The Local Government Pension Scheme (LGPS) is one of the UK's largest public sector pension schemes. It is open to most employees in local government and some other organisations.
The government has introduced new laws designed to help people save for their retirement. It requires all employers to enrol their workers into a workplace pension scheme if they are not already in one. This is known as automatic enrolment.
Your employer may have to enrol you in the LGPS under automatic enrolment rules, but if you want to opt out after you start work you can complete an LGPS opt out form available from our website and return it to your payroll department which is responsible for opting you out of the scheme.
- What are the scheme benefits?
- A choice of tax free lump sum when you retire – subject to maximums
- An annual pension on retirement based on pension you build up
- The ability to pay 50% of your contributions for 50% of the pension benefits
- The ability to increase your pension by paying extra contributions
- Voluntary retirement from age 55, subject to reductions
- An ill health pension from any age (subject to qualifying service for a period of two years)
- A death in service lump sum of three times your pensionable pay
- A widow's, widower's, civil partner's or cohabiting partner's pension in the event of death
- Children's pensions for eligible children in the event of death
- How is my pension calculated?
From 1 April 2014 the scheme has changed from a final salary scheme to a career average scheme.
- For every year you are in the new scheme, you will build up a pension based on your pensionable pay in that year
- For each scheme year that you are a member, a pension equal to a 49th of your pensionable pay will be added to your pension account
- Inflation increases will be added to ensure that your pension account keeps up with the cost of living
Ben is in the main section of the scheme from 1 April 2014 to 31 March 2015 and earned £24,500 in that year.
Scheme year 2014 to 2015 Section of the scheme Main Rate of build up 1/49th Pensionable pay £24,500 Amount of pension built up £500 (£24,500 divided by 49)
So at the end of the scheme year, £500 is added to Ben's pension account. However, to ensure that the pension keeps its value, the total pension account will be adjusted in line with the cost of living (CPI – Consumer Price Index). If inflation was 3%, Ben's total pension account would be increased on 1 April 2015 to £515.
If Ben had been in the 50/50 section for the year ending 31 March 2015, the pension benefits he would have built up would have been half the amounts shown above.
- Pension benefits prior to 1 April 2014
As the scheme regulations changed on the 1 April 2014, the way your pension is calculated will be different for any membership prior to this date.
For service between 1 April 2008 and 31 March 2014
Your pension is calculated by using a simple calculation:
Your final pay ÷ 60 × the number of years you have been in the scheme.
Since 1 April 2008 there is no longer an automatic lump sum.
However, you can exchange £1 of annual pension for £12 of lump sum. The lump sum you can take is up to 25% of the capital value of your pension benefits providing the total lump sum does not exceed £312,500 (2014/15 figure) less the value of any other pension rights you have in payment.
Details of the maximum tax-free cash payment you can take will be given to you shortly before your retirement. It is at that time you need to make a decision.
For service on and before 31 March 2008
Your final pay ÷ 80 × the number of years you have been in the scheme.
An automatic lump sum of:
Your final pay ÷ 80 × the number of years you have been in the scheme × 3.
- What information will I receive about my pension?
You will receive an annual benefit statement each year giving you a summary of your benefits to date.
Producing a summary of your benefits involves a lot of work as we have to get accurate information from your employer. If you need a statement of your benefits and think your annual benefit statement is not suitable then let us know.
- What else should I know?
- The Local Government Pension Scheme (LGPS) is a statutory scheme with benefits set out in law making it very secure
- Its regulations are issued by the Department for Communities and Local Government (DCLG)
- The benefits you build up in the LGPS are guaranteed and don't depend on the investment performance of the scheme
- New member information