What reductions are applied to my benefits if I draw them before my protected Normal Pension Age?
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If you choose to 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 you will see in the section How is my pension worked out? and are then reduced. How much your benefits are reduced by depends on how early you draw them.
The reduction is calculated in accordance with guidance issued by the Government from time to time. 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.
The table below shows the reduction that would be applied depending on the number of years before your Normal Pension Age you decide to draw your pension. Where the number of years is not exact, the reduction percentages are adjusted accordingly.
The Government changed the reductions on 3 July 2023. The reductions shown below apply to retirements from that date.
|
Years Early
|
Pension
|
Lump Sum
(for membership up to 31 March 2008)
|
|
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
|
33.0%
|
14.1%
|
|
10
|
35.6%
|
15.5%
|
|
11
|
39.5%
|
n/a |
|
12
|
41.8%
|
n/a |
|
13
|
43.9%
|
n/a |
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 the reductions by not taking immediate payment of your benefits on retirement i.e. by delaying payment until a later date.
If you decide not to draw immediate benefits, the benefits would normally become payable at your Normal Pension Age, but you can defer payment beyond that age, although benefits must be paid by age 75.
If you were a member of the LGPS on 30 September 2006, some or all of your benefits paid early could be protected from the reduction if you are a 85-year rule protected member.
You can find out more about rule of 85 protections from the section I joined the LGPS before 1 April 2014.