LGPS retiring before 65 penalties

bignorthernbloke

My wife is over 60 and legally can retire in the UK but the LGPS will take back some of her accrued pension if she retires before she is 65. The % reduction is at the decression of the employer but they are saying they will not excercise that option. It works out about 5% per annum for each year you retire before 65 on the pension and 2% on the lump sum.

Does anyone know if these pension rules can overide her right to retire in UK law and if the deductions could be challenged or indeed have been? It seems to me they have introduced the 65 year rule in advance of the change that is been phased in in the next few years.

Any info advice would be appreciated.

CAE

Retirement age in the LGPS has always been age 65, both for men and women. The state pension age is irrelevant. In some circumstances, if the member satisfies certain rules based on age and service, pension benefits can be taken before age 65 with an actuarial reduction, a maximum of 23% on a pension for ladies, and a maximum of 12% on the one off lump sum retirement grant.

The member is given an option to take actuarially reduced benefits at age 60 (or sometime between age 60 and age 65, depending on when they leave), or leave the benefits until age 65, when they will be paid unreduced. If a female member elects to delay payment until age 65, and there is a Guaranteed Minimum Pension (GMP) payable, that would still have to be paid at retirement regardless.

The employer will not normally exercise their discretion to pay unreduced benefits as there is an additional cost to them of paying the benefits early.

I hope this helps, although obviously not what you wanted to hear!

Andy_L

If she was in service before 2006 she may have reserved rights on some or all of her pension to retire at 60 without actuarial reduction.
http://www.lgps.org.uk/lge/core/page.do?pageId=100801

CAE

CAE wrote: »

Retirement age in the LGPS has always been age 65, both for men and women. The state pension age is irrelevant. In some circumstances, if the member satisfies certain rules based on age and service, pension benefits can be taken before age 65 with an actuarial reduction, a maximum of 23% on a pension for ladies, and a maximum of 12% on the one off lump sum retirement grant.

The member is given an option to take actuarially reduced benefits at age 60 (or sometime between age 60 and age 65, depending on when they leave), or leave the benefits until age 65, when they will be paid unreduced. If a female member elects to delay payment until age 65, and there is a Guaranteed Minimum Pension (GMP) payable, that would still have to be paid at retirement regardless.

The employer will not normally exercise their discretion to pay unreduced benefits as there is an additional cost to them of paying the benefits early.

I hope this helps, although obviously not what you wanted to hear!

Just wanted to clarify something I wrote earlier. Was in a bit of a rush to finish the post before my lunch hour finished, and managed to miss something out that I meant to say.

'In some circumstances, if the member satisfies certain rules based on age and service, pension benefits can be taken before age 65 withOUT an actuarial reduction. IF TAKING BENEFITS BEFORE AGE 65 THERE IS a maximum of 23% REDUCTION on a pension for ladies, and a maximum of 12% REDUCTION on the one off lump sum retirement grant.'