LGPS - Rule of 85

joshiesaunt

I'm getting confused by this.  My dh is 55 soon to be 56.  He has been with the LGPS since Sept 1996.  He'd like to think about retiring at 60.  will he qualify under this rule and will there be an actuarial reduction for retiring early please?
I am also in a similar position only I'm 55 next year.  I have been a member of the scheme since 1994

joshiesaunt

Sorry, pressed post too soon!  I was part time for 10 years.  Will this make a difference?

hyubh

joshiesaunt said:

I'm getting confused by this.  My dh is 55 soon to be 56.  He has been with the LGPS since Sept 1996.  He'd like to think about retiring at 60.  will he qualify under this rule and will there be an actuarial reduction for retiring early please?

1996-2026 = 30, and 30+60 = 90, so he will easily meet the 85 year rule at age 60. However, only benefits on service to March 2008 will be protected (i.e. the 80ths pension and standard lump sum). This means all 60ths pension (i.e. on service from April 2008 to March 2014) will be subject to an actuarial reduction for going before 65, and all CARE pension (49ths) will be subject to one for going before SPA.

I am also in a similar position only I'm 55 next year.  I have been a member of the scheme since 1994

Same applies.

joshiesaunt said:

Sorry, pressed post too soon!  I was part time for 10 years.  Will this make a difference?

No, it's calendar not reckonable service that counts. Furthermore, if you or your husband were to leave pensionable employment before retirement, this would unaffect 85 year rule protection because the deferred period between leaving and 60 would still count to the 85.

Lastly, if there's thoughts about retiring before 60, given you can now voluntarily draw an LGPS pension from 55 (i.e. without being made redundant), keep in mind meeting the magic 85 before 60 probably won't mean anything. This is because it is an employer discretion to 'turn on' the rule of 85 until it was originally due, and most employers won't because that will usually attract a 'strain charge' from the pension fund. 

Silvertabby

hyubh said:

joshiesaunt said:

I'm getting confused by this.  My dh is 55 soon to be 56.  He has been with the LGPS since Sept 1996.  He'd like to think about retiring at 60.  will he qualify under this rule and will there be an actuarial reduction for retiring early please?

1996-2026 = 30, and 30+60 = 90, so he will easily meet the 85 year rule at age 60. However, only benefits on service to March 2008 will be protected (i.e. the 80ths pension and standard lump sum). This means all 60ths pension (i.e. on service from April 2008 to March 2014) will be subject to an actuarial reduction for going before 65, and all CARE pension (49ths) will be subject to one for going before SPA.

I am also in a similar position only I'm 55 next year.  I have been a member of the scheme since 1994

Same applies.

joshiesaunt said:

Sorry, pressed post too soon!  I was part time for 10 years.  Will this make a difference?

No, it's calendar not reckonable service that counts. Furthermore, if you or your husband were to leave pensionable employment before retirement, this would unaffect 85 year rule protection because the deferred period between leaving and 60 would still count to the 85.

Lastly, if there's thoughts about retiring before 60, given you can now voluntarily draw an LGPS pension from 55 (i.e. without being made redundant), keep in mind meeting the magic 85 before 60 probably won't mean anything. This is because it is an employer discretion to 'turn on' the rule of 85 until it was originally due, and most employers won't because that will usually attract a 'strain charge' from the pension fund. 

hyubh said:

joshiesaunt said:

I'm getting confused by this.  My dh is 55 soon to be 56.  He has been with the LGPS since Sept 1996.  He'd like to think about retiring at 60.  will he qualify under this rule and will there be an actuarial reduction for retiring early please?

1996-2026 = 30, and 30+60 = 90, so he will easily meet the 85 year rule at age 60. However, only benefits on service to March 2008 will be protected (i.e. the 80ths pension and standard lump sum). This means all 60ths pension (i.e. on service from April 2008 to March 2014) will be subject to an actuarial reduction for going before 65, and all CARE pension (49ths) will be subject to one for going before SPA.

I am also in a similar position only I'm 55 next year.  I have been a member of the scheme since 1994

Same applies.

joshiesaunt said:

Sorry, pressed post too soon!  I was part time for 10 years.  Will this make a difference?

No, it's calendar not reckonable service that counts. Furthermore, if you or your husband were to leave pensionable employment before retirement, this would unaffect 85 year rule protection because the deferred period between leaving and 60 would still count to the 85.

Lastly, if there's thoughts about retiring before 60, given you can now voluntarily draw an LGPS pension from 55 (i.e. without being made redundant), keep in mind meeting the magic 85 before 60 probably won't mean anything. This is because it is an employer discretion to 'turn on' the rule of 85 until it was originally due, and most employers won't because that will usually attract a 'strain charge' from the pension fund. 

As hyubh says.  Plus, if either of you want to flexibly retiree before 60 (ie, draw pension accrued to date and carry on working on (usually) reduced hours) then that would also attract an employer strain cost in relation to your pre 2008 benefits between your numerical R85 age and 60.  This has resulted in many applications for flexi retirement being refused. 

joshiesaunt

Thank you Hyubh and Silvertabby - that has clarified matters.  It is likely that I'll be made redundant in a few years.  In that scenario, say I'm 58 at that point, will I get automatic right to an unreduced pension or is this at the discretion of the local council I work for?  What if they offer voluntary redundancy - does the position change?

hyubh

joshiesaunt said:

It is likely that I'll be made redundant in a few years.  In that scenario, say I'm 58 at that point, will I get automatic right to an unreduced pension or is this at the discretion of the local council I work for?  What if they offer voluntary redundancy - does the position change?

If aged 55 or over and made redundant, it would be an early retirement without an actuarial reduction. This is set out in the scheme regulations, where 'compulsory' vs. 'voluntary' redundancy isn't a distinction used (the formulation is instead where the member either is dismissed or leaves by mutual consent for reason of redundancy or business efficiency). However there will likely be a strain charge payable by the employer in that case, the fact of which would enter into whether redundancy would be offered in the first place. (So typically HR would have a policy setting a payback period of such-and-so, and the strain cost would need not to breach that.)