Leaving Toolkit - Flexible Retirement
Summary
This sets out how the Council manages Flexible Retirement arrangements in line with the
Council Local Government Pension Scheme (LGPS) Discretions Policy. This applies to all
employees employed by the Council and maintained schools in Hertfordshire who are a
member of the Local Government Pension Scheme. Academies and Free School must
have a discretions policy and may wish to follow the policy set by the council.
Flexible Retirement
Flexible Retirement is an arrangement whereby an employee who is a member of the Local
Government Pension Scheme (LGPS) who is aged 55 or over can be granted early access
to their pension whilst remaining in employment for a limited period, in the same or a similar
role, with a minimum reduction of 30% of costs (usually reduction in hours or grade) and
retains continuous service with the council.
The granting of Flexible Retirement is an employer led initiative and it is entirely at the
discretion of the employer via the Council LGPS Discretions policy to offer it. Flexible
Retirement is only offered on an exceptional basis and can only be agreed by the HCC
Assistant Director, HR who has delegated authority to approve the Council use of its
discretions. It will only be agreed where there is a clear business benefit to the
organisation and where any foreseeable costs are offset by the reduction in grade
and/or hours and where it has an agreed end date.
Flexible retirement discretion should not be used in place of redundancy, capability or ill
health procedures.
Eligibility
To be eligible to be offered flexible retirement an employee must be:
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A member of the Local Government Pension Scheme
Aged 55 or over
Be in a shortage skill area / role and /or have skills and experience the Council need
to retain or cannot easily / quickly replace without a transition plan over a period of
up to 2 years.
Planning full retirement in the near future
Members of other Public Sector Pensions (i.e. Fire/NHS/TPS) can find further information
on similar arrangements in their scheme specific websites.
In order for a flexible retirement to be agreed, there must be a proposal in place that
reduces employment costs by a minimum of 30%. This can be done by reducing hours or
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moving to a lower graded post with work being re-allocated. This is to ensure any
additional costs of granting Flexible Retirement can be off set against these savings.
Flexible Retirement can be costly to the Council (and in turn the school were costs are
passed on) so is only offered and agreed in exceptional circumstances. Examples of costs
incurred include;
1) Pension Benefits - this consists of an employee pension and may include a lump
sum retiring allowance, detailed on the pensions estimate supplied by Local Pension
Partnership (LPP) who administrate the LGPS for the Council.
2) Strain/Capital Costs - these are the additional pension costs of early retirement (i.e.
paying out the pension earlier and for longer) that are charged to the employing
department
3) Ongoing Salary and on costs (National Insurance etc.)
4) Hidden Costs- reductions in investment returns as pension paid out early, due to
money being removed from pension fund.
Timescales
Flexible retirement should only be used as a transition period into full retirement, and
should therefore be for a short period of time only – as a guide - no longer than 2 years.
Therefore part of the business case should be a plan as to how a transition of skills and
experience will take place to reach a point when full retirement can be achieved.
Terms of Agreement
All employees who are offered and have a Flexible Retirement arrangement agreed will be
required to sign an agreement setting the terms of the Flexible Retirement arrangement.
This will include;
 An agreed date for the end of the arrangement where the employee will resign and
retire fully.
 An agreement that at no time within the Flexible Retirement period will the
employees hours or grade be increased, accept in line with normal cost of living or
Performance related increment (PRI) awards.
Breaks in Service
If flexible retirement is granted, no break in service is required. An employee can begin to
draw their pension and continue to work from an agreed date. Note that this will not create
a break in service which will mean employees continue to be entitled to equivalent benefits.
Independent Advice
If an individual chooses to retire before their normal retirement age the pension benefits they
receive will be reduced in value to accommodate for the extra years of payment. Once
pension payments start they cannot be ceased.
All employees should therefore seek independent financial advice before accepting an offer
of flexible retirement.
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Unauthorised Retirements
Under no circumstances should an employee be allowed to retire and draw their full
pension with an ‘arrangement ‘of returning to their old post or another post without going
through the correct flexible retirement process. Any manager or employee found to be
involved in setting up/agreeing such an arrangement will be addressed in accordance with
the relevant disciplinary policy.
There may be circumstances where an employee does fully retire and later wishes to return
to employment. In this instance any re-employment must follow HCC’s recruitment process,
and be subject to a proper and open competition process.
Returning to work after starting to draw a pension may result in abatement of the pension in
payment. Abatement rules relate to members with pre-2014 LGPS pension benefits. This
rule sets out that, if the sum of the pension and the salary in the new employment exceeds
the final rate of pay for the employment the pension was based on (uplifted with indexlinking if there was a gap between retiring and returning), the excess pension is suspended
for the duration of the re-employment.
Appeals
If an application for Flexible Retirement is rejected the employee should be notified in
writing of the reasons for this decision. An employee can appeal the decision though the
Councils Internal Disputes Resolution Procedure (IDRP). To appeal they must contact the
pension scheme administrator, the Local Pensions Partnership (LPP) who will provide the
forms to appeal.
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Flexible Retirement (FR) Process Flowchart
Manager receives a resignation letter of an
employee aged over 55 or through
supervision the manager understands the
individual is looking to retire in the near
future. If the manager wishes to retain skills /
experience of employee for a short period and
employee meets elegibility criteria, manager
can consdier offering Flexible Retirement.
Headteacher should discuss this with their
governing body with a view to building a case
for Flexible Retirement.
The Headteacher must sign along
with the Chair of Governors to
progress the appliction for
agreement with the HCC
Assistant Director, HR this should
be submitted via one of the HR
advisors in HfL HR Service .
Note: For employees employed in a School setting the Head
Teacher must agree the arrangement and build the business
case and this must be approved by the Governing Body. The
Application must then be sent to the Assistant Director HR at
Hertfordshire County Council for approval.
If the Headteacher and Governing Body agree
that there is no alternative way of retaining
skills and knowledge and the employee meets
the criteria for FR, then following a discussion
with the employee to see if they would be
interested in a flexible retirement, the Flexible
Retirement Application form must be
completed by the manager.
The application form with business case and
cost benefit analysis must then be assessed by
the HCC Assistant Director, HR who has
delegated responsiibility for agreeing all
requests. The HfL HR Advisor will
communicate the outcome to the
Headteacher.
The Headteacher must build the business case,
inc. asking the LPP for a pensions estimate.
and must include a reduction of costs of 30%
or more and develope a transition plan.
If Flexible Retirement agreed, the line manager should
complete a 'change to terms and conditions' form
(existing position) - for an employee remaining in the
same post but changing hours or grade or an Appointing a
Candidate Form - for employees moving to another
position.
HEadteacher to comlete and enusre employee signs
Flexible Retirement Agreement.
LPP advised of the agreement and provided with the
signed copy of application form with HCC Assistant
Director HR approval in order to release the pension
benefit.
If not agreed, applicant notified Headteacher.
Indivdual can appeal through the IDRP process.
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