Changes to your pension – Deferred Members

There are changes to the Local Government Pension Scheme (LGPS). These changes, unless indicated otherwise, came into effect from 14 May 2018.

When you can take your pension

  • If you left the LGPS with a deferred benefit before 31 March 2014 you can now choose to take early payment of your deferred benefits from the later of age 55 or 14 May 2018 (rather than 60).
  • If you were awarded a share of your ex-spouse’s LGPS pension as part of a divorce settlement and you are a pension credit member in the LGPS, you can now elect to take payment of these benefits from age 55 regardless of when the pension sharing order took effect.
  • If you choose to take your deferred benefits earlier than your Normal Pension Age (NPA) they will normally be reduced to take account of the fact that your pension will be paid for longer.

How you can take your Additional Voluntary Contributions

If you were a member of the LGPS on or after 1 April 2014 and you paid Additional Voluntary Contributions (AVCs) and the contract to pay those AVCs started before 1 April 2014, you will see some changes in how you can take your AVC plan.  When you take your AVC plan:

  • You can now buy additional pension from the LGPS with your AVC plan when you take your benefits from the scheme.
  • When taking your main scheme benefits you’re no longer able to leave your AVC invested and take it later.
  • If you die before taking your AVC and a lump sum is to be paid from your AVC plan, your pension fund now has absolute discretion over who to pay that sum to (rather than it having to be paid to your estate). If the lump sum is paid at the discretion of the pension fund it does not form part of the estate and will not be subject to inheritance tax.

Underpin protection extended

The underpin protection has also changed and has been extended to also apply to people who were active members of a different public service pension scheme on 31 March 2012 and who were within 10 years of age 65 on 1 April 2012; if these people join the LGPS and transfer their pension benefits from the other public service pension scheme into the new LGPS scheme and part or all of that transfer buys final salary benefits in the LGPS, subject to certain conditions, the underpin will apply.

For more information look out for more information in the post or on Members’ Self Service.