Rule of 85
If you were a member of the LGPS at any time between 1 April 1998 and 30 September 2006, some or all of your benefits could be protected from an early payment reduction under what is called the rule of 85. If you have rule of 85 protection this continues to apply from 1 April 2014. The only occasion where this protection does not automatically apply is if you choose to voluntarily draw your pension on or after age 55 and before age 60.
To have protection under the rule of 85 you must satisfy the following condition at the date you draw your pension benefits:
- Your age (in whole years) plus your scheme membership (in whole years) must add up to 85.
If you work part-time, your membership counts towards the rule of 85 at its full calendar length. Not all membership may count towards working out whether you meet the rule of 85.
If you take flexible retirement, any rule of 85 protection will apply to the benefits you've built up to the date of flexible retirement but will not apply to benefits you build up after the date of flexible retirement.
If you choose to voluntarily draw your pension on or after age 55 and before age 60 and you have rule of 85 protections, these will not automatically apply. Your employer can choose to allow the rule of 85 to apply. This is a discretion and you can ask your employer what their policy is on this matter. If you choose to voluntarily draw your pension on or after age 55 and before age 60 and your employer does not choose to allow the rule of 85 to apply, your benefits are reduced.
The rule of 85 and you
The information below will help you work out your general position in relation to the rule of 85, however, you should be aware that the rules governing how the rule of 85 protection applies, and the level of that protection, are quite complex.
Please note: The protected normal retirement age for almost all members who joined the LGPS before 1 April 2014 is 65.
If you would not satisfy the rule of 85 by the time you are 65
All your benefits are reduced if you choose to draw your pension before your normal pension age. The reduction will be based on how many years before your normal retirement age (protected normal pension age for pension built up before 1 April 2014) and new normal pension age (linked to state pension age) for pension built up from 1 April 2014) you draw your benefits.
If you will be age 60 or over by 31 March 2016 and choose to draw your pension before your normal pension age
Provided you satisfy the rule of 85 when you start to draw your pension, the benefits you build up to 31 March 2016 will not be reduced.
If you will be under age 60 by 31 March 2016 and choose to draw your pension before your protected normal pension age
Provided you satisfy the rule of 85 when you start to draw your pension, the benefits you've built up to 31 March 2008 will not be reduced
If you will be aged 60 between 1 April 2016 and 31 March 2020 and meet the 85 year rule by 31 March 2020
Some or all of the benefits you build up between 1 April 2008 and 31 March 2020 will not have a full reduction.
Rule of 85 and drawing your pension on or after age 55 and before age 60
If you have rule of 85 protection this will continue to apply from 1 April 2014. The only occasion where this protection does not automatically apply is if you choose to voluntarily draw your pension on or after age 55 and before age 60.
From 1 April 2014 there is a new option in the LGPS where you can choose to voluntarily draw your pension on ceasing your employment from age 55 and before age 60 without the need for your employer's permission. The rule of 85 will not automatically be applied if you decide to draw your benefits under this new option but your employer can exercise their discretion to apply it.
Don't forget: if you leave your employment and are interested in applying for the release of your pension please contact the pension team in writing who will provide details of the benefits payable. Should you wish to go ahead payment will commence three months from the date your written request is made.
Further information
Please see the rule of 85 explanation page for details of the reductions and how they work.