7 Critical Facts About The 85-Year Pension Rule You Must Know Before Retirement
The 85-Year Pension Rule is one of the most misunderstood and crucial concepts in the UK’s public sector retirement landscape, particularly within the Local Government Pension Scheme (LGPS). As of December 20, 2025, this rule is not a standalone early retirement option, but rather a vital form of protection that determines whether a long-serving member can take their pension benefits without suffering a significant financial penalty from actuarial reductions.
This rule is a legacy benefit that provides a bridge between early retirement and the scheme's Normal Pension Age (NPA), which is now generally linked to the State Pension Age (SPA). Understanding the specific mechanics of the 85-year rule—especially the critical dates and the recent influence of the McCloud Judgment—is essential for any member planning their financial future and calculating their unreduced pension date.
The Core Mechanics: How the 85-Year Rule is Calculated
The 85-Year Rule is a simple formula designed to allow long-serving members to retire earlier than their Normal Pension Age (NPA) without having their benefits fully reduced for early payment. The rule is satisfied when the member's age at the date they retire, and their total length of Scheme Membership, when added together, equal 85 years or more. Both the member's age and their length of membership must be measured in whole years.
- The Formula: Member's Age (in whole years) + Scheme Membership (in whole years) $\ge$ 85.
- Minimum Age: The member must be at least age 55 to be eligible to retire and claim their pension under the rule.
- The Benefit: If the rule is satisfied, the pension benefits that were built up before a specific date (see the next section) are paid without the full actuarial reduction that would otherwise apply for taking a pension before the NPA.
A Practical Example of the 85-Year Rule
To illustrate, consider a member of the Local Government Pension Scheme (LGPS):
- Scenario 1: Meeting the Rule
- Age at Retirement: 60 years
- Scheme Membership: 25 years
- Calculation: 60 + 25 = 85.
- Result: The rule is satisfied. Benefits accrued during the protected period (pre-October 2006) are paid without reduction.
- Scenario 2: Not Meeting the Rule
- Age at Retirement: 58 years
- Scheme Membership: 22 years
- Calculation: 58 + 22 = 80.
- Result: The rule is not satisfied. All benefits taken before NPA would be subject to an actuarial reduction based on guidance from the Government Actuary's Department (GAD).
It is crucial to note that the 85-year rule is not a right to retire early; it is a right to *unreduced* benefits for a specific portion of the pension. The ability to retire early (from age 55) is a separate scheme provision known as Voluntary Early Retirement or Flexible Retirement.
The Critical Date: Why October 1, 2006, is Everything
The most important factor in determining a member's entitlement to the 85-year rule protection is the date the rule was largely phased out. The Local Government Pension Scheme (LGPS) underwent significant changes on 1 October 2006, and this date effectively split the membership into those with and without guaranteed protection.
The Phasing Out of the Protection
The 85-year rule was removed from the LGPS for new members joining after 1 October 2006. For existing members, the level of protection depends on when they joined the scheme and their age:
- Full Protection: Members who satisfied the 85-year rule by 31 March 2016 have their benefits paid without reduction from the date the rule is met, provided they are at least age 60.
- "Tapered" or Partial Protection: Members who joined before 1 October 2006 but whose age and service did not meet the 85-year rule by 31 March 2016 still receive protection for the benefits accrued up to 31 March 2006. This means only the pre-2006 portion of their pension is unreduced, while the post-2006 portion is subject to the actuarial reduction.
- No Protection: Members who joined the LGPS for the first time on or after 1 October 2006 have no entitlement to the 85-year rule protection. Their benefits will be subject to a reduction if taken before their Normal Pension Age (NPA), which is typically their State Pension Age (SPA).
This distinction is what makes the rule so complex. A member's final pension pot is often divided into different "tranches" of service, each governed by different rules regarding reductions for early payment. This is why consulting an independent financial advisor or the specific Pension Fund Administrator is crucial for accurate calculations.
Modern Implications: The 85-Year Rule, Actuarial Reductions, and the McCloud Judgment
While the 85-year rule is a legacy protection, its application continues to be affected by modern pension reforms, particularly the legal challenge known as the McCloud Judgment.
The McCloud Remedy and Age Discrimination
The McCloud Judgment ruled that the transitional protections offered to older members of public service pension schemes (which included the 85-year rule) constituted unlawful age discrimination. As a result, the government is implementing a remedy that requires all affected members to be treated equally, regardless of their age.
- The Impact: The McCloud remedy means that all eligible members must be given a choice between the benefits of the old scheme (which included the 85-year rule protection) and the benefits of the new 2014/2015 schemes for the period between 1 April 2014 and 31 March 2022.
- The Choice: At the point of retirement, affected members will be given a Remedy Period choice to select the most favourable benefits for this period. For those with 85-year rule protection, this could mean ensuring the unreduced benefit calculation is correctly applied to the relevant service period, thereby maximising their overall pension income.
The ongoing implementation of the McCloud remedy ensures that the 85-year rule protection remains a highly relevant topic. It is no longer just a historical rule, but a factor being retroactively applied to remedy past discrimination and ensure members receive their full entitlement, potentially delaying or eliminating the application of a significant actuarial reduction.
Understanding Actuarial Reductions
In the absence of the 85-year rule protection, early retirement results in an actuarial reduction. This is a permanent reduction to your annual pension designed to offset the fact that the pension will be paid for a longer period of time. The reduction is calculated based on the number of years and months the pension is taken before the Normal Pension Age (NPA), using tables provided by the Government Actuary's Department (GAD).
The 85-year rule acts as a valuable shield, reducing or completely removing this penalty for the protected service period. For scheme members considering Flexible Retirement, understanding this interplay between the rule and the reduction is key to making an informed decision about their retirement date and final income.
Key Entities and Terms Related to the 85-Year Rule
To achieve topical authority, it is important to understand the specific terminology used in the context of the 85-Year Rule:
- Local Government Pension Scheme (LGPS): The public sector scheme where the 85-year rule is most relevant.
- Normal Pension Age (NPA): The age at which a member can take their pension without any actuarial reduction. This is generally linked to the State Pension Age (SPA) for the post-2014 LGPS.
- State Pension Age (SPA): The age at which you can claim the UK State Pension.
- Actuarial Reduction: The percentage reduction applied to a pension when it is taken before the NPA.
- Government Actuary's Department (GAD): The official body that sets the tables used to calculate actuarial reductions.
- McCloud Judgment: The legal ruling that found public sector pension scheme changes (including the phasing out of protections like the 85-year rule) to be discriminatory on the basis of age.
- Voluntary Early Retirement: Taking a pension voluntarily from age 55, which is subject to reductions unless the 85-year rule protection applies.
- Deferred Member: A member who has left the scheme but whose benefits remain invested until retirement. They may still qualify for 85-year rule protection.
- Scheme Membership: The total length of time a member has paid into the pension scheme.
The 85-Year Pension Rule is a complex but highly valuable protection for thousands of public sector workers. Its continued relevance, especially in light of the McCloud Judgment and ongoing scheme reforms, means that every eligible member must seek personalised advice to ensure they maximise their retirement income.
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