Ceasing Contributions
The Fund Rules allow you to cease contributing to the Fund while remaining in service in which case your pension would be calculated as if you had left service at the date you ceased contributing but then increased by 8 percent a year while you remain in service.
The age at which you will be offered this option will depend upon your membership category which are set out below:
Existing Member
If you joined the Fund or would be eligible to join the Fund as set out below, you are known as an Existing Member.
- You joined the Fund on 1 April 1989 as a result of the merger of the London Transport Pension Fund and the London Transport 1970 Superannuation Fund
- You were in service on 1 April 1989, aged over 18, but had not completed a year’s service or were too young to join either the London Transport Pension Fund or the London Transport 1970 Superannuation Fund and were automatically entered into the Fund on 1 April 1989
- You were under 18 on 1 April 1989, and at that date were given the option, which you accepted, to join the Fund on reaching age 18
New Member
If you joined the Fund or would be eligible to join the Fund as set out below, you are known as a New Member.
- You joined the Fund after 1 April 1989 as a result of applying for membership or starting to work for your employer after that date
- You were automatically enrolled or re-enrolled into the Fund on or after 1 March 2013
Option to Cease Contributing at Age 60
This option is only available to Existing Members.
As you approach age 60 the Fund office will write to you offering the option to stop making contributions to the Fund. If you choose this option your pension will be calculated as if you had left at age 60 and deferred your pension. However, you will receive a bonus of 2/3rds of one per cent for each complete month (8 per cent a year) that your pension remains deferred and you remain in service.
In addition to the bonus mentioned above your accrued pension will be increased each April in line with the increase in the Retail Prices Index (RPI) over the 12 months ending the previous September.
If you do not take up the option to cease contributions you will continue to pay contributions to the Fund and build up further benefits in the usual way.
Option to Cease Contributing at Age 65
This option is available to New Members and to Existing Members who did not elect to cease contributing at age 60.
As you approach age 65 the Fund office will write to you offering the option to stop making contributions to the Fund. If you choose this option your pension will be calculated as if you had left at age 65 and deferred your pension. However, you will receive a bonus of 2/3rds of one per cent for each complete month (8 per cent a year) that your pension remains deferred and you remain in service.
In addition to the bonus mentioned above your accrued pension will be increased each April in line with the increase in the Retail Prices Index (RPI) over the 12 months ending the previous September.
If you do not take up the option to cease contributions you will continue to pay contributions to the Fund and build up further benefits in the usual way.
Making your decision
This is an important decision to make and the option to make a decision expires three months after your 60th or 65th birthday depending on which option you are offered. This deadline is not extendable and once passed the option will lapse.
We cannot provide advice and each individual’s position will be different, so please look at your own financial situation and plans for retirement and consider taking appropriate independent financial advice.
All we can give you are the facts and things to consider:
Please look at the figures we provide, we show how much your pension would be based on your current salary if you continued to contribute compared to if you stop contributing. If you have short pensionable service or expect significant pay awards after age in the future it may be that the impact of these on your overall pension could outweigh the 8 per cent a year bonus added to your pension if you cease contributing.
If you leave within six months of ceasing to contribute there is no bonus added. Therefore, if you are planning to leave within six months of ceasing to contribute to the Fund, ceasing to contribute may not be the option for you, unless you are looking to save money by stopping your pension contributions, accepting that your pension would not be as high as it might otherwise have been.
You do continue to be covered for the four times pensionable salary life cover if you cease contributing, while your pension remains deferred and you remain in service. Therefore, please make sure that your Expression of Wish form is up to date.
If you choose to cease contributing and subsequently die in service before age 65, any pension payable to an adult dependant or eligible child would be based on your accrued pension with increases including the bonus rather than based on pensionable service plus additional service to age 65 subject to a 40 year maximum.
If you choose to cease contributing and are subsequently granted an ill health pension before age 65, the pension payable would be your accrued pension with increases including the bonus rather than based on pensionable service plus additional service to age 65 subject to a 40 year maximum.
Further information can be found in our Guides to Ceasing Contributions available below, please make sure you read the guide that relates to your membership category.
You have 3 months from your 60th / 65th birthday to make a decision, if we have not received a completed option form by the deadline the option will lapse and you will continue to pay contributions and accrue pension in the same way as you have until now.
If the 3 month deadline has not yet expired you can change your decision however we must have received your confirmation of the option that you do wish to choose by the 3 month deadline.
Yes, life cover continues and continues to be calculated in the same way based on your pensionable salary.
The option to cease contributing to the Fund at age 60 is only open to Existing members, that is those who were members of the Fund on 1 April 1989. If you joined the Fund after 1 April 1989 you do not have the option to cease contributing at age 60, however this option is available at age 65.
Yes you can continue to pay AVCs
Yes, the 15% overall limit on contributions still applies, so you can if you wish increase your AVCs, to do so please contact the Fund Office.
No, the pension can only be paid from the date you leave, so when considering whether or not to cease contributing to the Fund, you should consider whether you will remain in service for at least 6 months after ceasing contributing.
Whether or not to cease contributing is an individual choice based on our own circumstances, you should consider how much pension you have built up to date and how that would grow when compared to earning another year of pensionable service in the Fund. You should also consider how you expect your salary to grow between now and retirement as that would impact the growth of your pension were you to decide to continue to contribute to the Fund. You should consider seeking independent financial advice.
These increases do not count towards your pensions input
If you choose to cease contributing to the Fund at age 60 and subsequently die in service before age 65, any pension payable to an adult dependant or eligible child would be based on your accrued pension with increases including the bonus rather than based on pensionable service plus additional service to age 65 subject to a 40 year maximum. The death in service lump sum of 4 times pensionable salary is not affected.
If you choose to cease contributing at age 60 and are subsequently granted an ill health pension before age 65, the pension payable would be your accrued pension with increases including the bonus rather than based on pensionable service plus additional service to age 65 subject to a 40 year maximum.