LGPS early retirement

SimonEvans

Could someone please confirm the rules regarding the reduction of pension entitlement for a local government pension scheme when retiring before normal pension age? I am aware of the table listing the applied reductions  in percentages based on the number of years early a claim is made (i.e. 1 year = 5•1% etc.)
I assume that this would be deducted from the current value of the pension at the time of the early retirement rather than a reduction of the projected value at normal retirement age?

MX5huggy

Yes because the projected includes years of service you are not going to do. 

OldBeanz

The wife's authority pension site allows you to see the current value, early retirement, deferral and other scenarios.

SimonEvans

Many thanks for the responses - thought so. The other area I'm a little confused about is the projected pension amount at NRA. Why does this increase year on year with each annual statement? Obviously I will see the current value increase with ongoing contributions and adjustments for inflation etc. but why does the projected value rise in value too? Surely the fact that it is a projected amount would allow for additional yearly increases so why has the predicted value gone up about £2500 in six years?  Sorry if I'm missing something obvious! This is my wife's pension by the way, I find my own DC pension much easier to fathom.

Silvertabby

SimonEvans said:

Many thanks for the responses - thought so. The other area I'm a little confused about is the projected pension amount at NRA. Why does this increase year on year with each annual statement? Obviously I will see the current value increase with ongoing contributions and adjustments for inflation etc. but why does the projected value rise in value too? Surely the fact that it is a projected amount would allow for additional yearly increases so why has the predicted value gone up about £2500 in six years?  Sorry if I'm missing something obvious! This is my wife's pension by the way, I find my own DC pension much easier to fathom.

The projected value only uses known facts - ie current salary.

SimonEvans

Thanks. Again, this is as I thought. So (again, please excuse my ignorance) how would we get an accurate picture of what my wife could expect to receive at early retirement? She is currently 52 years old and hoping to finish at 60. Her income will massively influence my own retirement age. I was naïve enough to think that one of the advantages of her scheme over mine was the ability to access fairly accurate projections without the vagueries of the stock market playing a part. If we request a projected figure from the scheme, surely this too wouldn't include future contributions either and, therefore, be pretty useless for planning purposes.

Gin_and_Milk

SimonEvans said:

Could someone please confirm the rules regarding the reduction of pension entitlement for a local government pension scheme when retiring before normal pension age? I am aware of the table listing the applied reductions  in percentages based on the number of years early a claim is made (i.e. 1 year = 5•1% etc.)
I assume that this would be deducted from the current value of the pension at the time of the early retirement rather than a reduction of the projected value at normal retirement age?

I'm with LGPS and I can access my statement online which gives projections for retiring at 55, 60, 65 and 67 - can she not access this?  It was a while ago, but it's in a section called 'My Pension', and I think I had register for access.
The amount is worked out on current salary, so I recently got my figures and they're based on what I'm earning now.  If I change jobs which either pays more or less, then my pension amount will change to reflect that.
The figures don't take into account pay rises either, just 'facts'.  Remember, as it's DB it will rise in line with inflation, so if her statement says £15k at 65 for example, it will actually be an amount that has the purchase power of £15k in today's money.
Don't compare DC to DB pensions, they're not the same product and you'll only end up confusing yourself.
If your wife wants to retire before 55, she will have to contact LGPS for figures.  
Hope this helps

SimonEvans

Many thanks. Yes, she can access the local government scheme website but as far as I'm aware, it doesn't give the projections that you mention. We have requested a forecast based on her retiring at 60, but the response was simply a generic "how to work out your pension" document. I do understand that it cannot realistically take into account unknown future pay increases but I was wondering whether we could work this out ourselves using a few different potential scenarios - time to get the calculator out I think!

Regarding the difference between DB and DC pensions, yes fully understand the difference. The reason for the original post was an endeavour to get a figure for my wife's "share" of providing future income do that I could begin to estimate my own retirement date. Thanks to all of you who have responded.

sevenhills

Gin_and_Milk said:

I'm with LGPS and I can access my statement online which gives projections for retiring at 55, 60, 65 and 67 - can she not access this?  It was a while ago, but it's in a section called 'My Pension', and I think I had register for access.

If the OP clicks on 'my documents at the top right corner, they should be there.

My job was regraded and it didn't seem to affect the pension, so not sure if small changes affect the final pension.

Silvertabby

Likely that the LGPS will only supply a full written pension quote once the member is within 12 months of their requested retirement date, hence the generic response to the request now.  Far too many variables when working 8 years ahead.  

The on-line calculator is a handy tool, just don't get too carried away when selecting future revaluation rates and pay increases, as that could give you false expectations of a much higher pension than your wife will actually accrue.

daveyjp

I know when a friend took early LGPS retirement he did so after 3-4 years of requesting the figures.  When the figures were right for him he retired.