 12 weekly or 3 monthly pay periods because of their ill health, calculate the APP figure on the pay the member would have received during the relevant pay periods if they hadn’t been working reduced hours.

Tier 3

Members who get a tier 3 ill-health pension

  • don’t get enhanced benefits, just the pension they’ve built up
  • must tell you if they get another job while they’re getting the tier 3 pension, and
  • will have their tier 3 pension stopped if you decide they are in gainful employment of 30 hours or more a week for at least 12 months

You have to review a tier 3 pension when the member has been getting it for 18 months, and get a certificate from an IRMP (who can be the same IRMP who signed the original certificate) that says if the member is likely to be capable of undertaking gainful employment – and when.

When you’ve done this, you can

  • stop the pension
  • continue it for up to a total period of three years or to the member’s NPA, or
  • award a tier 2 ill-health pension if you are satisfied that the member is permanently incapable of discharging efficiently the duties of the employment the member did for you and is either unlikely to be capable of undertaking gainful employment before their NPA, unlikely to be capable of undertaking gainful employment within three years of leaving, but likely to be able to undertake such employment before reaching their NPA.

Note - tier 3 pensions: tier 3 ill health benefits awarded under LGPS2008 still come under the 2008 scheme regulations.

At any time while a member is getting a tier 3 ill-health pension, they can ask you to consider changing it to a tier 2 ill-health pension. You can do this if you are satisfied – and get a further certificate from an IRMP (who can be the same IRMP who signed the original certificate) – that the member is permanently incapable of discharging efficiently the duties of the employment the member had with you, and is either

  • unlikely to be capable of undertaking gainful employment before their NPA, or
  • unlikely to be capable of undertaking gainful employment within three years of leaving but likely to be able to undertake such employment before reaching their NPA.

When members stop getting a tier 3 ill-health pension they become a deferred member and will get their deferred pension when they reach NPA unless

  • they defer payment to a date no later than their 75th birthday (payable at an increased rate on account of the delayed payment), or
  • they take reduced pension benefits on or after age 55 and before their NPA, or
  • you move them to tier 2 within 3 years of their tier 3 pension ending.

You can move them to tier 2, if you are satisfied – and get a further certificate from an IRMP (who can be the same IRMP who signed the original certificate) – that the member is permanently incapable of discharging efficiently the duties of the employment the member had with you, and is either

  • unlikely to be capable of undertaking gainful employment before their NPA, or
  • unlikely to be capable of undertaking gainful employment within three years of leaving but likely to be able to undertake such employment before reaching their NPA.

Note - tier 3 pensions: you can’t award a tier 3 pension if the member was previously awarded one under LGPS2008 or LGPS2014. In this case they will get deferred benefits, but they can apply to you to have them paid without enhancement. Before agreeing to this you must get a medical certificate from an IRMP to say whether the member is suffering from a condition that renders them permanently incapable, because of ill health or infirmity of mind or body, of discharging efficiently the duties of the job they did before, and as a result of that condition, is unlikely to be capable of undertaking gainful employment before reaching their NPA, or for at least three years whichever comes first.

Employer led retirements

Members with fixed-term contracts who are 55 or over when the contract ends, and have at least two years' membership, can take their pension benefits straightaway.

When the fixed-term contract ends send us the Retirement Notification before the member is due to retire showing the retirement reason as `age'.

Members who are made redundant (voluntarily or compulsorily) or retire on business efficiency grounds, who are age 55 or over and have at least two years’ membership, can take their pension benefits straightaway. These are unreduced benefits so there’ll be a cost to you for the retirement.

You can get an estimate of this cost (and the member’s own benefits) by filling in the Estimate Request on the employer portal.

Once the date of the retirement has been agreed send us the Retirement Notification before the member leaves. We’ll invoice you for the early retirement cost after the member retires.

Members who reduce their hours or grade of employment may with employers consent flexibly retire and receive immediate payment of their pension if they are 55 or over and have at least two years’ membership.

Members who choose flexible retirement will get a pension from

  • all their pre 1 April 2008 membership, plus
  • some, all or none of their membership between 1 April 2008 and 31 March 2014, plus
  • some, all or none of their membership after 31 March 2014.

There may be a cost to you for this. You can get an estimate of the cost (and the member’s own benefits) by filling in the Estimate Request on the employer portal.

Once you have agreed to the flexible retirement, complete the Retirement Notification before the member is due to retire. If there’s an early retirement cost, we’ll invoice you after the member retires.

Waiving reductions and protections

If members decide to take their pension benefits at or after age 55, but before age 60, you decide if the 85 year rule applies or not. If you allow it, the member’s benefits will be reduced.

You can waive all or some of the reduction, for any reason and at your expense, for members’ post 31 March 2014 benefits. Members can only get pre 1 April 2014 benefits unreduced on compassionate grounds.

Originally the underpin was an extra payment for some members who would have been better off (depending on certain criteria – see below) if they had been able to stay in LGPS2008 from 1 April 2014 to the underpin date (NPA in LGPS2008) or the date they left active membership if that’s earlier.

Members benefit from the underpin if they:

  • were an active member on 31 March 2012
  • were 10 years or less from normal retirement age (NRA) under on 1 April 2012
  • were an active member immediately before the underpin date and paid under LGPS2014 on or after the underpin date
  • don’t have a disqualifying break in service, and
  • have taken no pension benefits under the 2013 regulations before the underpin date.

The underpin date is the earlier of:

  • the date the member reached NRA under LGPS2008, or
  • the date they stopped being an LGPS2014 active member with immediate entitlement to pension.

Age Discrimination 'McCloud'

Since the 2014 scheme was introduced the underpin has been further changed following a legal challenge. You can read more about this here.