Flexible Retirement Policy

4.      Applications for flexible retirement will be considered on a case-by-case basis.  Applications will be refused in instances where the criteria below is not satisfied.

5.      The Council will only agree to flexible retirement in instances where it is operationally and financially viable and there is a sound business case.  This will include the feasibility of meeting operational requirements (business need), the ability to recruit to the hours remaining and the ability to support succession planning.

6.      An employee will usually take a minimum 20% reduction in hours or reduce their grade by 2 levels in order for flexible retirement to be approved.  This must provide for a substantial salary saving for the Council or provide the ability to recruit to the hours remaining in a way that is operationally viable.

7.      By their very nature flexible retirements are to facilitate a gradual wind down to full retirement and consequently will be implemented for a relatively short term (not exceeding 2 years) with a date for full retirement mutually agreed at the outset.  This benefits the employee, providing a period of adjustment in terms of time spent working which better enables the employee to plan for full retirement and allows the employer to benefit from a gradual handover of knowledge, experience and work duties to achieve continuity of service provision.

8.      Any proposal to cease certain aspects of the current job role in order to reduce the level of responsibilities undertaken and to reduce the grade of the post will initially be subject to scrutiny in terms of operational feasibility and subject thereafter to a formal job evaluation of the role to be undertaken during the period of flexible retirement.  Approval to the application cannot be provided until a re-evaluation has taken place and until a full financial assessment has been carried out.   

9.      Where Flexible Retirement is agreed, all membership elements of pension benefits will become payable and may be subject to the appropriate actuarial reduction in accordance with the LGPS Regulations.

10.    The Council will only waive any actuarial reduction in whole or in part, where it considers it is in its financial or operational interests to do so.  Each case will be considered on the merits of the financial and operational business case and will require approval by the Executive Director Corporate Services and Commercial.

11     In considering applications, the following factors will be taken into account:

• the cost to the Council
• the operational and financial effects of reducing the hours/grade relative to the individual concerned, including the impact on the rest of the section/team
• whether there is any benefit/detriment to the Council.

12.       The earliest age for flexible retirement for employees of the Council (at their requested flexible retirement date) is 55.  This includes employees who have remained in employment beyond age 65.  It also includes employees who meet these criteria and who are employed in schools, which have adopted this policy.  You must reduce your hours or grade as detailed above and have you employer's consent to take flexible retirement.  If you draw your benefits on flexible retirement before your normal retirement age, they may be reduced.  (see Annex A).

13.       Flexible retirement does not apply to Councillors.

(For the Council)

14.      There is a cost to flexible retirement, where a pension is paid early, because of the “strain” on the pension fund of paying out benefits at an earlier date than anticipated.  This is a capital cost, which is calculated as a lump sum payment which the Council must make to the Pension Fund. The responsibility for this payment lies with the employing department (or with the school, in the case of school employees).

15.       The amount payable depends upon the particular circumstances of the employee concerned and how early he/she is receiving benefits.  In some cases there will be a nil cost, in others the cost may be significant – it all depends on individual circumstances.

16.       In considering flexible retirements, the employing department/school must obtain a pension estimate from the Pensions Manager in the Corporate HR Department so that the capital cost (if any) is clearly identified, and an informed decision can be made.

(For the employee)

17.       On retirement, pension benefits may be subject to actuarial reduction, dependent upon the age of the employee and his/her length of membership in the LGPS.  Such reductions also apply to flexible retirement, and employees will need to bear these in mind when considering flexible retirement.

18.       The level of reduction varies depending upon how far in advance of his/her normal retirement date an employee takes flexible retirement.  The table attached at Annex A gives an indication of the level of reduction; this table is effective from September 2006 and is in force at the time of writing.

19.       If flexible retirement is agreed, all of the accrued service up to the flexible retirement date is brought into payment – it is not possible to opt to only take a proportion of the benefits.  The employee concerned may choose to pay contributions to the LGPS in relation to his/her revised employment and build up another pension entitlement.  This would be a new entitlement, and LGPS membership prior to commencing contributions to the new entitlement would not count.

20. In agreeing flexible retirements, it is important to ensure that there is no break in service; this ensures that the individual’s terms and conditions of employment remain in place (other than the agreed changes to hours/grade) and he/she benefits from accrued service relative to annual leave, sick pay, redundancy etc.

21.      All requests must be made in writing on the appropriate form (attached at Annex B) and submitted to the line manager.  The employee must specify how he/she would propose to reduce his/her hours and/or pay and the proposed effective date.  Requests should be made at least 8-10 weeks before intended retirement date to ensure all paperwork is completed on time and authorised if accepted to facilitate Flexible Retirement.

22.       The employee must also consider the effects and impact of their proposed request on service provision and be able to offer reasonable and practicable solutions as to how such effects could be overcome. 

23.       In considering the application, the line manager should take into account the factors described at paragraph 11 of this policy.

24.       If the request is operationally viable, it will be necessary to assess the cost of granting the flexible retirement.  In this respect the line manager must request a pension estimate from the Pensions Manager, from the Corporate HR Department, so that the capital cost can be identified and considered.

25.       The line manager considers the application in the first instance, as he/she is best placed to consider the operational viability of any proposal, and to take account of the financial implications.  Please ensure that applications and decisions are made within 8-10 weeks of the intended retirement date to ensure all paperwork is complete to allow time for the authorisation process and release of pension forms if the request is accepted.

26.      If, having considered all the circumstances, the line manager agrees with the proposed flexible retirement, the decision must be agreed by the Assistant Director, the Head of HR and Workforce and the Executive Director of Corporate Services and Commercial.  This is because they are authorised by the Council to approve pension payments.  At this stage a Chief Officer’s report must be completed stating the reduction in hours or grade. If there is a reduction in hours the report must state if the reduced hours are to be held vacant, deleted, offered to another employee, post hours reduced or recruited to.

27.      An ECF is required if the hours are to be released to another employee /post or recruited to.

28.      Forms are available within the Establishment Control section of the intranet.  All forms need to be submitted to the Establishment Control mailbox and are sent on to Finance and Assistant Director for approval.

29.       Where the application is from an Executive Director or an Assistant Director, the decision rests with the Chief Executive and the Executive Director of Corporate Services and Commercial and the Head of HR and Workforce.

30.       In parallel with the arrangements applying to requests for early retirement, the decision of the Senior Officers identified in paragraphs 26 to 29 above is final.

31.       Once authorisation is obtained, the line manager must write to the employee, setting out his/her new arrangements, and the effective date. The Pensions Manager will issue the COR to the Pensions team so that arrangements can be made for pension benefits to be paid. The Establishment Control Officers will issue instructions to payroll via the COR to move the employee into the new position and reduce their hours.

32.       If the application is not viable, the line manager must inform the employee in writing as soon as possible after consideration of the application and explain the reasons for rejection.

33. The Head of HR and Workforce is responsible for reviewing this policy.