Help with LGPS - Deferred Benefit Status at 55

Angie-Pangie

Hi,

I'm hoping someone can help with the information I've received regarding a small LGPS that I'm thinking of redeeming at 55 (now).

I've requested a forecast and have received the necessary paperwork but just need some advice on what I've received really?

I've received x2 estimates, both state at the top "Date of Retirement 10/03/2022" but have differing amounts?

Service:

3 years 109 days of 1/80th

6 years 0 days of 1/60th

First estimate sheet shows:

Pension: £1,691.58

Retirement Grant: £11,277.07

Widower's pension payable on death: £1,513.45

Second estimate sheet shows:

Pension: £2,417.42

Retirement Grant: £2,566.99

Widower's pension payable on death: £1,513.45

There are other calculations for each of the above, showing a breakdown, but what I don't really understand (stupidly) is the two different estimates? Is this showing me the two options I have - one with a higher lump sum/lower pension and vice versa?

Sorry if that seems obvious but the notes received with the estimates do not explain clearly what it is I've received?

Thanks for your help.

GunJack

basically, yes

woolly_wombat

The differing amounts appear to reflect whether or not you choose to take the maximum tax free lump sum (retirement grant).

You will get the maximum possible annual amount if you choose the minimum possible tax free lump sum as the LGPS commutation rate is not exactly generous.

Silvertabby

Option 1 is your maximum tax free cash/minimum pension

Option 2 is your standard tax free cash/standard pension.

The spouse's pension is the same in both options because it is unaffected by early retirement/commutation reductions.

As you have an automatic lump sum (the £2566.99 quoted in option 2) you must have some pre 2008 service - but you will only have R85 protections (and even then, only in respect of your pre 2008 pension) if you joined the LGPS before 1 October 2006.

Actually, there is a 3rd option open to you - and that is to leave your pension deferred until a later date.  Even leaving it until 60 will reduce the early retirement reductions by over 20%.