Retirement

Retirement including capital costs, conversion of annual pension to lump sum, early retirement reductions, flexible retirement, ill health, redundancy.

How retirement benefits are calculated?

Pension benefits are calculated using different formulae depending on when a member first joined the LGPS.

We split their pension membership into three categories in order to calculate the pension benefits due:

  • Membership prior to 1 April 2008
  • Membership from 1 April 2008 to 31 March 2014
  • Membership from 1 April 2014 onwards
For all active members of the LGPS on 1 April 2014

From 1 April 2014, the LGPS remained a 'Defined Benefit (DB)' pension scheme (i.e. the way in which benefits are calculated will continue to be defined in legislation) but instead of benefits building up on a final salary basis they build up on a 'Career Average Revalued Earnings' (CARE) basis. This means that the pension members earn each year is based on their actual pensionable pay received in each Scheme year (1 April to 31 March) instead of being based on the pay they received at the point they leave or retire from the Scheme.

Each year members receive 1/49th of their actual pensionable pay and this is added to their 'pension account' with an inflationary increase being added each year so that it keeps its value from the point the pension is earned to the point from which it becomes payable.

Members who joined the LGPS on or after 1 April 2014

For members who first joined the LGPS on or after 1 April 2014, their benefits will be calculated as follows:

Annual pension: Actual Pensionable Pay ÷ 49

Lump sum (tax-free): NIL (but with an option to convert a portion of annual pension into tax-free cash)

Members who joined the LGPS from 1 April 2008

For members who joined the LGPS for the first time on or after 1 April 2008, their pension benefits up to 31 March 2014 will be calculated as follows:

Annual Pension: Scheme Membership ÷ 60 x Final Pay

Lump Sum (tax-free): NIL (with an option to convert a portion of annual pension into tax-free cash).

Members who joined the LGPS before 1 April 2008

If a member joined the LGPS before 1 April 2008 their pension benefits up to 31 March 2008 will be calculated as follows:

Annual Pension: Scheme Membership ÷ 80 x Final Pay

Lump Sum (tax-free): Scheme Membership ÷ 80 x Final Pay x 3

IMPORTANT: If a member is taking early voluntary retirement and they wish to release their pension before their NPA a written notice of three months must be provided to the pensions team. We can accept this over email info@berkshirepensions.org.uk