Deferred annual benefits statement 2024 notes and frequently asked questions

Guidance to help you understand the deferred annual benefit statement.

At what age can my benefits come into payment?

If you left the scheme before 1 April 1998

Your Normal Retirement Date (NRD) will be between age 60 and 65 depending on when you joined the scheme. Your annual benefit statement will show your NRD (the date your benefits are payable from). You may take your benefits at any time after age 55 but they may be reduced due to the earlier payment. You do not have an option to defer payment of your benefits beyond your Normal Retirement Date i.e. you have to take payment of your benefits at that date if they are not already in payment.

If you left the scheme between 1 April 1998 and 31 March 2014

The age at which an unreduced pension can be taken is 65. You may take your deferred benefits at any time after age 55 but they may be reduced due to the earlier payment. However, if you have membership of the scheme before 1 October 2006, your benefits may be protected from this reduction if you will qualify for the 85 year rule when you retire. For more information, see 'what is the 85 year rule?'.

If you left the scheme after 31 March 2014

The age at which an unreduced pension can be taken is your State Pension Age. You may take your deferred benefits at any time after age 55 but they may be reduced due to the earlier payment. However, if you have membership of the scheme before 1 October 2006, some of your benefits may be protected from this reduction if you will qualify for the 85 year rule when you retire.

For more information, see the 'What is the 85 year rule' section.

I am now paying into another pension arrangement (not LGPS). Can I transfer my LGPS benefits to that arrangement?

We can transfer your pension rights to another pension scheme provided it is an HMRC registered pension scheme. If your new scheme is a Qualifying Recognised Overseas Pension Scheme (QROPS), we can transfer your LGPS benefits to it provided the scheme appears on the HMRC QROPS list.

Qualifying Recognised Overseas Pension Scheme list

I have some pension rights from a previous employment. Can I transfer these into the LGPS

No. You can only transfer benefits in to the LGPS if you are an active member.

I am also an active member of the Local Government Pension Scheme (LGPS). Does this statement cover that pension?

No. If you are currently paying into the LGPS these are not included on this statement. You will receive a separate statement for these.

How much pension can I exchange for a larger lump sum?

If you joined the LGPS before 1 April 2008  you are entitled to receive a tax-free automatic lump sum retirement grant based on your membership built up before 1 April 2008.  This is in addition to the annual pension.  Under current regulations, when you draw your benefits you have the option to exchange some of your annual pension for extra tax-free lump sum.  For every £1 of annual pension you give up you will receive £12 lump sum.

If you joined the LGPS after 1 April 2008 your benefits do not include an automatic lump sum retirement grant. However, under current regulations, when you draw your benefits you will have the option to exchange some of your annual pension for a tax-free lump sum.  For every £1 of annual pension you give up you will receive £12 lump sum. There are limits to how much pension you are allowed to give up in order to have a larger lump sum, more information can be provided upon request.

How will my benefits keep their value?

Your benefits are adjusted in line with inflation from the time you leave the scheme and continue to be adjusted once pensions are in payment. The increases are linked to the Consumer Price Index, and these are applied to your deferred benefits each April.

Pension sharing on divorce – when can a pension credited member take their pension?

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, subject to early payment reduction factors. Pension credit members’ benefits do not provide survivors’ pensions.

I am interested in taking my benefits, what do I need to do?

If you wish to take payment of your benefits at any time from age 55, please contact us. Otherwise we will write to you approximately one month before your reach your normal retirement age with details of the current values.

What happens if I become ill before my deferred pension benefits are due to be paid?

In such circumstances please contact us and we will arrange an appointment with an independent Doctor qualified in Occupational Health Medicine to assess your eligibility to receive your pension early due to ill-health.

What happens if I re-join the LGPS?

If you re-join the LGPS in England or Wales you are required to comply with the following:

Notify the administering authority of the fund in which you are an active member that you have a deferred benefit in another LGPS fund in England & Wales.
Notify the administering authority of the fund in which you are an active member of any intervening service in any other public service pension scheme (even if you have completed a transfer out of their benefits in respect of that service to non-public sector pension scheme).
Notify the fund in which the deferred benefit is held that you are an active member in another LGPS fund in England or Wales.

What happens if I take my deferred benefits earlier?

If you choose to take your deferred benefits earlier than your Normal Retirement Age they will usually be reduced to take account of the fact that your pension will be paid for longer.  How much your deferred benefits are reduced by depends on how early you take them.  The reduction is based on the length of time (in years and days) between the date you take them and the date your deferred benefit will be payable without a reduction for early payment. 

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, we adjust the percentages. Benefits built up before 1st April 2014 have a different Normal Retirement Age, which for most people is age 65. You should always ask for a formal quotation of your benefits from the Pension’s Office before deciding to retire early.

Number of years paid early	Pension reduction	Lump sum reduction (for membership to 31 March 2014)
1	4.9%	1.7%
2	9.3%	3.3%
3	13.5%	4.9%
4	17.40%	6.5%
5	20.9%	8.1%
6	24.3%	9.6%
7	27.4%	11.1%
8	30.3%	12.6%
9	33%	14.1%
10	35.6%	15.5%
11	39.5%	15.5%
12	41.8%	15.5%
13	43.9%	15.5%

What happens to my additional voluntary contributions?

If you have taken out an additional voluntary contributions (AVCs) arrangement with either Prudential, Phoenix Life or Utmost, these are not included in the enclosed statement. Neither are any shared-costs AVCs arranged through My Money Matters (formally AVC Wise) and administered by Prudential. Your AVC provider will be in contact with you about your benefits held with them.

What is modification?

This only affects people who have service in the scheme before 1 April 1980. Public service pensions were modified since the National Insurance Act 1946 introduced State Retirement Pensions. Pensionable employees paid reduced contributions and were subject to a modification of their benefits at State Pension age, when they become entitled to State Retirement Pensions. If modification applies to you, your modified pension figure will be shown on your benefit statement.

What is the 85 year rule?

This rule applies to anyone who was an active member at any time between 1 April 1998 and 30 September 2006.

If your age in whole years at the point when your deferred benefits come into payment and your total membership of the scheme in whole years (including the length of time your pension has been deferred) equal at least 85 when added together, you will have some protection against reduction to your benefits even if you retire before age 65.

If you do not meet the 85 year rule and your deferred benefits come into payment before age 65, the pension benefits will be reduced to reflect early payment. How much your deferred benefits are reduced by depends on how early you take them. The reduction is based on the length of time (in years and days) between the date you take them and the date your deferred benefit will be payable without a reduction for early payment.

What tax limits apply to pensions?

Annual Allowance

The Annual Allowance (AA) is the amount your pension savings can increase in any one year, without you having to pay a tax charge. The AA for 2023/2024 has increased to £60,000. Further information on the AA charge is available on HMRC’s website.

Will my partner receive a pension in the event of my death?

If you were an active member of the scheme on or after 1 April 2008 then a cohabiting partner’s pension may be payable providing certain qualifying conditions have been satisfied for a continuous period of at least two years before the date of death. For more information, refer to the ‘Eligible Cohabiting Partner’ section in the main annual benefit statement guidance notes.