LGPS losing 5% pension per year

iansmum

My husband is considering retiring early due to ill health and may be exploring ill health retirement but isn’t confident about that. My question is - we know that he would lose 5% per year of his pension that he draws early, and it would be about 3 years early, how does that work? So if his projected pension is about £8000 a year would he lose 5% of this amount or 15% each year?

Silvertabby

iansmum wrote: »

My husband is considering retiring early due to ill health and may be exploring ill health retirement but isn’t confident about that. My question is - we know that he would lose 5% per year of his pension that he draws early, and it would be about 3 years early, how does that work? So if his projected pension is about £8000 a year would he lose 5% of this amount or 15% each year?

It depends on any Rule of 85 protections he may or may not have.

Can you post his age, current salary and date he joined the LGPS? (actual calculations are by day, but my working with whole years should give you some indication).

Where does the £8K come from? If that's his projection assuming that he carries on working until his normal retirement age, then leaving early will affect that. Then the early retirement reductions will further reduce his pension.

molerat

https://www.lgpsmember.org/more/reductions.php

tacpot12

Your post isn't clear, but it sounds like you are saying that your husband is aged over 55 and is considering asking to take his LGPS pension early in the event that no qualified medical practitioner will agree that he is incapable of working. If he draws his pension three years before it was due to be paid, he will lose 15% of the pension that is paid. e.g. If the LGPS pension was due to be paid at age 65 and was to be £15,000, but he asks for it to be paid from age 62 he will receive 85% of £15,000 per annum (£12,750 pa), and it is this lower amount that will be index-linked.

Do be careful though, as any amount of pension you husband thinks he is entitled to at retirement age might have been calculated on the assumption that he will continue working until his normal retirement age. He will be gaining additional entitled each year he works - if he stops working three years early, his entitlement will be less AND he will lose 15% of this lower entitlement. So make sure he works out what his entitlement at his normal retirement age will be at the point he stops work and then factor in the reduction for having the pension paid at this earlier date.

Edited: Just re-read your original post. The £8000 is likely to be a projection based on the assumption he works until his normal retirement age, so he will lose more than 15% of this. (as Silvertabby said - we're posting at the same time...)

iansmum

He’s 61 - 62 next April. Joined in April 1997 and is currently on about 29k.
His line manager has mentioned IHR to him and he has just had an occ health meeting today where the advisor indicated that she’s not sure he’d get it based on what she knows, and what he has said. He’s been off sick for nearly six months with severe angina following a heart attack five years ago. He’s about to go down to half pay and is also still waiting for an appointment with the cardiologist, though all the tests he had done showed no immediate treatment. He’s in a complete quandary about what to do and finances play a part in his decision. If he pursues IHR he may not get it and will the GP even sign him off for the duration. He’s stressed at work and doesn’t want to go back. He really would like to just jack it in and take the hit, but it sounds like a big hit to me!

crv1963

It may be an appointment with GP to discuss may ease his mind. Ask GP for a view about retiring? If GP is unsure without the Cardiologist view he may agree to sign him off until the Cardiology appointment. If he's got unstable angina it may affect the decision, there may be other things to consider in the whole such as ability to drive, working hours, adjustment to workload/ pressure.

I was advised by my Cardiologist to not take retirement but to reduce the number of days worked even if that meant working a compressed week. However I didn't have angina following my heart attack, I was advised that 60-62 would be an ideal age to retire, go too young and risk an earlier death due to a possible relapse into unhealthy lifestyle, go too late and not enjoy life while healthy!

I am not a civil servant though.

Silvertabby

iansmum wrote: »

He’s 61 - 62 next April. Joined in April 1997 and is currently on about 29k.
His line manager has mentioned IHR to him and he has just had an occ health meeting today where the advisor indicated that she’s not sure he’d get it based on what she knows, and what he has said. He’s been off sick for nearly six months with severe angina following a heart attack five years ago. He’s about to go down to half pay and is also still waiting for an appointment with the cardiologist, though all the tests he had done showed no immediate treatment. He’s in a complete quandary about what to do and finances play a part in his decision. If he pursues IHR he may not get it and will the GP even sign him off for the duration. He’s stressed at work and doesn’t want to go back. He really would like to just jack it in and take the hit, but it sounds like a big hit to me!

He has some R85 protections in respect of his pre 2008 service, which is good.

Bearing in mind that these are real 'back of a fag packet' calculations, his reductions would be somewhere in the region of:

Service 1997 to 2008 = 5% (and a lesser % reduction from the automatic lump sum).

Service 2008 to 2014 = 15%

2014 to date of leaving = 20%

On the other hand, I make his current, pre reduced pension, more than £8K - does he have any part time service that would reduce that?

Don't be too quick to dismiss ill health retirement. If granted Tier One (the highest) then not only would no reductions apply, but his pension would be enhanced to age 66 (SPA). Even Tier Two would be worth having - no reductions and 25% enhancement.

In view of his age, he should be able to ask his LGPS for a normal retirement estimate as at, say, 31 March 2019. That will give you a better idea.

Hope this helps.

iansmum

Thanks silvertabby. That’s all very interesting. I got the £8000 from the last pension letters he got. He split the pension a few years ago and I’m under the impression it restarted at that point. Not really sure. A good idea to ask for a pension forecast and hope we get a full picture. When we got the normal summary earlier this year they only gave us half the story because of the split that was made and we had to write to them again which took ages.
One last question of you - this 85 year rule you mentioned. I was under the impression this was his age plus service in full years. He’s not 62 yet till early April 19 and at that point will have done 22 years. To get to that date he will have to hope the doc will sign him off as he really can’t face going back into work. This would still only add up to 84. Thanks.

Silvertabby

iansmum wrote: »

Thanks silvertabby. That’s all very interesting. I got the £8000 from the last pension letters he got. He split the pension a few years ago and I’m under the impression it restarted at that point. Not really sure. A good idea to ask for a pension forecast and hope we get a full picture. When we got the normal summary earlier this year they only gave us half the story because of the split that was made and we had to write to them again which took ages.
One last question of you - this 85 year rule you mentioned. I was under the impression this was his age plus service in full years. He’s not 62 yet till early April 19 and at that point will have done 22 years. To get to that date he will have to hope the doc will sign him off as he really can’t face going back into work. This would still only add up to 84. Thanks.

R85 is on a sliding scale, rather than a cliff edge. As his age and service would add up to 84, he misses R85 by just one year - hence the 5% (1 year) reduction in respect of his pre 2008 service. Not quite clear if the £8K is just part of his benefits or not - but a request for a full estimate should clarify that. Do come back to me if you need any help with the figures, one you get them.

Your husband's health is the important thing now.

iansmum

Silvertabby wrote: »

R85 is on a sliding scale, rather than a cliff edge. As his age and service would add up to 84, he misses R85 by just one year - hence the 5% (1 year) reduction in respect of his pre 2008 service. Not quite clear if the £8K is just part of his benefits or not - but a request for a full estimate should clarify that. Do come back to me if you need any help with the figures, one you get them.

Your husband's health is the important thing now.

Thank you so much for all that advice and help. We will do as you suggest and I will revisit the forum when I have some answers.
Really appreciate it. :beer:

Blackbeard_of_Perranporth

I also have a heart condition with am ICD fitted.

The longer you leave not taking your pension, the more you get.