Contributions

Note: the benefits you receive from the scheme are determined by the scheme regulations, not by the contributions that you pay.

How much do I have to pay?

The rate of contributions you pay will be based on your actual pensionable pay. (Non-contractual overtime is counted as pensionable pay.) If you elect for the 50/50 section of the scheme you would pay half the normal contribution rate.

2024/2025- contribution bandings applicable from 1 April 2024 to 31 March 2025

Band If your pay is: Contribution rate - main section Contribution rate -50/50 section
 1 Up to £17,600 5.50% 2.75%
2 £17,601 to £27,600 5.80% 2.90%
3 £27,601 to £44,900 6.50% 3.25%
4  £44,901 to £56,800 6.80% 3.40%
5 £56,801 to £79,700 8.50% 4.25%
6 £79,701 to £112,900 9.90% 4.95%
7 £112,901 to £133,100 10.50% 5.25% 
8 £133,101 to £199,700 11.40% 5.70%
9 £199,701 or more 12.50% 6.25%
Assessing your contribution rate

Your employer will decide the appropriate contribution rate for each employment by matching your actual pensionable pay to the appropriate band and section in the contribution table.

Your employer decides when your contribution rate is reviewed. If this results in a change to your contribution rate, they will let you know.

You can check how much you will pay by using the LGPS Contributions calculator at: Tools and calculators :: LGPS (lgpsmember.org)

Contribution rate examples
Example 1

Ben works full time as a team manager.

  • His annual pensionable pay is £35,000.
  • His gross contribution rate will be 6.5% (£189.58).
  • His actual contribution rate after tax relief will be 5.2% (£151.67 a month).

Example 2

Sarah works full time as a Department Head.

  • Her annual pensionable pay is £80,000.
  • Her gross contribution rate will be 9.9% (£660 a month).
  • Her actual contribution rate after tax will be 5.94% (£396 a month).

Previous years' employee contribution rates
2023 to 2024

Band If your pay is: Contribution rate – main section Contribution rate – 50/50 section
1 Up to £16,500 5.5% 2.75%
2 £16,501 to £25,900 5.8% 2.9%
3 £25,901 to £42,100 6.5% 3.25%
4 £42,101 to £53,300 6.8% 3.4%
5 £53,301 to £74,700 8.5% 4.25%
6 £74,701 to £105,900 9.9% 4.95%
7 £105,901 to £124,800 10.5% 5.25%
8 £124,801 to £187,200 11.4% 5.7%
9 £187,201 and more 12.5% 6.25%

2022 to 2023

Band If your pay is: Contribution rate – main section Contribution rate – 50/50 section
1 Up to £15,000 5.5% 2.75%
2 £15,001 to £23,600 5.8% 2.9%
3 £23,601 to £38,300 6.5% 3.25%
4 £38,301 to £48,500 6.8% 3.4%
5 £48,501 to £67,900 8.5% 4.25%
6 £67,901 to £96,200 9.9% 4.95%
7 £96,201 to £113,400 10.5% 5.25%
8 £113,401 to £170,100 11.4% 5.7%
9 £170,101 and more 12.5% 6.25%

2021 to 2022

Band If your pay is: Contribution rate – main section Contribution rate – 50/50 section
1 Up to £14,600 5.5% 2.75%
2 £14,601 to £22,900 5.8% 2.9%
3 £22,901 to £37,200 6.5% 3.25%
4 £37,201 to £47,100 6.8% 3.4%
5 £47,101 to £65,900 8.5% 4.25%
6 £65,901 to £93,400 9.9% 4.95%
7 £93,401 to £110,000 10.5% 5.25%
8 £110,001 to £165,000 11.4% 5.7%
9 £165,001 and more 12.5% 6.25%

2020 to 2021

Band If your pay is: Contribution rate – main section Contribution rate – 50/50 section
1 Up to £14,600 5.5% 2.75%
2 £14,601 to £22,800 5.8% 2.9%
3 £22,801 to £37,100 6.5% 3.25%
4 £37,101 to £46,900 6.8% 3.4%
5 £46,901 to £65,600 8.5% 4.25%
6 £65,601 to £93,000 9.9% 4.95%
7 £93,001 to £109,500 10.5% 5.25%
8 £109,501 to £164,200 11.4% 5.7%
9 £164,201 and more 12.5% 6.25%

What happens to your contributions?

Flowchart of what happens to your contributions

Your pension contributions are paid into The Pension Fund and not to individual pension pots.

If you contribute to the LGPS then your employer would normally also pay contributions to The Pension Fund. These are often much more than you pay, and in most cases at least double your contribution.

The money in The Pension Fund is invested and these investments add more money to The Fund.

The scheme regulations determine what pension benefits will be paid (not the amount of money in The Pension Fund) so you know what benefits to expect and do not have to worry about changes in the financial markets affecting your pension.

All pension benefits are paid out of The Pension Fund, including your pension, or the pension paid to a partner or dependant in the event of your death. If a death grant is due, this is also paid out of The Pension Fund.

The government sets the contribution rates for members every year. The scheme actuary sets the employer contribution rate every three years, at a level to ensure that there are sufficient resources in The Pension Fund to meet all its liabilities.

Flexibility to pay less - the 50/50 section

The 50/50 section of the LGPS is an alternative to opting out. It is intended to be a temporary measure to assist members who may be suffering from financial hardship but still want their pension to grow.

It allows you to remain in the scheme but pay half your normal contributions and build up half the normal pension.

As a member of the 50/50 section you benefit from:

  • Full life assurance cover
  • Full ill health retirement cover
  • Full survivor's benefits in the event of your death

In other words, the above cover is the same as if you were in the main section.

When you join the LGPS your employer will automatically put you into the main section of the LGPS, where you will pay the normal contribution rate in return for normal pension build up. Once you are a member of the main scheme you can then elect, in writing, to move to the 50/50 section.

Note: If you are in the 50/50 section, your employer will have to put you back into the main section of the scheme every three years at their re-enrolment date.

For information about moving to the 50/50 section of the LGPS please see: Reduce your pension contributions.

Increasing your pension contributions

Making additional contributions towards a pension can be a cost-effective way of increasing your retirement benefits as contributions qualify for immediate tax-relief through your employer's PAYE system.

There are two ways you can increase your retirement benefits within the LGPS:

  • Additional Pension Contributions (APCs) - Pay regular contributions or lump sum payments to buy extra amounts of pension in the LGPS.
  • Additional Voluntary Contributions (AVCs) - Pay additional contributions to build up a pension "pot" which can be used to buy an annuity, increase your tax-free lump sum or both.

For details on these choices, see: Increase your pension benefits.

Pension contributions and tax

The LGPS  uses 'net pay arrangements' for tax relief. This means that pension contributions are deducted from a member's salary before income tax is calculated and therefore the member receives tax relief on pension contributions at their marginal* rate of tax.

*Marginal rate of tax

The marginal rate of tax is the percentage of tax that you would pay if you earned an extra £1 on top of your current income. The current tax bands are:

 Band  Taxable Income  Tax rate
 Personal Allowance  Up to £12,570  0%
 Basic rate  £12,571 to £50,270  20%
 Higher rate  £50,271 to £125,140  40%
 Additional rate  over £125,140  45%

So a person with taxable income of £15,000 would get tax relief at the rate of 20% on their pension contributions to the LGPS. A person with a taxable income of £60,000 would get tax relief at the rate of 40% on their pension contributions to the LGPS.

Low earners only

There is currently an anomaly for LGPS members who earn less than the personal tax allowance.

In a 'net pay arrangements' scheme like the LGPS, if a member earns less than the personal allowance then their marginal rate of tax is 0% and so no tax relief is given.

However, other schemes e.g. personal pensions, use 'relief at source' and tax relief is given.

From 6 April 2024, HM Revenue and Customs (HMRC) must pay top up payments directly to affected members of schemes which use 'net pay arrangements'. Low earners will be contacted by HMRC and asked for their bank details so that the top up can be paid directly to their bank account.

Example

Sarah works part time as a teaching assistant.

  • Her annual pensionable pay is £12,000.
  • Her gross contribution rate will be 5.5% (£55 a month).
  • Sarah has only one job and does not earn enough to pay tax. This means she does not receive tax relief on her payslip. However, from the tax year 2024/2025, HM Revenue and Customs are responsible for making a top up payment to Sarah, equivalent to the tax relief she would have received if she had been a tax payer.

Employer not paying contributions

If you are concerned that your employer is not paying your contributions (or its contributions for you) into your LGPS pension, please contact your employer.

If you still have difficulties then see the following factsheet: What to do if my employer doesn’t pay my pension contributions or is late paying them | MoneyHelper