Late retirement
Your LGPS pension is payable at your Normal Pension Age, but you can choose to receive it earlier or later.
If you take it earlier, it will be reduced as it will be in payment longer and if you take it later it will be increased.
Taking a pension after Normal Pension Age is known as a late retirement.
How late you can leave your LGPS pension
If you are still working in your LGPS employment, you can continue paying towards your pension until age 75.
If you are retired due to ill-health, redundancy or business efficiency or take flexible retirement, you won’t be able to defer taking your pension benefits when you leave.
If you leave your employment and your LGPS pension becomes deferred, unless you left before 1 April 1998, you will be able to choose to leave it deferred until age 75.
Once you reach age 75, you must put your pension benefits into payment, even if you are continuing to work in your LGPS employment. We will contact you to arrange payment of your pension benefits.
Late retirement increases on annual pension
Late retirement increases are an additional amount added to your annual pension.
The annual pension is amount you receive each year in retirement.
They will apply to:
- your pension benefits built up after 1 April 2014 from your Normal Pension Age
- your pension benefits built up before 1 April 2014 from age 65
Late retirement increases are worked out differently before and after 1 September:
- before 1 September 2019, your annual pension would have received an increase of 0.010% for each day after Normal Pension Age (minimum age 65) until 31 August 2019.
- after 1 September 2019, the percentage increase depends on how many years late your pension is being paid.
Different percentage increase factors are used for the period before and after 1 September 2023. These are shown in the table below.
You will receive the percentage increase displayed in the table below for each day that you leave your pension after the relevant Normal Pension Age.
| Years after Normal Pension Age |
Percentage increase (%) 1 September 2019 to 31 August 2023 |
Percentage increase (%) From 1 September 2023 |
|---|---|---|
| 1 | 0.010% | 0.0098% |
| 2 | 0.010% | 0.0107% |
| 3 | 0.011% | 0.0117% |
| 4 | 0.012% | 0.0129% |
| 5 | 0.014% | 0.0141% |
| 6 | 0.015% | 0.0156% |
| 7 | 0.017% | 0.0171% |
| 8 | 0.018% | 0.0189% |
| 9 | 0.020% | 0.0208% |
| 10 | 0.022% | 0.0230% |
Late retirement increases can be a little complicated to work out. Here is an example to show you how they are calculated.
Late retirement increases example
Mark’s Normal Pension Age is 65. He turned 65 on 1 September 2019. If he chose to retire on 31 August 2024, that would be exactly 5years after his Normal Pension Age.
The table shows how increases would be applied to each period after his Normal Pension Age until his retirement date.
| Period | Years late | Total days | Increase percentage (%) |
| 1 September 2019 to 31 August 2020 | 1 | 366 | 0.010% |
| 1 September 2020 to 31 August 2021 | 2 | 365 | 0.010% |
| 1 September 2021 to 31 August 2022 | 3 | 365 | 0.011% |
| 1 September 2022 to 31 August 2023 | 4 | 365 | 0.012% |
| 1 September 2023 to 31 August 2024 | 5 | 366 | 0.0141% |
We would then add the percentages together to get a total percentage increase: (366 x 0.010%) + (365 x 0.010%) + (365 x 0.011%) + (365 x 0.012%) + (366 x 0.0141%) = 20.87%.
Let’s say Mark’s annual pension was valued at £5,000. So the increases are valued at 20.87% x 5,000 = £1,043.50
This means his total annual pension when he retires, including late retirement increases, would be £6,043.50
Automatic lump sums
If you were in the scheme before 1 April 2008, you will have an automatic lump sum included in your benefits which is sometimes referred to as the ‘retirement grant’. This is a tax-free lump sum that usually cannot be converted into an annual pension.
After 1 September 2023, there are no late retirement increases applied to the automatic lump sum. However, if you reached your Normal Pension Age before this date, the automatic lump sum will increase 0.001% for each day between the date you reached your Normal Pension age and 1 September 2023.
For example, if your automatic lump sum is £4,000 and you were 386 days after your Normal Pension Age on 1 September 2023, we could calculate the increase as follows:
£4,000 x (0.001% x 386 days) = £15.44.
The total retirement grant paid would therefore be £4,015.44
Getting a pension estimate
You won't be able to see late retirement increases on 'my pension online' and we don't include them on the annual benefit statement.
If you are close to retirement, we recommend you contact us directly for an estimate before you make a decision about taking your pension. We can supply you with up to 2 estimates in any rolling 12 month period.