Lgps. Potential redundancy just before 55 birthday

Pensionquery101 · 2025-02-20T11:29:50+00:00

I’m 55 this year and our organisation has just announced a restructure. My understanding is that if I am 55 when made redundant I would get my pension without reduction. As I have been there for 12 years I think my notice period would be three months. if they made me redundant the three months before my 55th birthday what would happen if they paid me off tomorrow with three months notice paid? Would that mean I was not employed on my 55 birthday and I wouldn’t be entitled to my pension hope that makes sense. thanks

zzpleb · 20/02/2025 15:59

Are they doing a redundancy consultation? If so, how does the date of the outcome fit with your birthday? Would it then be followed by a selection procedure - how long would that take?

I've witnessed a similar situation. It was obviously very stressful for the person concerned and they were signed off sick, which was just long enough to take them up to their next birthday. I think it was just a few weeks though, not several months.

Employers can make you redundant while on sick leave, so I'm not sure how it worked in that case - perhaps it was just easier to wait a few weeks rather than force through the redundancy.

Tulipsandaffodils · 20/02/2025 16:03

If you work your notice then you’re still employed till thr last day of your notice period, if that falls on or after your 55th, you would get your pension.

if you’re paid in lieu of notice and don’t work it, no you’d not be eligible. However pension scheme funds are held separately. So if you are made redundant you can ask for the date of termination to be your 55th birthday or the day after, most companies would have no issue with this.

Original poster

Pensionquery101 · 20/02/2025 16:25

Thank you both. I didn’t think I would get a reply. It’s a bit of a niche question

theres no specific details on restructure at the moment. I am about 4 months away from being 55.

I think that they would try and get rid of me before if they can which is why I wondered about them paying me my notice.

my understanding of the LGPS is that if you are made redundant after 55 you would get pension un reduced. So if my pension was £30k (I wish) and I decided to retire at 55 then they would take off 5% a year till pensionable age so I would only get about £15k now
but if I am made redundant at 55 then I would be entitled to the £30k. but the council I presume would have to pay a lot to cover the costs of this which is why I wondered if they could try and get rid of me earlier. As the whole point of the restructure is to save money.

OP posts:

Carnation25 · 20/02/2025 16:30

When I was made redundant from local government, the redundancy payment included payment in lieu of notice. There was a consultation period and timescales for this were set out in writing. Once the decision was confirmed, those being made redundant were formally finished one week later.

Carnation25 · 20/02/2025 16:32

And yes I was 55 and received my pension without reduction.

Beetrooty · 20/02/2025 16:35

I think if you've been paid off for 3 months work then your end date of work would be that. Even if you have stopped going in and are on gardening leave.
So if from now it would be 20th May.

Can you go on your specific lgps website and ask?

Original poster

Pensionquery101 · 20/02/2025 16:43

Thanks. All very helpful. I think I am getting ahead of myself as I don’t yet know which teams are more likely to be affected. Or whether my older colleagues will volunteer to go

I suppose we’ve got to see the proposal and as you say there needs to be a consultation of 45 days.

it would just be hard if my leaving date was just shy of my 55th birthday!!

OP posts:

ChessieFL · 20/02/2025 16:58

I work in this area. You are right with everything you have said. If they give you pay in lieu of notice then your termination date is the day you actually stop work, not the day at the end of your theoretical notice period. If you work your notice then your termination date is the end of that period.

And yes if you’re over 55 at your termination date then your pension is unreduced and your employer has to pay the cost of paying that unreduced pension early. If your termination date is before 55 then you can take your pension from 55 but at a reduced rate.

So you definitely want your termination date to be after your 55th birthday but you are right that your employer will want the opposite.

Original poster

Pensionquery101 · 20/02/2025 17:01

ChessieFL · 20/02/2025 16:58

I work in this area. You are right with everything you have said. If they give you pay in lieu of notice then your termination date is the day you actually stop work, not the day at the end of your theoretical notice period. If you work your notice then your termination date is the end of that period.

And yes if you’re over 55 at your termination date then your pension is unreduced and your employer has to pay the cost of paying that unreduced pension early. If your termination date is before 55 then you can take your pension from 55 but at a reduced rate.

So you definitely want your termination date to be after your 55th birthday but you are right that your employer will want the opposite.

Thank you. As I feared. Can I insist on working my notice I wonder?

OP posts:

zzpleb · 20/02/2025 17:49

but the council I presume would have to pay a lot to cover the costs of this which is why I wondered if they could try and get rid of me earlier. As the whole point of the restructure is to save money.

I think it's called 'pension strain' - the amount the employer has to pay into the pension to cover the lost contributions.

I think the selection process has to be fair - they can't/shouldn't choose the people who are cheapest to make redundant. Although voluntary severance would be different - they can pick who they like from people who apply for VS.

Although that's not to say they wouldn't try to speed up your exit if you were fairly selected for redundancy.

If you fall into the relevant age bracket, the cost of pension strain is actually a double-edged sword. If you are made redundant it gives you the reassurance of having your full pension, but on the other hand it also makes you more expensive to make redundant, so they might be reluctant to choose you, especially for a voluntary severance, as it would be cheaper to carry on employing you.

Original poster

Pensionquery101 · 20/02/2025 18:30

zzpleb · 20/02/2025 17:49

but the council I presume would have to pay a lot to cover the costs of this which is why I wondered if they could try and get rid of me earlier. As the whole point of the restructure is to save money.

I think it's called 'pension strain' - the amount the employer has to pay into the pension to cover the lost contributions.

I think the selection process has to be fair - they can't/shouldn't choose the people who are cheapest to make redundant. Although voluntary severance would be different - they can pick who they like from people who apply for VS.

Although that's not to say they wouldn't try to speed up your exit if you were fairly selected for redundancy.

If you fall into the relevant age bracket, the cost of pension strain is actually a double-edged sword. If you are made redundant it gives you the reassurance of having your full pension, but on the other hand it also makes you more expensive to make redundant, so they might be reluctant to choose you, especially for a voluntary severance, as it would be cheaper to carry on employing you.

Yes I would be happy to carry on working. I was thinking of moving house too so that has thrown that up in the air.

I guess I am worried that I might go literally a few weeks before I am 55 and that would be challenging at my age to get a similar level job

OP posts:

AllThePotatoesAreSinging · 20/02/2025 18:38

I’m HR in the public sector. If it ends up being you, you should get 45 days for the consultation , plus 84 (12 weeks from notice of redundancy) which will hopefully take you to age 55. Rather than having the 12 weeks paid as PILON ask for the 12 weeks to be done as gardening leave with your official finish date at the end of that 12 week period, you remain on payroll for that time, with all your benefits in place. We’ve done this in the past so people reached minimum pension age, but also so the individual had a set income they knew was coming in for that period. Doesn’t cost us any extra to do it as gardening leave instead as a PILON is subject to tax, NI, pension contributions exactly as if you had been working for that period.

NRTFT so sorry if I’m duplicating advice. (Caught up and saw it had been - good luck)