Review of early retirement reduction factors announced by the Scottish Government

The Scottish Government recently announced that they are changing the factors that the LGPS (Scotland) uses for reducing benefits which are put into payment before a member reaches their Normal Pension Age (NPA). The new factors came into force on 3 July 2023.

The new factors are lower than the previous factors which means that the reduction to your pension will be less.  The new factors apply to retirements from 3 July 2023.

Who is affected by the change?  If you choose to voluntarily retire before your NPA, your benefits will normally be reduced to take account of them being paid earlier, and for longer. 

Your NPA will be:

• Age 65 for service before 1 April 2015
• Age 65, or State Pension Age if later for service from 1 April 2015

You can use the Government's State Pension Age calculator to find out your State Pension Age at: www.gov.uk/calculate-state-pension.

The percentage reductions are based on the length of time (in years and days) that your benefit are paid early i.e. the period between the date your benefits are paid and your Normal Pension Age - so the earlier you draw them, the greater the reduction.

The table below provides the percentage reductions applicable from 3 July 2023 (Where the number of years is not exact, the reduction percentages are adjusted accordingly):