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Your Pension

Taking your pension

Taking your pension

Thinking about retiring?

Whether you’re contributing to the Essex Pension Fund or not, planning your retirement can take time. It’s good to know that once you are in receipt of your pension, it will increase with inflation.

Types of retirement

Essex Pension Fund offers different types of retirement:

  • Normal – taking your pension without reduction at age 65, or State Pension Age.
  • Early – taking a reduced pension from age 55.
  • Late – retiring later than age 65, or State Pension Age.
  • Flexible – continuing to work and drawing your pension.
  • Ill health – retiring due to health reasons.
  • Redundancy and efficiency – a decision made by your employer from age 55.

Your retirement benefits

Normal retirement

Early retirement

Late retirement

Flexible retirement

Ill health retirement

Redundancy and efficiency

Small pot payment

Your retirement benefits

What will you receive?

Contributing members

You can check what your pension might be at your Normal Pension Age on your Annual Benefit Statement, which is available on Member Online.

If you would like to see what your pension could be if you retired at a different age, between 55 and 74, you can also use the pension modeller on Member Online.

If you would like an estimate for any other age please contact us. Please note, we can only produce one estimate within a 12-month period.

No longer contributing

If you’re no longer contributing and over age 55, you can use the retire online calculator to get an estimate of your pension. You must plan to take your pension within two months of making the calculation.

Further information

We’re unable to run estimates for ill health, redundancy and flexible retirement. Contact your employer if your query relates to these.

How your benefits are calculated

Membership from 1 April 2014

Any pension you have built up in the Fund after 1 April 2014 is on a CARE (Career Average Revalued Earnings) basis. Your accrual rate is 1/49 of your pensionable pay.

You can see an overview of how your pension builds up in the ‘How the Fund works’ section.

Membership from 1 April 2008 to 31 March 2014

Any pension you built up between these dates is worked out using your final pay and membership length:

Pension = Final pay x membership ÷ 60

Membership before 1 April 2008

Any pension you built up before 1 April 2008 is worked out using your final pay and your membership length.

Pension = Final pay x membership ÷ 80

Lump sum = Pension x 3

If you were a member of the Fund both before and after 1 April 2008, the total amount of all pension and lump sum will be added together to give you your total benefits at retirement.

Your lump sum

When you retire, you can take part of your pension as a lump sum. This is normally paid tax free.

If you were a member:

  • Before 1 April 2008 – you are automatically provided with a lump sum.
  • After 1 April 2008 – the Fund no longer provides an automatic lump sum, but you can choose to reduce your pension for a lump sum.

Normal retirement

When can I take my pension?

Your Normal Pension Age is the age that you will normally take your pension from the Fund in full.

Your Normal Pension Age is usually:

  • The same as your State Pension Age;
  • Or, age 65 (for members who left the Fund before 2014).

Find out your State Pension Age .

To find out more please visit the LGPS website .

Early retirement

Taking your pension early?

You can choose to retire early, but your annual pension would be reduced. Currently, the earliest you can take your pension from is age 55.

The Government has confirmed that early retirement age is due to rise to age 57 from 2028. The amount of pension you would receive depends on how early you retire.

Details of the reductions that apply can be found on the LGPS website .

Terarrium and coffee cups on a dining table.

Late retirement

You can retire after your Normal Pension Age. You must retire and leave employment, except if you are working past age 75. A late retirement enhancement would be applied as your pension is starting later than expected.

Flexible retirement

Taking your pension and working

If you would like to retire and continue to work, known as flexible retirement, you need to be age 55 or over and you’ll also need your employer’s consent. If your employer allows it, you can reduce your hours and/or your pay grade from age 55 and draw some, or all, of your pension while continuing to work.

If you and your employer agree you can take flexible retirement before your Normal Pension Age, your benefits may be reduced (as they would be for early retirement).

Ask your employer about their flexible retirement policy if you are interested in this option.

Workbench in a garden with a terarrium on it.

Ill health retirement

What this means for you

To qualify for ill health benefits, you have to have met the two-year vesting period in the Fund and your employer, based on an opinion from an independent occupational health physician appointed by them, must be satisfied that you will be permanently unable to do your own job until your Normal Pension Age and that you are not immediately capable of undertaking gainful employment.

Gainful employment means paid employment for more than 30 hours each week for a period of less than 12 months.

The different tiers of ill health benefits are:

  • Tier 1: No prospect of gainful employment either in the short term or before Normal Pension Age.

    In this case, your pension would be based on your accrued benefits plus an enhancement to replace what you would have built up to your Normal Pension Age, if you had stayed in the Fund until then.

  • Tier 2: No prospect of gainful employment in the short term but prospect of gainful employment before your Normal Pension Age.

    Your pension would be based on your accrued benefits plus a 25% enhancement of what you would have built up in your pension if you remained in the Fund until your Normal Pension Age.

  • Tier 3: Prospect of gainful employment within three years of leaving.

    Your pension would be based on your accrued benefits only. Your pension would be paid for a maximum of three years and must be reviewed after 18 months.

    For more information please visit the LGPS website .

Redundancy and efficiency

What this means for you

If your employer makes your role redundant or retires you in the interests of business efficiency and you are aged 55 or over, your pension will be paid immediately without reduction but not enhanced to Normal Pension Age.

Please note, the minimum retirement age is changing from 55 to 57 in 2028. This means the minimum age that your pension would be paid without reduction in this circumstance would also increase to age 57 from 1 April 2028.

Small pot payment

What you can do with a small pot

Taking your entire pension as a one-off lump sum is known as ‘trivial commutation’. The government has specific rules about who can do this, and it’s usually only an option for those with smaller pension pots.

You might be eligible to take your pension as a lump sum if the total value of all your pension benefits (including any other pensions you have and any already being paid, but excluding the State Pension) is no more than the current HMRC limit of £30,000.

If you do not qualify for a trivial commutation, you still may be able to receive a small pot payment under ‘de minimis’ regulations.

To qualify under ‘de minimis’ rules the total payment of all your LGPS benefits must not exceed £10,000 and you must be at least age 55. You are unable to receive payment under ‘de minimis’ rules if you have an LGPS deferred benefit in which the leave date was before 1st April 2008. There are a number of factors to consider when applying for a de minimis payments. Please contact us to find out more.

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