Retirement Made Simple
Your NESPF pension, as part of the Local Government Pension Scheme (LGPS), offers many retirement benefits which other schemes may not. One of the main advantages of paying into the NESPF is your guaranteed annual pension, which is paid for life. Plus, your pension is inflation proof - so as prices and the cost of living increase, so too will your pension pot.
With this is mind, most of us are looking forward to reaping the rewards of retirement and receiving our NESPF pension when the time comes. We may know that retirement is on the horizon at some point, but the ins and outs of retirement might not be so clear-cut. This article will break down the need-to-know information about taking your pension for smooth sailing at retirement time.
When can I retire?
If you are counting down to retirement, it might be helpful to know you can choose to take your pension from between your 55th birthday and your 75th birthday. However, if you take your pension before your Normal Pension Age (NPA), which is the age you can retire and receive your pension in full, it will be reduced for being paid early. Similarly, if you take your pension after your NPA, it will be increased as it is being paid later.
Normal Pension Age (NPA) differs depending on when you were paying in to the scheme:
- Before 1 April 2015: NPA = 65
- On or After 1 April 2015: NPA = State Pension Age, with a minimum age of 65. That means those who have a State Pension Age lower than 65, still have a NPA of 65 in the LGPS. As your Normal Pension Age is linked to your State Pension Age, if your State Pension Age increases so too will your Normal Pension Age. You can find out your State Pension Age here.
You cannot take your pre and post April 2015 benefits separately. They must be taken at the same time.
What types of retirement are there?
There are various types of retirement which may be suitable depending on your own personal circumstances:
- Flexible retirement: From age 55 and with your employer's permission, you can reduce your hours or pay grade and begin to draw some or all of your pension benefits.
- Ill health retirement: Ill health retirement is an option at any age provided you have been a member of the pension scheme for at least 2 years and your employer, based on the opinion of an independent occupational health advisor, is satisfied you are permanently incapable of doing your job. Your pension will not be reduced for early payment, in fact it will increase.
- Redundancy and efficiency retirement: If you are 55 and over, and you lose your job on grounds of redundancy or business efficiency, your pension will be paid immediately without any reductions for early payment. For those who have been in the scheme continually since 5 April 2006, your pension can be paid from age 50 in these circumstances.
For more information on these options click here.
What is the retirement process?
The retirement process for the various types of retirement as mentioned above may differ however, in general, the process for retirement will be as follows:
- Speak to your employer about retiring and agree a retirement date. If you are requesting ill health retirement, your employer will first organise a medical before agreeing to ill health retirement.
- Once you and your employer have agreed and set a retirement date, your employer will notify us.
- Around 4-6 weeks* before your retirement date, we will write out to you about your pension options. This will include your options to swap pension for lump sum.
- You'll need to complete and return the forms we send to you.
- After your final pay has been paid, your payroll department will pass on your final pay details to us. This is used to calculate the final value of your pension and lump sum.
- We will write out to you once we receive your final pay details, confirming the date of your first pension payment.
*We aim to have pension options issued 4-6 weeks before retirement. However this might not always be possible. Timings can vary in terms of how long your pension can take to be processed and come into payment, so please be sure to begin the process from your side in plenty of time, especially if you have a specific retirement date in mind.
More information on the retirement process can be found here.
How can I keep track of my pension?
Even if retirement is several years away, you can still take steps towards becoming retirement ready. With our My Pension+ portal, it is now easier than ever to keep track of your pension:
- Monitor the value of your pension by watching your annual pension statement video.
- Use our retirement planner to forecast how different pension pots translate into standard of living and see how taking your pension at different ages and with different lump sums affect its value.
To log in to My Pension+ click here.
