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When you can receive your deferred benefits
Your deferred benefits are normally payable from age 65, or from your normal retirement date if you left before 1 October 2006 (before 1 December 2006 in Scotland), although they can be paid earlier.
When can they be paid earlier?
On ill health grounds at any age, without reduction, if you are no longer capable of performing the duties of your old job. You should contact your former employer to arrange a medical, if this applies to you.
You can request early payment of your deferred benefits from age 50, but you must have your former employer’s permission for payment before age 60 and your benefits may be reduced.
Employees in England and Wales who left the LGPS after 31 March 2008 - when you can receive your deferred benefits will be different.
Employees and councillors in Scotland who left the LGPS after 31 March 2009 - when you can receive your deferred benefits will be different.
If your choose to draw your deferred benefits early, your benefits may be reduced to take account of being paid for longer. How much yours are reduced depends on how early you draw your benefits.
Your pension fund administrator can provide you with a quotation and your employer can agree to waive any reduction on compassionate grounds.
Please note: If your former employer gives their permission to pay your benefits before age 55, this may result in a tax charge on your benefits. This would be in addition to the normal PAYE tax on your monthly pension. Payment of benefits on or after age 55 will not result in this additional tax charge. If you apply for your benefits to brought into payment before 6 April 2011, your pension fund administrator also has to agree to the payment of your benefits if you are under age 55.
If your benefits are paid on or after age 55, or are paid before age 55 because of ill health and you are permanently incapacitated from engaging in any regular full-time employment, your benefits will be increased each year in line with the cost of living. If your benefits are paid before age 55 for any other reason, your pension is normally paid at a flat rate until age 55. Your pension will then be increased from age 55 to the level it would have been, if it had been increased every year since your date of leaving.
There are HM Revenue and Customs controls on the pension savings you can have before you become subject to a tax charge. When your deferred benefits become payable your pension fund administrator will ask you about any other pensions you may have in payment, so they can work out whether a tax charge should be made.