LGPS Flexiable Retirement cost to employer

Tiggy777

Hi all


I recently applied to my employer for flexiable retirement aged 57.5


I thought it would be fairly straight forward as I would take to relevent percentage reductions for taking early and thus it wouldn't cost my employer anything.


However they have now confirmed there are costs involved and as a result my application was rejected.


Question is why is that as I thought it wouldn't cost them anything ???


Really confused as policy states you can apply from 55 but sounds like it was never be approved.


Would really appreciate any advice or comments


Thank you for your helpa nd time


Regards


Tiggy

Silvertabby

Tiggy777 wrote: »

Hi all


I recently applied to my employer for flexiable retirement aged 57.5


I thought it would be fairly straight forward as I would take to relevent percentage reductions for taking early and thus it wouldn't cost my employer anything.


However they have now confirmed there are costs involved and as a result my application was rejected.


Question is why is that as I thought it wouldn't cost them anything ???


Really confused as policy states you can apply from 55 but sounds like it was never be approved.


Would really appreciate any advice or comments


Thank you for your helpa nd time


Regards


Tiggy

It's down to Rule of 85 protections, which retained a minimum retirement age of 60 when the scheme access age was reduced to 55.

If you meet R85 (in your case, in respect of your pre 2008 benefits only) before 60, then your employer has to plug the gap between reduced and unreduced (pre 2008 benefits) from your date of leaving to age 60.

If that's the full 2.5 years, then that could be a substantial sum that your employer would have to cough up.

There would be no employer's costs if you flexibly retired from 60+.

Nebulous2

Tiggy777 wrote: »

Hi all


I recently applied to my employer for flexiable retirement aged 57.5


I thought it would be fairly straight forward as I would take to relevent percentage reductions for taking early and thus it wouldn't cost my employer anything.


However they have now confirmed there are costs involved and as a result my application was rejected.


Question is why is that as I thought it wouldn't cost them anything ???


Really confused as policy states you can apply from 55 but sounds like it was never be approved.


Would really appreciate any advice or comments


Thank you for your helpa nd time


Regards


Tiggy

Sounds like my employer. They have been quite keen on flexible retirement but are now turning against it.

Have others been rejected or only you? Have they been explicit about turning people down if there is a cost involved in their policy?

It might be worth appealing or taking out a grievance if other people have been allowed and you are the first to be rejected.

Tiggy777

Silvertabby wrote: »

It's down to Rule of 85 protections, which retained a minimum retirement age of 60 when the scheme access age was reduced to 55.

If you meet R85 (in your case, in respect of your pre 2008 benefits only) before 60, then your employer has to plug the gap between reduced and unreduced (pre 2008 benefits) from your date of leaving to age 60.

If that's the full 2.5 years, then that could be a substantial sum that your employer would have to cough up.

There would be no employer's costs if you flexibly retired from 60+.

Hi Silvertabby... thanks this is beginning to make sense now. I did notice on my pension estimate that the early retirement reduction on pre-01/04/008 service was shown as 0.000% where as post 31/03/2008 and care had reductions applied. It confused me as I had ask if my total package could be paid unreduced and saw that the pre 1/04/2008 appeared to have been (so thought they made a mistake by only reducing part of it) ....but from what you are saying that relates to the R85 and no reductions is applied (pre 01/04/2008) but the employer pays for it ..hence them saying there are costs involved and turning down my request. Have I understood that right ? Appreciate your advice . Many thanks Tiggy

Silvertabby

Tiggy777 wrote: »

Hi Silvertabby... thanks this is beginning to make sense now. I did notice on my pension estimate that the early retirement reduction on pre-01/04/008 service was shown as 0.000% where as post 31/03/2008 and care had reductions applied. It confused me as I had ask if my total package could be paid unreduced and saw that the pre 1/04/2008 appeared to have been (so thought they made a mistake by only reducing part of it) ....but from what you are saying that relates to the R85 and no reductions is applied (pre 01/04/2008) but the employer pays for it ..hence them saying there are costs involved and turning down my request. Have I understood that right ? Appreciate your advice . Many thanks Tiggy

Yes. If the pension estimate you mention was for specifically for flexi retirement, then the 0% reduction for pre 2008 benefits is correct as it assumes that your employer will pick up the relevant costs.

Marcon

Nebulous2 wrote: »

Have others been rejected or only you? Have they been explicit about turning people down if there is a cost involved in their policy?

It might be worth appealing or taking out a grievance if other people have been allowed and you are the first to be rejected.

Why? An employer is free to change their policy at any time, without notice to employees.

daveyjp

Those I know who have opted for this have all had to be 60 before being considered.

Apodemus

Marcon wrote: »

Why? An employer is free to change their policy at any time, without notice to employees.

Agreed. But policies have to be fairly applied to all employees, so if the OP’s request is not considered, when other similar requests are, then Nebulous is quite correct that it would be reasonable to appeal, or under certain circumstances table a grievance.

Tiggy777

Silvertabby wrote: »

Yes. If the pension estimate you mention was for specifically for flexi retirement, then the 0% reduction for pre 2008 benefits is correct as it assumes that your employer will pick up the relevant costs.

Silvertabby many thanks for this it's really helpful. My confusion was based on when I applied for an estimate (1) to resign and simply draw my pension there were reduction made across all areas ie pre and post 2008 / Care and even my lump sum pre 2008.

When I applied for flexible retirement I presume the above reductions would simple be applied again and there would be no cost to employer. However when I received my flexible retirement estimate (2) both the pre 2008 and lump sums had zero reductions and I would told this resulted in a cost to the employer and my application was rejected.

My sort of query was why couldn't they make the same reductions in estimate 1 and I would happily take the hit.

I maybe looking at this to simplicity with out understand other rules or areas !

Would appreciate any comments and thank you for your time

Regards

Tiggy

Silvertabby

Tiggy777 wrote: »

Silvertabby many thanks for this it's really helpful. My confusion was based on when I applied for an estimate (1) to resign and simply draw my pension there were reduction made across all areas ie pre and post 2008 / Care and even my lump sum pre 2008.

When I applied for flexible retirement I presume the above reductions would simple be applied again and there would be no cost to employer. However when I received my flexible retirement estimate (2) both the pre 2008 and lump sums had zero reductions and I would told this resulted in a cost to the employer and my application was rejected.

My sort of query was why couldn't they make the same reductions in estimate 1 and I would happily take the hit.

I maybe looking at this to simplicity with out understand other rules or areas !

Would appreciate any comments and thank you for your time

Regards

Tiggy

If your employer won't approve flexi because of the costs, then I'm afraid you're limited to either retiring fully or deferring your flexible retirement until 60.

Whilst employer discretions do apply, in the case of flexi retirement they are basically limited to 'yes' or 'no'. If yes, then they have to comply with LGPS regs re payment of costs in respect of R85 protections. Agreeing to take the full hit yourself is not an option.

Tiggy777

Silvertabby wrote: »

If your employer won't approve flexi because of the costs, then I'm afraid you're limited to either retiring fully or deferring your flexible retirement until 60.

Whilst employer discretions do apply, in the case of flexi retirement they are basically limited to 'yes' or 'no'. If yes, then they have to comply with LGPS regs re payment of costs in respect of R85 protections. Agreeing to take the full hit yourself is not an option.

Hi Silvertabby..thanks again for this, so just to confirm if I 'fully' retire there is no costs to the employer : if I take flexible retirement there is a cost to employer ? (as before if there is a cost they will say no)

I guess I could leave at 58 and delay taking my pension until 60 which would boost it a bit.

Kind regards

Tiggy