Defer LGPS Pension

Maria2512

Hi all,

Not sure why but Pension scenarios keep me up at night. Just when I think I’ve cracked it another scenario appears in my mind!

If I’ve been in the LGPS for 25 years and want to retire at 60, can I defer taking my pension for a couple of years until I’m say 62? If so, will the reductions be less because my NPA will be nearer when I take my pension at 62? 

Would it have any impact on when I can take my AVC’s?

If I can tide myself over for a couple of years would it be worth considering or is it too much aggravation for nowt much?

Thoughts?

I’m planning for every eventuality!!

la531983

The Pension can be taken anytime between 55 and 75.

Ignoring inflation and assuming you are still contributing to it, it will be worth more at age 62 than at age 60 as you will have two extra years worth of "stamps", as it were. 

If you aren't contributing anymore, you can defer it and gain a small percentage per year for doing so, I can't find the table at the moment though. Also not sure if there is a minimum age, it may be the state pension age. Someone else will know.

Edit - found it, minimum age to defer and get the extra is the state pension age, so not applicable to you at the age of 62...

https://lgps.buckinghamshire.gov.uk/currently-payingin/thinking-about-retirement/late-retirement/#:~:text=Your LGPS pension is payable,known as a late retirement

43722

Completely unqualified comment here. Why not just take the pension when it comes due? None of us know what lies around the next bend.

Maria2512

43722 said:

Completely unqualified comment here. Why not just take the pension when it comes due? None of us know what lies around the next bend.

The pension window is 55 to 75 so it’s all about timing and strategy 

la531983

Maria2512 said:

43722 said:

Completely unqualified comment here. Why not just take the pension when it comes due? None of us know what lies around the next bend.

The pension window is 55 to 75 so it’s all about timing and strategy 

There is seemingly no benefit from the link I posted in deferring an Lgps pension from 60 to 62 if you are no longer contributing. You get the inflationary uplift if you have claimed it or not, however.

Maria2512

la531983 said:

Maria2512 said:

43722 said:

Completely unqualified comment here. Why not just take the pension when it comes due? None of us know what lies around the next bend.

The pension window is 55 to 75 so it’s all about timing and strategy 

There is seemingly no benefit from the link I posted in deferring an Lgps pension from 60 to 62 if you are no longer contributing. You get the inflationary uplift if you have claimed it or not, however.

What about the reductions for taking the pension earlier than NPA? Would the deduction percentage be lower?

la531983

Maria2512 said:

la531983 said:

Maria2512 said:

43722 said:

Completely unqualified comment here. Why not just take the pension when it comes due? None of us know what lies around the next bend.

The pension window is 55 to 75 so it’s all about timing and strategy 

There is seemingly no benefit from the link I posted in deferring an Lgps pension from 60 to 62 if you are no longer contributing. You get the inflationary uplift if you have claimed it or not, however.

What about the reductions for taking the pension earlier than NPA? Would the deduction percentage be lower?

The deduction percentages are quite draconian

https://www.lgpsmember.org/your-pension/planning/taking-your-pension/#early-retirement-reductions

So I suppose in a roundabout way there is a benefit in waiting 2 years, obviously you aren't getting 2 years worth of payments though so that's a factor. 

ussdave

With 25 years of LGPS, are you subject to any of the protections that would give you an unreduced pension at 60?  Rule of 85 I believe?

Maria2512

ussdave said:

With 25 years of LGPS, are you subject to any of the protections that would give you an unreduced pension at 60?  Rule of 85 I believe?

Only for pre 2008

hyubh

Maria2512 said:

If I’ve been in the LGPS for 25 years and want to retire at 60, can I defer taking my pension for a couple of years until I’m say 62? If so, will the reductions be less because my NPA will be nearer when I take my pension at 62?

You can, but given you have 10 years membership under the 85 year rule, you would be losing some of the benefit of that. On the flip side 2008-14 and 2014+ pension would have a lower actuarial reduction.

The sweet spot would probably be getting a flexible retirement from your employer, drawing your pre-2008 pension at 60 and leaving the rest while continuing to work at a lower grade or fewer hours than before.

Maria2512

hyubh said:

Maria2512 said:

If I’ve been in the LGPS for 25 years and want to retire at 60, can I defer taking my pension for a couple of years until I’m say 62? If so, will the reductions be less because my NPA will be nearer when I take my pension at 62?

You can, but given you have 10 years membership under the 85 year rule, you would be losing some of the benefit of that. On the flip side 2008-14 and 2014+ pension would have a lower actuarial reduction.

The sweet spot would probably be getting a flexible retirement from your employer, drawing your pre-2008 pension at 60 and leaving the rest while continuing to work at a lower grade or fewer hours than before.

Could I draw my AVCs while drawing only my pre-2008 pension?