Early retirement reductions
If you choose to voluntarily retire before your Normal Pension Age your benefits will normally be reduced to take account of being paid for longer. Your benefits are initially calculated as detailed in the section ‘how is your pension calculated?‘, and then reduced. How much your benefits are reduced by depends on how early you draw them.
We would recommend that you log on to our Member Self Service portal and complete a benefit projection to check the reduction applicable to you. This is because the reduction is based on the length of time (in years and days) that you retire early, i.e. the period between the date your benefits are paid and your Normal Pension Age. The earlier you retire, the greater the reduction.
If you were in the LGPS before 1 April 2014 your benefits built up before that date will have a different Normal Pension Age, which for most is age 65. For further information on when benefits built up before 1 April 2014 are payable, see the if you joined the LGPS before 1 April 2014 section.
As a general guide, the current percentage reductions for retirements up to 13 years early are shown in the table below. Where the number of years is not exact, the reduction percentages are adjusted accordingly. Please note if you have pre-1 April 2008 service you are entitled to an automatic lump sum. As the lump sum is payable without reduction at age 65, and the earliest voluntary date you can take it is age 55, the maximum reduction amount you can suffer on the lump sum is 10 years.
| Number of Years Paid Early | Pension reduction | Lump Sum (for membership to 31 March 2008) |
|---|---|---|
| 0 | 0% | 0% |
| 1 | 4.9% | 1.7% |
| 2 | 9.3% | 3.3% |
| 3 | 13.5% | 4.9% |
| 4 | 17.4% | 6.5% |
| 5 | 20.9% | 8.1% |
| 6 | 24.3% | 9.6% |
| 7 | 27.4% | 11.1% |
| 8 | 30.3% | 12.6% |
| 9 | 33.3% | 14.1% |
| 10 | 35.6% | 15.5% |
| 11 | 39.5% | 15.5% |
| 12 | 41.8% | 15.5% |
| 13 | 43.9% | 15.5% |
Your employer can agree not to make any reduction. This is a discretion and you can ask them what their policy on this is.
You can reduce or avoid any reductions by delaying payment until a later date. Your benefits will normally become payable at your Normal Pension Age but you can defer payment beyond that age (unless you left the scheme before 1 April 1998), although benefits must be paid by age 75.