Asked to cover cost of early retirement upfront! - help needed

Thrugelmir

MLAB wrote: »

Why this cannot be deducted from my lump sum payment I do not know?

Chicken and egg. Until you retire your pension cannot be calculated and therefore paid.

There's no allowance in pension scheme rules for such a transaction. So obviously open to abuse if it were.

greenglide

MLAB wrote: »

Apologies if my second post was a little misleading.

I'm past the goverment pension scheme '85 year rule' and so my pension benefits are not affected, this £25k is the cost to the fund of me taking my pension early (by 3 years). Why this cannot be deducted from my lump sum payment I do not know?

Just to clarify, I would not be losing any pension this way.

So either they have misinterpreted what you want or (most likely) what you want isn't allowed by the rules of the scheme.

I had a preserved pension in the LGPS scheme and because of the date leaving employment and my age I was left with no alternative but to take the pension at 60 and when I asked about forgoing the lump sum and enhancing the pension they said (after getting over the shock - Public Sector employees largely seem to live solely for the lump sum IMHO) that only a small amount could be used that way - I had to take a minimum amount.

These schemes are very rigid. You seem to have found one of these limits.

Probably because normally the employer normally pays for this.

MLAB

The letter I've received from the Pension Fund states that payment of this amount is a matter that should be agreed between myself and my Employer and is dependent upon Employer/HR policy, which I know from speaking to others varies across the various government agencies who participate in the fund.

So from the Scheme perspective, they do not care who pays this cost.

Very frustrating after 37 years service, that I'm now expected to take out a sizeable loan (which I may not even get) in order to take my pension.

MLAB

Update: I've just spoken to the fund administrator who have confirmed that I do not need to pay this amount up front and so seems that HR have their wires crossed.

Thank you all for your comments

xylophone

http://www.bexley.gov.uk/CHttpHandler.ashx?id=215&p=0

I have been looking at this which does mention flexible retirement from LGPS and TPS.

"At the employee’s request the early release of pension benefits under ‘flexible
retirement’ will be considered in addition to the request to work flexibly. The
employee should tick the appropriate box at the top of the application form if
they wish their request to include consideration of the early release of pension
benefits and indicate if they wish to take all or part of their benefits. If they
wish to only take part of their benefits they should indicate what proportion.

Employees should note that their benefits are likely to be reduced, under
scheme regulations, if they are taken before normal retirement age. It is
therefore essential that the employee request an estimate of benefits prior to
making an application for flexible retirement

Due to the way the pension scheme is managed there is a potential strain on the fund when a pension is taken early. This potential strain must be taken into consideration and may result in a request for early release of pension being denied - even if the request to work flexibly is agreed.

If the relevant designated officer, or the Governing Body in schools, supports the flexible retirement request, the early release of pension benefits will be considered by the Director of Finance. (Members must agree flexible retirement for posts subject to Member level appointment).

Consideration by the Director of Finance will include the potential strain on the LGPS fund of the pension being taken early. If he authorises a request he will ensure that adequate provision is made to address any strain on the fund through the relevant staffing budget.

There are provisions within the Regulations for the employer to waive, in whole or in part, the actuarial reduction that will apply to an individual taking their pension early under Flexible Retirement. This is a discretionary provision and Council members have determined that this will not be considered in any
circumstances."


This http://mpfmembers.org.uk/pdf/planningyourretirement08.pdfhttp://mpfmembers.org.uk/pdf/planningyourretirement08.pdf

mentions the "85 year rule" p13/14 and seems to indicate that if you satisfy the rule your benefits are not reduced for early retirement?

If the OP does works for LGPS ( which isn't known) I'm still mystified as it would appear that either the staffing budget should take the strain charge or, if, as he avers, he satisfies the 85 year rule he is entitled to take his pension without reduction?

Or is the problem created because he wants to draw his pension before SRA and continue to work?

xylophone

Update: I've just spoken to the fund administrator who have confirmed that I do not need to pay this amount up front and so seems that HR have their wires crossed.

Or you misunderstood what you were told?