Get to grips with how the Local Government Pension Scheme works - from how much you need to pay in to what you'll get when you retire.
Paul Davies
In this article
If you work in local government you'll have access to the Local Government Pension Scheme (LGPS), one of the largest pension schemes in the UK.
The amount you'll get when you retire will depend on your earnings and how long you have been part of the scheme.
The LGPS is made up of 90 funds in England and Wales administered and managed at local level, although the scheme rules are set at a national level.
There are nearly 2 million active members of the scheme and around 1.75 million pensions in payment.
The Local Government Pension Scheme changed from a final salary scheme to a career average scheme on 1 April 2014.
If you joined the scheme before 1 April 2014, you will have built up some benefits in the final salary scheme.
Your contribution rate is based on how much you are paid. When you join, and every April afterwards, your employer will determine the contribution rate.
Pay bands and contribution rates for 2024-25 are detailed below:
| If your actual pensionable pay is: | You pay a contribution rate of: |
| Up to £17,600 | 5.5% |
| £17,601 to £27,600 | 5.8% |
| £27,601 to £44,900 | 6.5% |
| £44,901 to £56,800 | 6.8% |
| £56,801 to £79,700 | 8.5% |
| £79,701 to £112,900 | 9.9% |
| £112,901 to £133,100 | 10.5% |
When you can access your local government pension will depend on when you left the scheme.
Pension benefits are normally payable in full at your Normal Pension Age (NPA). Since 1 April 2014, the Normal Pension Age has been linked to your state pension age.
For benefits built up before 1 April 2014, the Normal Pension Age is 65.
Members do not have to take their pension at Normal Pension Age - you can take it at any time between the ages of 55 and 75. Take it earlier than the NPA and you'll get a reduced amount; delay it and you'll get a higher amount.
Deferred pension benefits are normally payable in full at Normal Retirement Date (NRD). Your NRD under the old arrangements is:
This will vary depending on the scheme under which you built up benefits:
Each year 1/49th of your pensionable pay is put into your pension account.
At the end of the year it is adjusted to take into account the cost of living.
Example
Here's how your pension would build up over two years with pensionable pay of £30,000 (increasing by 1% after a year) and cost of living adjustments (COLA) of 1.5% and 2%:
Year 1: £30,000/49 = £612.24 x 1.5% (COLA) = total pension of £621.42
Year 2: £30,300/49 = £618.37 + £621.42 x 2% (COLA) = total pension of £1,264.59
Between 1 April 2008 and 31 March 2014 members received a pension worth 1/60th of their final pay.
Your final pay is usually the pensionable pay earned in the year prior to leaving the scheme (one of the two previous years' pay can be used, if this is higher).
Example
You joined the LGPS on 1 April 2000 and you left on 31 March 2020 with a total membership of 20 years (six years of which spanned the period between 1 April 2008 and 31 March 2014).
You have a final year's pay of £30,000 (based on the period from 1 April 2019 to 31 March 2020).
For the period 1 April 2008 to 31 March 2014 only:
Annual pension is: 6/60 x £30,000 = £3,000.
These benefits are then added to the pension benefits built up before 1 April 2008 (see example below) and the benefits from 1 April 2014 to the date of leaving.
Up to 31 March 2008 members received a pension of 1/80th of their final pay plus an automatic lump sum of three times their pension.
Your final pay is usually the pensionable pay earned in the year prior to leaving the scheme, however, one of the two previous years' pay can be used, if higher.
Example
You joined the LGPS on 1 April 2000 and left on 31 March 2020 with a total membership of 20 years, eight years of which were before 31 March 2008.
You have a final year's pay of £30,000 (based on the period from 1 April 2019 to 31 March 2020).
For the period 1 April 2000 to 31 March 2008 only:
Annual pension is: 8/80 x £30,000 = £3,000.
Plus an automatic tax free lump sum: 3 x 8/80 x £30,000 = £9,000.
These benefits are then added to the pension benefits built up from 1 April 2008 to the date of leaving.
The scheme will pay out a lump sum on your death, but the amount depends on whether you are still employed or already drawing benefits.
If you die in service as a member of the LGPS, a lump sum death grant of three times your assumed pensionable pay at your date of death is paid, no matter how long you have been a member of the LGPS, provided you are under age 75 at the date of death.
If you die in service, a pension will be paid to your spouse or civil partner for the rest of their life. For your membership from 1 April 2014 this is calculated at 1/160th of your pensionable pay (or assumed pensionable pay where applicable) plus an amount equal to 1/160th of your assumed pensionable pay for each year of membership you would have built up from your date of death to your Normal Pension Age.
For membership built up before 1 April 2014 the pension payable to your partner is equal to 1/160th of your final pay times the period of your membership in the scheme up to 31 March 2014.
A lump sum of five times your deferred annual pension will be payable.
A lump sum of three times your deferred annual pension will be payable.
Your membership from 1 April 2014: 1/160th of the pensionable pay or assumed pensionable pay you received in each year plus a proportion of any transfer of pension rights credited to your pension account.
Your membership up to 31 March 2014: 1/160th of your final pay for the period of your membership up to 31 March 2014, upon which your deferred benefit is based.
A lump sum death grant will be paid if you die before you reach the age of 75 and your pension has been paid for less than 10 years. The amount payable would be:
A lump sum death grant will be paid if you die before you reach the age 75 and your pension has been paid for less than five years. The amount payable would be:
The calculation of the death grant depends on whether you have more than, or less than, 10 years of pensionable service. The calculation is complex so you should ask your pension fund administrator for an estimate of the amount that may be payable.
For your membership from 1 April 2014, your partner will receive 1/160th of the pensionable pay or assumed pensionable pay you received in each year plus a proportion of any transfer of pension rights credited to your pension account
For your membership up to 31 March 2014, your partner will receive 1/160th of your final pay multiplied by the period of your membership up to 31 March 2014.
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