Flexible retirement LGPS - can I defer the pension?

2biscuit

Hi everyone

I am getting conflicting advice from my local LGPS pension fund and was hoping that someone here might have some wisdom / experience they could share.

I am in the process of flexibly retiring (from 1/4/25) and have been advised previously that I could flexibly retire and defer my pension as I would be able to continue to support myself on the salary I would be earning in the part time role (~2/3 the hours of my existing role). I have another deferred LGPS pension with R85 protections so no pre 2008 complications with this pension! 

However I have spoken to my LGPS pension people today and been advised that the previous advice was wrong and that I cannot defer the pension for my existing role and I have to claim that pension as part of the flexible retirement.

This is a change to what I was told and as there is a substantial AVC attached to that pension something that I do not want to do. I have asked them to double check this as I may need to withdraw the flexible retirement request.

Anyone have any pearls of wisdom they want to share?

Dazed_and_C0nfused

If you aren't taking the pension then does it actually meet the criteria for "flexible retirement" 🤔

Aren't you just going part time?

Silvertabby

If you officially flexibly retire, then you have to take your pension.

But if you just reduce your hours to part time, then you don't.

Your employer will have to approve either option.

2biscuit

I have looked at my records and have found a record of what I originally asked the scheme and noted their responses in BOLD:

"I am contemplating flexible pension but wanted some clarification on how this impacts on my pension. Having read Flexible retirement | Business and economy | Hampshire County Council (hants.gov.uk), I am a little confused. I have a number of questions I would appreciate you answering if possible?

 

1. It seems that if I undertook flexible pension that I could decide to claim none of the benefits that relate to my membership built up since 1 April 2014 i.e. all my XXXXshire pension – is this correct? YES
2. I understand that I can decide not to claim any of my additional benefits from my associated AVC contract – is that correct? Would the age factor used to calculate the cost of additional LGPS pension using the AVC relate to when I subsequently claimed that pension and AVC and not the date when I flexibly retired? WHEN CLAIMED NOT WHEN FLEXIBLY RETIRED
3. Does this mean that the entire pension would then fall into being a deferred pension (in the same way my Berkshire LGPS pension is)? YES
4. Would it be possible to flexibly retire and defer the entirety of my pension as it is all post 2014? YES
5. I believe that after flexible retirement (I am considering working 3 days per week instead of 5 days), I would be able to start a new LGPS pension, is this correct? YES"

 Does this make better sense?

 

hyubh

2biscuit said:

I have looked at my records and have found a record of what I originally asked the scheme and noted their responses in BOLD:

"I am contemplating flexible pension but wanted some clarification on how this impacts on my pension. Having read Flexible retirement | Business and economy | Hampshire County Council (hants.gov.uk), I am a little confused. I have a number of questions I would appreciate you answering if possible?

1. It seems that if I undertook flexible pension that I could decide to claim none of the benefits that relate to my membership built up since 1 April 2014 i.e. all my XXXXshire pension – is this correct? YES
2. I understand that I can decide not to claim any of my additional benefits from my associated AVC contract – is that correct? Would the age factor used to calculate the cost of additional LGPS pension using the AVC relate to when I subsequently claimed that pension and AVC and not the date when I flexibly retired? WHEN CLAIMED NOT WHEN FLEXIBLY RETIRED
3. Does this mean that the entire pension would then fall into being a deferred pension (in the same way my Berkshire LGPS pension is)? YES
4. Would it be possible to flexibly retire and defer the entirety of my pension as it is all post 2014? YES
5. I believe that after flexible retirement (I am considering working 3 days per week instead of 5 days), I would be able to start a new LGPS pension, is this correct? YES"

 Does this make better sense?

If you aren't looking to draw any benefits, then by definition, you are not looking for a 'flexible retirement' in the LGPS sense. So do you mean, you are looking to draw final salary benefits from your current membership and leave the CARE part deferred (q1 above)? If so, q4 contradicts that though? And if you have only CARE benefits with your current membership, what would be the point of cutting them into two, pre- and post- reducing your hours...?

2biscuit

Apologies for the delay in responding. I have a deferred pension which has R85 rights.
My current employer wants me to go down the flexible retirement route. I am happy to do so ....if I do not have to crystallise my current LGPS pension. Reading the information detailed above and from my first conversation with LGPS this seemed possible. This has now changed (possibly) and I was struggling to see why. I realise this is a slightly weird scenario but was wondering whether it was possible 

2biscuit

So I currently have two LGPS pensions - 1 deferred and 1 current. I want to effectively defer the current pne

Silvertabby

Why is your employer insisting that you flexibly retire instead of just going part time?  Just reducing your hours is a much simpler admin procedure for them.

And why do you want to defer your current pension?  If it's CARE, with no final salary link, then there's no 'best pay year' to protect.  Sorry, but unless I'm missing something I just can't see what benefit you think you will get by deferring your current pension and starting a new record.  

hyubh

2biscuit said:

Apologies for the delay in responding. I have a deferred pension which has R85 rights.
My current employer wants me to go down the flexible retirement route. 

The only reason I can think for an LGPS employer to push for a flexible retirement was if it was making headcount reductions, and this would avoid a redundancy. Is that the case here...?

(Under the rules of the scheme, such a redundancy for someone your age would involve an automatic early retirement with no actuarial reduction, paid for by the employer usually up front. Ergo, a flexible retirement could avoid the 'strain charge' that a full redundancy would entail. However this scenario still presupposes the employee is actually interested in drawing their pension benefits.)

I am happy to do so ....if I do not have to crystallise my current LGPS pension. Reading the information detailed above and from my first conversation with LGPS this seemed possible. This has now changed (possibly) and I was struggling to see why.

If the Hants person got confused, it was probably because they were expecting a question about a potential flexible retirement to presuppose a desire to 'retire' in some way 

I realise this is a slightly weird scenario but was wondering whether it was possible

To be completely clear - your current LGPS membership with Hants has no pre-14 service at all? If it actually has, then a flexible retirement would allow drawing the final salary part and leaving the CARE part deferred. But only if you actually wanted to draw anything. If you didn't, but wanted to break the final salary link, you would need to opt out then immediately (within payroll limitations) opt back in again. But merely going part time wouldn't justify doing this, since final pensionable pay is full time equivalent.

If, conversely, your entire current membership is CARE... I'm with Silvertabby, it's really really difficult to come up with a rationale for deferring part of it.

zagubov

Hasn't your union got any advice or info on this?