A member wants to retire
A member wants to retire
When a member retires, it is your responsibility to provide Greater Manchester Pension Fund (GMPF) with information. Generally, two years’ membership is required before a member can retire.
You should complete the online P71 retirement form four to six weeks before the date the member is due to leave.
Before looking at the various types of retirement it is important to remember that a member must generally have been a member of the Local Government Pension Scheme (LGPS) for two years or more before they can retire and draw their benefits. But we also regard members as meeting the two year requirement if any of the following apply:
Find out more information on the different types of retirement:
If the member has transferred benefits from any UK staff pension scheme or a European pension institution.
If the member has transferred benefits from any scheme or arrangement where they weren’t allowed a refund when they left as long as the total length of service from any of these was at least two years.
If a member has previously transferred LGPS pension rights to a pension scheme abroad.
They already have any benefits on hold in the LGPS.
They already draw a pension from the LGPS (other than a dependant’s pension or pension from a pension sharing order).
They have paid National Insurance whilst a member of the LGPS and stop paying in during the tax year of reaching normal pension age (NPA).
They have paid into the LGPS for less than two years, but have reached age 75.
The NPA, when members can retire without a reduction, is:
- Age 65, for final salary benefits (built up before 1 April 2014)
- Age 65 or their State Pension age (SPA) if later, for career average benefits (built up from 1 April 2014). A members SPA is based on their gender and date of birth and may be subject to change in the future.
If you have a member who is retiring at NPA please complete the online P71 retirement form.
To check a member's State Pension age use the Government's State Pension Age calculator.
The current NPA for members is 65, or State Pension age if later. If they retire earlier then their benefits could be reduced. The early retirement age is currently 55 however the Government has announced the earliest age that you can take your pension will increase from age 55 to 57 from 6 April 2028. The closer a member is to their NPA the smaller the reduction. Employers can waive the reduction depending on their policy. Early retirement reductions don't apply in cases of ill health, redundancy or efficiency but if a member was in the Local Government Pension Scheme (LGPS) before October 2006 and has long service, they may have some protection from the reductions through the 85 year rule.
If you have a member who is retiring early voluntarily please complete the online P71 retirement form.
A member can stay in the scheme beyond their NPA – up to age 75. If retiring late, there are no early retirement reductions but there will be late retirement enhancements based on the number of days the member goes beyond their NPA.
If you have a member who is retiring after age 65, please complete the online P71 retirement form.
When a member leaves because of redundancy or on the grounds of efficiency and they are over age 55, their pension becomes payable with no reductions. They must take their benefits and cannot choose to keep them on hold.
As the pension is being paid early, without reductions, there will be a strain cost which you must pay.
If the member is leaving because of redundancy or on the grounds of efficiency, please complete the online P71 retirement form, stating ‘redundancy’ or ‘efficiency’ as the type of retirement.
The Local Government Pension Scheme (LGPS) regulations allow for immediate pension benefits to be paid if a member meets the criteria either as an active member or a member with benefits on hold, regardless of their age.
There are three tiers of protection for active members and one tier of protection for members with benefits on hold.
- Tier 1 – The member will receive an enhancement based on 1/49 of their assumed pensionable pay multiplied by the number of years until their NPA.
- Tier 2 – The member will receive an enhancement based on 25 per cent of the tier 1 enhancement.
- Tier 3 – The member will receive no enhancement and will receive a temporary pension for a maximum of three years. The member will have a review after 19 months where the independent registered medical practitioner (IRMP) will decide if the member will either qualify for an uplift to tier 2, continue receiving a tier 3 or, if they are capable of undertaking gainful employment, stop the pension.
As the employer, you are responsible for deciding on what grounds the employment is to be terminated. You can't make this decision unless you have obtained a certificate from an independent registered medical practitioner qualified in occupational health medicine.
We have designed an ill health section which contains guidance and a full set of ill health forms to help you understand LGPS ill health retirements.
This is a popular subject for appeals under the internal dispute resolution procedure. Make sure you understand the regulations, that you follow the processes correctly and keep the member informed at regular intervals.
Further guidance on ill health retirements can be found on the LGPS Regulations website.
If you have any questions about ill health retirement please contact the employer helpline.
A member can flexibly retire by reducing their working hours, or their pay grade. Their pension will be reduced if they do this before their NPA. However, if they have 85 year rule protections, these will automatically apply, even if the member is under 60. This is likely to result in a strain cost which you must pay.
The member can choose to take either some or all of their benefits. If the member decides to only take part of their benefits, the remainder will be linked to their new record. There is no minimum number of hours that the member must reduce by to be eligible for flexible retirement. The decision to approve flexible retirement is entirely at the employer's discretion.
If the member is taking flexible retirement, you will need to complete the online P71 retirement form. When completing the form you will need to be aware of the following information if the member has any extra benefits:
Extra benefits are any extra benefits in accordance with actuarial guidance issued by the Government Actuary's Department (GAD). These include:
- Added years' contracts being bought by the member: added years' contracts with an election date before 01/10/2006 must end and the resulting benefits must be taken on flexible retirement. For added years' contracts with an election date after 30/09/2006, the member has a choice whether to take all or none of the extra benefit.
- Additional voluntary contributions (AVCs): AVC contracts entered into before 13/11/2001 must end and the resulting benefits must be taken on flexible retirement. For AVC contracts that began on or after 13/11/2001, the member has a choice whether to take all or none of the extra benefit. If the member chooses to take all of their AVCs at flexible retirement, their existing contact must end. However, if the member wished to remain in the Scheme after flexible retirement (where you are treating as a new employment contract or a variation to the contract) and wished to continue to pays AVCs, more AVCs could be paid, but the AVC arrangement would be treated as a post 31 March 2014 arrangement.
- Extra pension bought by additional pension contributions (APCs) or shared cost APCs (SCAPCs): the member has a choice whether to take all or none of the extra benefit. If the member chooses to take benefits from an extra pension contract, their existing contact must end. However, a new extra pension contract could begin after flexible retirement if the member decides to stay in the Scheme (where you are treating as a new employment contract or a variation to the contract).
- Extra pension bought by additional regular contributions (ARCs): the member has a choice whether to take all or none of the extra benefit.
- Extra pension given by you, as the employer: the member has a choice whether to take all or none of the extra benefit.
If you are unsure whether a member has extra benefits:
- If you are not an Altair user, please contact us to find out before you discuss options with the member.
- If you are an Altair user, please check the AVC details data view on Altair, field 'AVC Type':
- Added years' contract: if the member has this type of extra benefit it will be recorded on the data view as either 'Added Service (60ths)' or 'Added Service (80ths)'.
- AVCs: if the member has this type of extra benefit it will be recorded on the data view as 'In-House AVC'.
- APCs/SCAPCs: if the member has this type of extra benefit it will be recorded on the data view as 'Reg 14 Add Pen Memb'. Please note that this is the wrong regulation number, it should be Reg 16, but Heywood are aware of this and it will not be changing. Fields 'Date started' and 'LGS Regulation' will help distinguish between an APC/SCAPC and an additional regular contribution contract (ARC). For 'Date started' if the date is on or after 01/04/2014 it is an APC/SCAPC. Additionally, 'LGS Regulation' will show 'CAREAPC' if it is an APC/SCAPC.
- ARCs: if the member has this type of extra benefit it will be recorded on the data view as 'Reg 14 Add Pen Memb'.
When a member flexibly retires, they can continue paying contributions into the Scheme. To advise us of the member's decision please complete this section of the online P71 retirement form.
For all members, when they take their retirement benefits, the record we hold for them becomes a pensioner record. If a member chooses to stay in the Scheme post flexible retirement, you need to send us their new starter details so a new record can be created. The new record must have a different payroll number to their pensioner record in order for i-Connect to be able to distinguish between them. This applies whether you are treating the change as a new contract, or as a variation of their contract.
If the member chooses not to stay in the Scheme post flexible retirement, they need to complete an opting out form (P4) to give to you.
For a member who chose to take all their benefits at flexible retirement and completed a P4 form within three months of their change of hours or grade:
- if you receive the P4 form before notifying us of the new starter, you can indicate they have opted out when sending their new starter details.
- if you receive the P4 form after you have notified us of the new starter, you need to let us know they have opted out on your next submission.
If the member chose to take part of their benefits at flexible retirement and has chosen to opt out then you need to contact our Employer Data team with details before sending a notification to us.
An employee is eligible to be a member of the Local Government Pension Scheme (LGPS) until they reach age 75. Once a member reaches age 75 they must take payment of their pension benefits, as per regulation 30(3) of the Local Government Pension Scheme Regulations 2013. A member cannot keep their benefits on hold after they reach age 75.
To inform us of a late retirement, please complete the online P71 retirement form.
If the member joined the scheme before 1 October 2006, they may qualify for 85 year rule protections. Usually, a member will have reductions on their pre 1 April 2014 benefits if they retire before age 65, and on their post 31 March 2014 benefits if they retire before their normal pension age (NPA). Members who qualify for the 85 year rule will have certain parts of their pension paid without some of the usual early retirement reductions.
To qualify, the member's age plus the number of years of service (both in whole years only) must add up to at least 85. The date the member meets the criteria is called their critical retirement age (CRA). For example, if the member reaches age 61 and has 24 years of service, they will reach their CRA. However, the member can't meet their CRA until they reach age 60, even if the age plus service equals 85. The employer can decide to switch on the 85 year rule before age 60, but there will be a strain cost for doing so. If the member takes flexible retirement before age 60, the 85 year rule will automatically be switched on.
Members are split into groups depending on their date of birth and the date they reach their CRA. Each group has different levels of protection, which are detailed in the table below.
| Pension built up before 31 March 2008 | Pension built up between 1 April 2008 and 31 March 2014 | Pension built up between 1 April 2014 and 31 March 2016 | Pension built up between 1 April 2016 and 31 March 2020 | Pension built up after 1 April 2020 | |
|---|---|---|---|---|---|
| Members born before 1 April 1956 | Protected | Protected | Protected | No protection | No protection |
| Members born between 1 April 1956 and 31 March 1960 | Protected | Partial protection | Partial protection | Partial protection | No protection |
| Members born on or after 1 April 1960 | Protected | No protection | No protection | No protection | No protection |
For more detailed information about the 85 year rule, visit the LGPS Guidance.
A strain cost is payable by the employer if a member retires on redundancy, efficiency or ill health grounds. This is usually payable upfront. However, some larger employers will have a budget, against which these costs are monitored. If the budget is exceeded, the employer will be invoiced for the additional payment.
Members who retire before their normal pension age (NPA) on voluntary early retirement grounds will have their pension reduced, to cover the cost of paying it early. In these cases, there would be no strain cost payable by the employer. However, if the member has 85 year rule protections, their pre 1 April 2008 benefits will be paid unreduced. There may be a small cost to cover this.
The strain cost is calculated by multiplying the member's pension and lump sum by an early retirement reduction factor, then by a pension commencement factor. Both factors are based on the member's age and are provided by our actuaries, Hymans. So the earlier the member retires, the higher the cost will be.
Strain costs may also be payable for flexible retirements, where the member has 85 year protections and has not yet reached age 60. There will also be a cost if you choose to waive any reductions or grant additional pension in redundancy/efficiency cases. The cost of awarding additional pension whilst the member is active or if they retire on redundancy/efficiency grounds is a cost that must be paid by the employer before any pension benefits may be paid. This cost is referred to as an 'upfront' cost.
Normal Pension Age (NPA) is equivalent to the members State Pension age (SPA) with a minimum of age 65.