Redundancy or efficiency retirement

Contents

Leaving on Redundancy or Business Efficiency

Redundancy is one of the fair reasons for dismissal, whereas efficiency is a mutual agreement that the member accepts retirement on the grounds of efficiency of the service.

A member who is aged 55 or over, whose LGPS employment is terminated by reason of redundancy or on the grounds of business efficiency, currently becomes entitled to the immediate unreduced payment of a pension and lump sum retirement grant.

A member who is aged under 55 will have their retirement benefits deferred. The benefits may be taken by the member from aged 55 onwards but would be subject to any actuarial reductions that would apply for early payment if taken before Normal Pension Age (NPA).

NPA for member's in the 2014 scheme is defined as their state pension age, or age 65 if later.

If the member has less than two years' service, they would not have entitlement to a benefit and would receive a refund of their contributions.

What you need to complete

If you wish to obtain a redundancy or efficiency retirement quotation, please complete form LG29 and return it to lgps.forms@surreycc.gov.uk via Egress Switch.

We will aim to send you the quotation, together with any early retirement strain costs payable by you, within 15 working days.

Once the redundancy or efficiency retirement has been confirmed, and you can provide the final pay and pensionable pay figures, please complete the retirement datafile (LG4) and return it to pensions.technical@surreycc.gov.uk via Egress Switch, if the member is age 55 or over.

We are not able to pay the member their benefits until we have received the completed retirement datafile (LG4) from you.

If the member is under age 55, please complete the Scheme Leaver Datafile and return it to pensions.technical@surreycc.gov.uk via Egress Switch. On receipt of the datafile, we will write to the member and confirm the options available to them.

Discretionary Compensation

The current Compensation Regulations were introduced from 29 November 2006 and allow employers to:

  • Base redundancy payments on actual pay rather than restrict them to the maximum statutory level.
  • Permit the award of up to 104 weeks' pay as a lump sum compensation payment, inclusive of the statutory payment. This is provided that no additional membership was added under Regulation 12 or Regulation 13 of the 2007/08 Regulations.

You must publish your policy regarding these provisions.

Compensatory Added Years

Prior to these, the Discretionary Compensation Regulations 2000 allowed employers to award Compensatory Added Years (CAY) in addition to the membership used to calculate the member's benefits, when a member was retired on redundancy or efficiency grounds.

These were paid by the employer and, whilst they are no longer awarded, you may still be receiving recharge invoices for these members.

If the member is receiving CAYs and is re-employed, the additional pension will be abated or permanently reduced.

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