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Scheme Details

The current scheme regulations came into effect on 1st April 2008. The following section sets out the main structure of the scheme, including benefits and contributions to be paid.

Benefit Structure

What contributions do I pay?

What you will pay is dependant on the amount of your pay: the more you earn, the higher your contribution rate will be. For part-time members, the rate will be dependant on your full-time equivalent pay.

The contribution rates (from April 2012) are:

Pay Range	Contribution Rate
£0-13,500	5.5%
£13,501 - £15,800	5.8%
£15,801 - £20,400	5.9%
£20,401 - £34,000	6.5%
£34,001 – £45,500	6.8%
£45,501 - £85,300	7.2%
>£85,300	7.5%

EXAMPLES

A full-time employee who earns £17,000 per annum (p.a.) will pay contributions on their pay of 5.9%

A full-time employee who earns £17,000 p.a. with a pensionable bonus of £5,000 p.a. will pay contributions of 6.5% on all of their pay, as their total pensionable pay is £22,000

A part-time employee who earns £8,500 p.a. and works 50% (eg two and a half days per week) will pay contributions of 5.9% as their full-time equivalent pay is £17,000

How much will my pension be?

Your pension is based on the length of your membership in the scheme and your final year’s pay. If you are part-time, your scheme membership will count at its part-time length when working out your pension and your final year’s pay is increased to what you would have received had you been fulltime. For membership you build up to 31 March 2008 you receive an annual pension based on 1/80th of your final year’s pay, with an automatic lump sum. For membership you build up after 31st March 2008 you receive an annual pension based on 1/60th of your final year’s pay with no automatic lump sum. The examples below show how benefits based on membership in the LGPS are calculated.

What pay is used to calculate retirement benefits?

Your retirement benefits will be calculated on your final year’s pay. That is, the pay due in respect of your final year. If you are part-time, your final year’s pay is increased to what you would have received had you been full-time.

Can I exchange part of my pension for a lump sum?

You can exchange part of your annual pension to create a tax-free cash payment, or to increase your automatic lump sum. You will receive £12 lump sum for each £1 of pension given up. You can take up to 25% of the capital value of your pension benefits as a lump sum.

EXAMPLES

On retirement at age 65, a Scheme member has 30 years total membership (all pre 01.04.2008) and has a final pay of £20,000. Their benefits would be as follows:

Annual pension: 30 x 1/80 x £20,000 = £7,500
Automatic lump sum: 30 x 3/80 x £20,000 = £22,500

If, however, a Scheme member retires at 65 with 30 years membership which is all post 31.03.2008, and has a final pay of £20,000 then their benefits would be:

Annual pension: 30 x 1/60 x £20,000 = £10,000

If the member wished to receive the same amount of lump sum that would have been available under the old Scheme, they would need to commute £1,875 annual pension which would result in an annual pension of £8,125 and a lump sum of £22,500.

How much will my employer pay?

All employers who are paying into the LGPS have a different contribution rate. Every three years an independent review is undertaken to calculate how much your employer should contribute to the Scheme to pay the balance of the cost of providing your benefits in the LGPS.

When can I take my benefits?

The Scheme retirement age is 65 and any benefits taken before that age (except on grounds of redundancy or ill-health) will be reduced to take account of early payment (special protections to benefits exist for those who joined before 01.10.2006 and who reach 60 by 31.03.2020).

The earliest date that a member can receive their benefits is age 55, except on the grounds of ill-health which is payable at any age.

What benefits are payable to my dependants when I die?

If you were to die whilst still an active member of the Scheme, the death grant payable is three times your annual pay (actual pay for part time employees). For those that die after having left the Scheme but before receiving any benefits, the death grant is five times your deferred annual pension. Pensions in payment are guaranteed for ten years, meaning that the death grant payable in respect of a deceased pensioner is ten times the annual pension, minus the amount of pension already paid.

A pension will also be payable to your spouse, civil partner or nominated co-habiting partner and is based on 1/160th of your pay for each year of your membership, except for nominated, co-habiting partners which is based on membership after 05.04.1988.

The 2008 Scheme Regulations introduced the provision for a dependant’s pension to be paid to a nominated, co-habiting partner. Such a pension is payable to anyone that you nominate. To create a nomination, a written declaration signed by both the nominator and the nominee must be sent to the Administering Authority which states that for a period of at least two years, the following criteria have been met:

There is financial dependence by the nominee on the nominator, or interdependence between both parties
Both parties have been free to marry or enter into a civil partnership with each other
They have been co-habiting as husband and wife, or as civil partners

What happens if I'm retired due to ill-health?

If you have at least three months total membership in the Scheme and your employer determines, on the advice of an independent medical practitioner, to terminate your employment on the grounds:

that you are permanently incapable of discharging efficiently the duties of your current employment AND
that you have a reduced likelihood of being capable of undertaking any "gainful employment" before age 65

you will be entitled to the immediate payment of your pension benefits. "Gainful employment" means paid employment for not less than 30 hours in each week for a period of not less than 12 months.

Whether the total membership used in the calculation of your pension will be enhanced will depend on your level of ill-health.

First Tier: If your employer determines that there is no reasonable prospect of you being capable of undertaking any "gainful employment" before age 65, you will be entitled to receive an increase to your membership of 100% of the period between your last day of membership and your 65th birthday.
Second Tier: If your employer determines that although you will not be capable of undertaking gainful employment within three years of leaving employment, but it is likely that you will be able to do so at some point before your 65th birthday, then your is increased by 25% of the period between your last day of membership and your 65th birthday.
Third Tier: If your employer determines that it is likely that you will be able to undertake gainful employment within three years of leaving employment, then you will be paid immediate pension benefits without any increase to membership, but your pension will be discontinued once you become capable of undertaking gainful employment.

Discontinuation and Review of Third Tier Benefits:

Once Third Tier benefits have been in payment to you for 18 months, your employer shall make inquiries as to your current employment. If you are not in gainful employment, the authority shall obtain a further certificate from an independent registered medical practitioner.

You employer will discontinue the payment of Third Tier benefits if they consider that you are in "gainful employment" or that you are capable of undertaking such employment and may recover any payment made in respect of any period before discontinuance during which they consider you to have been in gainful employment. You must, if you are in receipt of a Third Tier award, inform your employer immediately should you obtain "gainful employment".

Your employer shall, in any event, discontinue the payment of benefits under Tier Three after they have been in payment to a person for three years, unless the employer makes a determination that Tier Two benefits should apply.

Am I able to increase my benefits?

Additional Voluntary Contributions (AVCs) paid into an outside pension provider have not changed and can continue to be paid. However, the facility to purchase additional years of membership in the Scheme by regular contributions removed was removed from the Scheme on 31.03.2008. Contracts started on or before 31.03.2008 will continue and will still provide the same benefits as quoted when you began the contract.

The Scheme now allows members to buy additional pension by paying additional contributions. You may purchase additional pension up to a maximum of £5000 per annum, in multiples of £250 per annum, over any number of years, providing that the contract is complete before your 65th birthday.

You can also increase any survivor's benefits as well as your own. These would be payable in the event of your prior death to your spouse, civil or nominated partner at the rate of 37.5% of your own pension purchased by additional contributions. This naturally costs more than increasing your own benefits alone and includes benefits payable in respect of any eligible children at the time of your death.

Should you choose to leave the scheme before the completion of your contract you will be credited with the proportion of additional pension purchased to the date of retirement. Should you choose to retire on a voluntary basis before age 65 and receive immediate payment of your benefits there may be a reduction to your pension benefits due to the increased length of time over which your benefits will be paid.

We have produced a calculator to enable you to assess the cost of buying additional pension. Simply input the amount of pension you would like to purchase (in multiples of £250 pa), your age and the period in years over which you wish to pay. You should also indicate if you would like to purchase an additional survivor's pensions payable in the event of your death. The calculator will display the additional contributions you would need to pay each month. You should note that the cost is liable to be adjusted over the period of the contract in line with actuarial guidance.

If you are interested in purchasing additional pension benefits after assessing the cost, please contact LPFA to make arrangements through a pension administrator.

Benefit Statements

Benefit Statements are issued on an annual basis to disclose the benefits accrued to date and projected benefits on retirement.

We have produced a number of frequently asked questions to assist and clarify any common concerns.

Annual Benefit Statement FAQs (PDF 785KB - opens new window)

LGPS 2008 Video

In 2008, the LPFA worked in association with the Local Government Employers organisation (LGE) to produce a video which covers the main details of the Scheme from 1 April 2008.

Trouble Viewing?

To view these videos you must have Adobe Flash Player installed on your computer. More troubleshooting advice can be found on the google video website.

Help for screen readers

If you are having problems with screen readers and videos, visit the google "Using YouTube with a screen reader page".

Terms and Conditions

The Local Government Pension Scheme (LGPS) is the national pension scheme for people working in local government or working for other types of employer participating in the Scheme. It is administered locally through regional pension funds, for groups of participating employers.

Local Government Employers (LGE), working with AVT Ltd, has produced this video for pension fund administrators, local government employers and employees to assist in communicating the provisions of the LGPS in England and Wales from 1 April 2008. The information on this video is an overview of the LGPS in England and Wales from 1 April 2008. It is for general use only and does not cover every personal circumstance. In the event of any dispute as to eligibility for membership of, or benefits due under, the LGPS the appropriate legislation will prevail. The information on this video does not provide any contractual or statutory rights and is for information purposes only. It represents the views of LGE at the time of production (see version number below) and should not be treated as a complete and authoritative statement of the law.

The data on this video is protected under copyright and other intellectual property laws. Copyright remains with Local Government Employers (LGE). Unauthorised copying is illegal and could result in prosecution. The permission of LGE must be obtained prior to any addition, alteration or amendment to the video.

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