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  • Early Retirement Costs (ERC's)

Early Retirement Costs (ERC's)

Where an employee leaves on the grounds of redundancy/business efficiency and is aged 55 and over, the member is entitled to immediate payment of their unreduced benefits. As a result of these unreduced benefits being paid earlier than the normal pension age an ERC is payable by the employer to cover the pension fund strain cost, see the LGPS Regulations 2013:  http://lgpsregs.org/schemeregs/lgpsregs2013/timeline.php#r68.

Also in the event of your organisation agreeing to waive any actuarial reduction in respect of a members' benefit following their voluntary resignation or your granting of flexible retirement, an ERC would also be payable by the employer.

If a member retires on the grounds of ill health there will also be an ERC payable by the your organisation, but this would not be payable immediately and is taken into account at the next triennial valuation (31/03/2019).  

The calculation of an ERC is based on:

  • The members age
  • scheme membership
  • Pay
  • Length of time to their Normal Pensionable Age, and
  • Factors produced by the Funds actuary.

Before you process any redundancy/business efficiency retirements, grant flexible retirements, or waive any actuarial reductions for members, we advise that an estimate is run through the web portal to establish any potential costs to the employer.

pdf icon Retirement with ERC's [53kb]

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