Lgp reduction based on reduced hours

efitzy

Hi  I'm hoping someone can help with how to work out my projected pension at 55 as ive had to reduce my hours due to I'll health from 37 to 12 hours a week. I'm 49. I could opt for ill health retirement but I've been advised by union it will be time 2 in all probability which would be my pension to date x 25 percent 

Silvertabby

Hi I'm looking for some advice on my lgp please.
I've been in same post since 2004, but I'm now looking to reduce my hours sue to ill health as part of reasonable adjustment recommendation made by occupational health . I'm 49 now and looking to reduce my hours down to 12 hours a week from 37. I'm trying to work out how this will affect my pension as I could take ill health pension now but the advice would be it would be tier 2 which would be my pension pot now plus 25%. Could anyone tell me the calculation to work out my new pension projection if I work till I'm 55 on the new hours of 12 a week.

Many thanks

Copied from your other thread/post, as it gives more information.

There is no minimum retirement age in the case of an ill health retirement - are you thinking of working until 55 because you believe that's the earliest you can access your benefits?

Option 1

Take Tier 2 ill health retirement now (if approved)

Immediate payment of pension accrued to date, without any reductions for early payment, and plus 25% of the pension you would have accrued between your date of leaving and your NRA (same as your State pension age)

Option 2

Reduce your hours to 12 per week.  Your pre 2014 final salary benefits won't be affected as they use the whole time equivalent pensionable pay.  However, your CARE benefits will accrue at a lesser rate.  ie - salary of £20K /49 = £408.16 pension.  Salary of £6,486.49 = £132.38 pension (both examples per year).

If you then take normal retirement at age 55, your benefits will be subject to a very hefty reduction for early payment.  Unless you still qualify for ill health retirement, which would have to be completely new application   (no guarantees this far ahead - your condition may improve, the eligibility criteria may change). 

efitzy

Hi, thanks for the response. I was trying to work out if I was better trying to hold on to 55 and not take ill health retirement but just leave at the earliest I.e 55 but I'm worried that this will significantly impact on my overall pension at 55. Or do I apply for I'll health now, I have some supporting documentation on the salary I earn with 30 hour week contract. I'm aware it's becoming increasingly difficult to be awarded I'll health and I'm working on worst case scenarios of tier 3, but I have now been told that 12 hours is off the table so I can either take severance pay under capabolity grounds or apply for ill health and be assessed by occupational team , likelihood is either tier 3 or take severance pay. 

Silvertabby

efitzy said:

Hi, thanks for the response. I was trying to work out if I was better trying to hold on to 55 and not take ill health retirement but just leave at the earliest I.e 55 but I'm worried that this will significantly impact on my overall pension at 55. Or do I apply for I'll health now, I have some supporting documentation on the salary I earn with 30 hour week contract. I'm aware it's becoming increasingly difficult to be awarded I'll health and I'm working on worst case scenarios of tier 3, but I have now been told that 12 hours is off the table so I can either take severance pay under capabolity grounds or apply for ill health and be assessed by occupational team , likelihood is either tier 3 or take severance pay. 

Normal retirement at 55 will be subject to  huge reduction for early payment.  Huge. Even if you have some Rule of 85 protections in respect of your pre 2008 service, that is still linked to a minumum retirement age of 60.

Tier 3 doesn't have the enhancements that Tiers 1 & 2 have - it's just paid without any actuarial reductions.  But - and this is a huge but - Tier 3 expects that you will be fit to return to work in 18 months/3 years when you would be re-assessed and your pension could very well be ended.  If that happens, then your benefits return to normal 'deferred' status.