LGPS flexi retirement

LG_Lawyer

Hi I’ve seen a number of queries about the LGPS and have a question (possibly for SilverTabby). Has anyone who has taken flexi retirement before the age of 60 ever had the pension strain payment waived? Our LA will allow you to take flexi retirement it if you repay their  cost once you receive your lump sum but if you’ve been in the scheme a long time this can be quite substantial. Does anyone know under what provision they do this - or as it’s an agreement between parties is that irrelevant? Thanks 

hyubh

LG_Lawyer said:

Hi I’ve seen a number of queries about the LGPS and have a question (possibly for SilverTabby). Has anyone who has taken flexi retirement before the age of 60 ever had the pension strain payment waived? Our LA will allow you to take flexi retirement it if you repay their  cost once you receive your lump sum but if you’ve been in the scheme a long time this can be quite substantial. Does anyone know under what provision they do this - or as it’s an agreement between parties is that irrelevant?

The strain charge is on the employer, not the employee, and simply represents the unexpected liability for the fund on benefits being paid out early with no reduction. There is no difference from the fund's point of view if a pension is drawn early on a flexible or full basis, beyond the obvious point that the former might not involve all accrual to date coming into payment. It would be the lack of a strain charge that would need explaining, not the opposite...

Silvertabby

Employer strain costs in the case of flexible retirement are linked to R85 protections.  For someone taking flexi now, costs would only apply if the date of retirement is before 60 AND the employee meets R85 as at the date of leaving.  Payment without actuarial reductions would then only apply to pre 2008 benefits, with the employee taking the full hit for the post 2008 benefits.

Even with this limitation, strain costs can still be substantial - which is why some employers are now only allowing pre age 60 (with R85)  flexi if they can recover their costs from the employee.  

Would deferring your flexi retirement until 60 be an option?  

LG_Lawyer

Thanks Silver Tabby. I think I shall go for full retirement at 60 if I can’t come to some agreement before then as I’m only part time now. If I have to pay the strain cost it’s 20% of my lump sum and I’m not willing to forfeit that much. I definitely need to keep working for now unfortunately 😀

Silvertabby

LG_Lawyer said:

Thanks Silver Tabby. I think I shall go for full retirement at 60 if I can’t come to some agreement before then as I’m only part time now. If I have to pay the strain cost it’s 20% of my lump sum and I’m not willing to forfeit that much. I definitely need to keep working for now unfortunately 😀

Unusual (but not impossible) to get flexi if you are already part time.

Carrying on until 60 will have the double benefit of no strain costs AND lesser early payment reductions in the case of your post 2008 accruals.