The 85-Year Pension Rule: 5 Critical Things You Must Know About The LGPS Protection And The McCloud Remedy
The 85-Year Pension Rule is one of the most valuable, yet often misunderstood, protections available to long-serving members of the UK’s Local Government Pension Scheme (LGPS). As of late 2025, understanding this rule is more crucial than ever, especially following the implementation of the complex McCloud judgment remedy, which directly interacts with this protection. This rule essentially acts as a safeguard, allowing eligible members to retire early without facing the full, severe reductions that would normally be applied to their pension benefits for early payment.
This protection is not universal; it is highly specific to a member's joining date and the benefits they accrued under the scheme's older structure. For those who qualify, the 85-year rule can be the difference between a significantly reduced retirement income and a full, unreduced pension for a substantial portion of their service. Navigating this rule, particularly when combined with the recent McCloud underpin calculations, requires precise knowledge of service dates, scheme changes, and the current legal framework.
Who is Protected by the 85-Year Rule? The Eligibility Criteria
The 85-Year Rule is not a feature of the modern, reformed LGPS, but a legacy protection designed to ease the transition for long-term members as the scheme underwent significant changes.
The Core Definition: Age Plus Service
A member satisfies the Rule of 85 when their age in whole years, plus their total length of qualifying LGPS membership in whole years, equals or exceeds 85.
- Example: A member who is 57 years old with 28 years of continuous LGPS membership (57 + 28 = 85) would satisfy the rule. A member who is 60 years old with 25 years of membership (60 + 25 = 85) would also qualify.
Crucial Dates for Eligibility
The protection is primarily aimed at members who joined the LGPS before a key cut-off date. This is the single most important factor for eligibility:
- Joining Date: You must have been a member of the LGPS at any time between 1 April 1998 and 30 September 2006 (or 1 December 2006 in Scotland) to have any Rule of 85 protection.
- Phasing Out: The rule was phased out from 1 October 2006, meaning service built up after this date is generally not protected.
- Protected Benefits: The rule protects the benefits accrued up to 31 March 2014, which is the date the LGPS transitioned from a Final Salary scheme to a Career Average Revalued Earnings (CARE) scheme.
It is important to note that the Rule of 85 is almost exclusively associated with the Local Government Pension Scheme (LGPS). It does not apply to the main NHS Pension Scheme or the Teachers' Pension Scheme in the same way, as those schemes have different early retirement and abatement rules.
How the 85-Year Rule Prevents Actuarial Reduction
When a member chooses to take their pension before their Normal Pension Age (NPA), the benefits are typically reduced. This is known as an Actuarial Reduction. The reduction is applied because the pension is being paid for a longer period of time. The 85-Year Rule is the mechanism that waives or lessens this reduction for a specific portion of the member’s pension.
The Standard Reduction Factor
For benefits not protected by the 85-Year Rule—which includes all benefits built up since April 1, 2014, and for members who do not meet the criteria—early retirement results in a significant reduction. These Actuarial Factors are set by the Government Actuary’s Department (GAD) and were most recently updated in July 2023.
For example, retiring five years early (at age 63 instead of an NPA of 68) could result in a reduction of approximately 25% or more to the unprotected portion of the pension, a substantial loss over a lifetime. The 85-Year Rule prevents this reduction from being applied to the protected pre-2014 benefits.
The Phased Protection
The protection offered by the rule is often phased, depending on the member's age when they meet the condition:
- Retiring at Age 60 or Over: If you meet the 85-Year Rule and retire at age 60 or later, your protected benefits (pre-April 2014) are generally paid in full, without any reduction.
- Retiring Between Age 55 and 60: If you meet the 85-Year Rule but retire before age 60, the protected benefits will still be reduced, but the reduction will be smaller than the standard actuarial reduction. Furthermore, your employer has the discretion to waive all or part of this remaining reduction.
The McCloud Remedy and the 85-Year Rule Underpin
The most significant and recent development affecting the 85-Year Rule is the implementation of the McCloud Remedy, which was introduced to address age discrimination found in the 2014 public sector pension reforms. The remedy period runs from 1 April 2014 to 31 March 2022.
The Underpin Calculation
The McCloud Remedy requires a comparison, or "underpin," calculation to be performed for all eligible members who retire. The purpose is to ensure that for the remedy period, the member receives the higher of two calculated benefits:
- The benefits they actually accrued under the reformed (CARE) scheme.
- The benefits they would have accrued under the legacy (Final Salary) scheme.
The critical interaction here is that the 85-Year Rule protection must be factored into the legacy (Final Salary) calculation when testing the underpin.
In simple terms, if a member meets the 85-Year Rule at retirement, the legacy benefit calculation will be based on an unreduced or less-reduced pension (depending on the retirement age). This significantly increases the value of the legacy benefit, making it more likely that the member will receive the more generous, protected Final Salary benefits for the 2014-2022 remedy period. The LGPS McCloud remedy regulations became law on 1 October 2023, making this a current and ongoing review process for all qualifying retirees.
Key Entities and Terms for Topical Authority
To fully grasp the implications of the 85-Year Rule, it is essential to understand the related terminology and entities:
- Local Government Pension Scheme (LGPS): The specific public sector scheme where the 85-Year Rule is a primary protection.
- Actuarial Reduction: The percentage reduction applied to a pension when it is paid before the Normal Pension Age.
- Normal Pension Age (NPA): The age at which a member can take their pension in full. This is typically linked to the State Pension Age in the reformed LGPS.
- Final Salary Scheme: The legacy scheme structure (pre-April 2014) where benefits were based on final pay and length of service. This is the structure protected by the 85-Year Rule.
- Career Average Revalued Earnings (CARE) Scheme: The reformed scheme structure (post-April 2014) where benefits are based on a fraction of pay earned each year.
- McCloud Judgment: The legal ruling that found age discrimination in the 2014 public sector pension reforms.
- McCloud Underpin: The mechanism, now in force, that compares the CARE and Final Salary benefits for the remedy period (2014-2022) to ensure the member receives the better outcome.
- Deferred Member: A member who has left the LGPS but whose benefits remain within the scheme until retirement.
- Flexible Retirement: A mechanism allowing members to draw some of their pension while continuing to work, which can affect 85-Year Rule protection for future accrual.
- Government Actuary's Department (GAD): The official body that sets the actuarial factors used to calculate pension reductions.
The Bottom Line: What to Do Next
If you are a long-serving member of the LGPS, especially if you joined before October 2006, the 85-Year Rule is a vital protection that significantly enhances your early retirement options. The key takeaway is that your pre-2014 benefits are protected from the full Actuarial Reduction, and this protection is now a critical component in the ongoing McCloud Remedy calculations.
Do not make any retirement decisions based on general scheme information alone. You must contact your specific Local Government Pension Fund administrator. They are the only entity that can provide you with a personalised retirement quote, which will include the precise calculation of your 85-Year Rule protection and the impact of the McCloud underpin on your benefits. Understanding these specific figures is the only way to plan a financially secure early retirement.
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