Planning your retirement - Still paying in

If you are currently contributing into the scheme and considering retirement, here is an example of a typical retirement process:

Step 1 - Obtain an estimate
You can calculate an estimate of your benefits using your portal account. Alternatively, if you are looking to take redundancy or retire on ill-health grounds, your employer can provide you with an estimate of benefits.

Step 2 - Notify your employer you want to retire
Inform your line manager that you want to retire, at this stage you will need to check the notice period and then hand your notice in accordingly. Your manager will notify the HR department that you are leaving and that you wish to take your retirement benefits. Shortly after this, you should be issued with your retirement claim forms and a statutory notification letter (which officially confirms your retirement date).

Step 3 - Reply
Return your completed forms and any requested certificates to your employer as soon as possible after receipt. Photocopies of certificates are acceptable.

Step 4 - Your employer will inform us of your retirement
Your employer will complete our on-line retirement notification and attach your completed forms and certificates to formally let us know that you are leaving. This is expected approximately 3 weeks in advance of your leaving date.

Step 5 - Retirement Options
We will send you a retirement quote letter or email detailing your retirement options. If there is a query regarding any information provided you will be notified accordingly.

Step 6 - Reply
Return your completed option and member declaration forms together with any other documents requested as soon as possible to the Fund after receipt. Again, Photocopies of certificates are acceptable.

Step 7 - Payment
You will receive a letter confirming the date of payment of your lump sum and when the payment of your pension will commence. Your LGPS pension is a taxable income, but any lump sum is paid tax free. The amount of tax that you pay on your pension depends on your income and your personal circumstances.

Your first pension payment will be subject to a 0T tax code unless we have received a P45 with your forms, this means that you will be taxed at 20% or 40% dependent on the gross amount paid.  The HM Revenue and Customs Tax Office will then determine your tax code and send details to us electronically,  which will then generate a tax refund if applicable on the next payment made to you.

You will also receive a pension advice slip prior to your first pension payment.

Have you started thinking about retirement, or is there too much to think about? How much will your pension be? Can you afford to retire? How much notice do you need to give? Most of us spend more time planning for a two-week holiday than the biggest holiday of our lifetime - retirement!

Whatever your retirement looks like, the West Midlands Pension Fund is here to help you. We have produced some useful links and guides to ensure you can successfully plan for your future.

The Fund has produced a Retirement Planning Guide, which can be found in the Downloads section, which includes all the information you need will need.

• To find out how much your pension is or to calculate estimates, you will need to log onto the Pensions Portal.
   
• Do you know how much State Pension you are entitled to? To check your forecast please visit Check your State Pension forecast.
   
• Your LGPS pension is one of the most valuable asset you have, so when planning, prepare but beware of scammers who may try to get their hands on your hard earned benefit. For tips how to spot the signs and avoid a scam, please view the information on The Pension Regulator's website.
   
• When preparing for retirement, it is always helpful to produce a budget planner, for tips and advice and help on budgeting for the future please visit the Citizen Advice website.
   
• The LGPS Member site has all the information about you need to know about the rules and regulations of the scheme.

Please return only one set of forms, and ensure that all details are thoroughly checked before returning your forms to us.

We are moving towards a more digital way of working, and as a result you may receive a copy of your retirement forms by email in addition to your paper copy.

You can complete and sign these forms electronically, and this will be accepted as long as the required identification is also provided.

We have set out some instructions to how you can enter an electronic signature below:

1. Write your signature on a white piece of paper.
2. Scan the page and save it on your computer in a common file format: .bmp, .gif, .jpg, or .png. If you do not have a scanner available, take a close-up picture of the signature with a smartphone and send the image to your email address.
3. On your PC/laptop find the scanned image or find the emailed image in your inbox (check your junk folder) and save it on your computer in a common file format: .bmp, .gif, .jpg, or .png.
4. To insert and add your signature to the forms click insert and then locate the file where you saved your signature and double left click. 

You may wish to consider a gradual move into retirement by flexibly retiring. From age 55, if you reduce your hours or move to a less senior position, provided you have met the 2 years vesting period in the scheme and your employer agrees, you can draw some or all of the pension benefits you have built up, helping you ease into retirement. Your employer will have a policy on flexible retirement. You can ask your employer for details of their policy.

If your employer agrees to flexible retirement you can still draw your wages / salary from your job on the reduced hours or grade and continue paying into the LGPS, building up further benefits in the scheme.

If you take flexible retirement before your Normal Pension Age, your benefits will normally be reduced for early payment. How much your benefits are reduced by depends on how early you draw them.

Your employer may, however, determine not to apply all or part of any reduction. You can ask them what their policy on this is.

If you take flexible retirement after your Normal Pension Age your pension will be increased by 0.010% for each day payment of your pension is delayed beyond your Normal Pension Age to reflect late payment. Remember that your pension has be paid by the day before your 75th birthday.

For more information on flexible retirement, please visit Flexible retirement.

If you have to leave work due to illness,you may be able to receive immediate payment of your benefits.

To qualify for ill health benefits you have to have met the 2 years vesting period in the scheme 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.

Your normal pension age in the LGPS is linked to your State Pension Age (with a minimum of 65). If you are not sure what your State Pension Age is you can check using this calculator.

Ill health benefits can be paid at any age and are not reduced on account of early payment, in fact, your benefits could be increased to make up for your early retirement. There are graded levels of benefit based on how likely you are to be capable of gainful employment after you leave.

Gainful employment means paid employment for not less than 30 hours in each week for a period of not less than 12 months.

To apply for ill health retirement, please speak to your employer.

For more information on ill health retirement and the different levels of benefit, please visit Ill health retirement (contributing members).

Your LGPS benefits are made up of:

• A pension that, after leaving, increases every year in line with the cost of living for the rest of your life, and
• The option to exchange part of your pension for a tax-free lump sum that is paid when you draw your pension benefits

In addition, if you were a member of the LGPS before 1 April 2008 you will also have built up an automatic lump sum - see how your pension is calculated for more information.

When you draw your pension benefits you will have the option to exchange part of your pension for lump sum, within certain limits set by HM Revenue and Customs. For every £1 of pension you exchange you will be provided with £12 of tax free lump sum.

If you elect to exchange pension for lump sum your pension will be reduced accordingly. Any subsequent pension for your spouse, civil partner, eligible cohabiting partner or eligible children will not be affected.

If you have a Guaranteed Minimum Pension (GMP), you may not reduce your pension to below the level of your GMP.

To get an idea of how much lump sum you may be able to take on retirement, calculate an estimate of your benefits using the Pensions Portal and use these details in the Lump Sum Calculator.

If you choose to voluntarily retire before your Normal Pension Age, your benefits will normally be reduced to take account of being paid for longer.

Your benefits are initially calculated as detailed in the section how is your pension calculated and are then reduced. How much your benefits are reduced by depends on how early you draw them.

The reduction is based on the length of time (in years and days) that you retire early i.e. the period between the date your benefits are paid and your normal pension age. The earlier you retire, the greater the reduction.

To view the early retirement reduction percentages, please visit Taking your pension.

If you choose to voluntarily retire after your Normal Pension Age, your benefits are initially calculated as detailed in the section how your pension is calculated and are then increased increased as a result of late payment.

The amount of increase will be calculated at the point of your retirement.

Remember that your pension has to be paid by your 75th birthday. Also, all pension benefits, if drawn voluntarily, must be drawn at the same time, irrespective of whether they were built up in the career average scheme or the final salary scheme.

If you:

• lose your job because of redundancy or business efficiency
• have met the two-year vesting period, and 
• are age 55 or over

your LGPS benefits must be paid to you immediately.

If you leave after your Normal Pension Age, your benefits will be increased.

If you are under your Normal Pension Age, your main LGPS benefits will not be reduced for early payment. However, if you have bought any additional pension, this will be reduced because of early payment. This applies to any additional pension paid for by:

• Additional Pension Contributions (APCs)
• Shared Cost Additional Pension Contributions (SCAPCs), or
• Additional Regular Contributions (ARCs).

The Government has announced the earliest age that you can take your pension will increase from age 55 to 57 from 6 April 2028.

For more information, please see the links below:

• How your pension is worked out
• Taking your pension