Pensions England Scotland Wales

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Local government pension scheme FAQs

What is the LGPS?

The LGPS is a statutory pension scheme, available primarily for employees of Local Authorities.  The scheme is open to employees from other institutions which are known as either Scheduled Bodies (listed in the LGPS regulations) or Admitted Bodies.  The scheme is generally available to Local Authority employees who do not qualify for membership of other registered pension schemes, like the Teachers pension scheme or the NHS pension scheme.

Unlike other statutory public sector pension schemes the administration of the LGPS is not centralised.   It is administered at a local level either by a County Council or London Borough and the benefits payable from the scheme are fully funded. Contributions paid by scheme members and employers are invested by a Fund Manager and the expenses of the scheme are met by the pension fund.

If you are working in:

 

Are all Local Authority employees covered by the same regulations?

No.  Local Authority employees in England and Wales, Scotland and Northern Ireland are covered by three separate national regulations.

 

Does my employer have any discretion in the application of the regulations?

Yes. The pension scheme regulations allow each employer discretion in the way in which some of the scheme rules apply to its employees.  Each scheme employer is obliged to formulate and publish a discretions policy.

 

I am a doctor working for a Local Authority, will I be eligible to join the LGPS?

This will depend on a number of factors.  The LGPS is a default pension scheme and is generally available to Local Authority employees who are unable to contribute to another pension scheme.  For example if you are Public Health doctor employed directly by the Local Authority you may retain the right to continue to contribute to the NHS pension scheme via direction arrangements.  If this is the case you will not be able to contribute to the LGPS instead. If you are not eligible for membership of the NHS pension scheme you would be eligible to join the LGPS.

 

Is membership of the LGPS automatic on commencement of Local Authority employment?

Yes.  For an individual who holds a contract of employment for at least three months, is under age 75 and who is unable to join any other pension arrangement.

 

How long to do I need to contribute to the LGPS before I qualify for a pension?

You need to contribute for three calendar months or have transferred pension rights into the LGPS from another pension arrangement.

 

How is my pension calculated?

In respect of pension scheme membership accrued up to 31 March 2008 you will receive the following benefits:
Annual pension based on pensionable service X final pensionable pay / 80 plus a pension commencement lump sum of three times this amount.

In respect of pension scheme membership accrued after 1 April 2008 you will receive the following benefits:
Annual pension based on pensionable service X final pensionable pay / 60.

From 1 April 2014 benefits will be calculated on a Career Average Revalued Earnings basis with a 1/49th accrual.  More information can be found here:

Read further information 

 

Can I take a bigger lump sum?

Yes. You can take up to 25% of the capital value of your pension as a lump sum.  You can increase the lump sum by giving up part of your scheme pension and you will receive £12 of lump sum for each £1 of pension you give up.

 

What counts as membership?

Your membership is calculated with reference to the years and days that you contribute to the LGPS, but may also include membership transferred from other pension schemes, added years, augmented service and service credited as a result of ill health retirement.

During periods where you have worked part-time your membership is apportioned according to the number of part-time hours you are working. For example during a period of 10 years where you are working 50% of whole-time you will accrue five years of membership.

 

What counts as pensionable pay?

Your pensionable pay is your salary, wages, fees and other payments specified in your contract of employment as being pensionable. 

Generally payments made in respect of non-contractual overtime worked, expenses, and pay in lieu of notice are not treated as pensionable 

 

What is final pensionable pay?

Your final pensionable pay is the pay on which your benefits are calculated.

It is based on your pensionable pay during the year ending with the day that you cease to be an active member of the scheme, or one of the best of the last three years.

If your pay has been reduced you can request that your employer looks at the best consecutive three year average during the last thirteen years of your pensionable employment. In this calculation the pensionable earnings which are considered are in respect of the scheme year up to 31 March.  

Final pensionable pay is calculated with reference to your earnings from a single comparable whole-time employment.

 

How much does it cost?

The contribution rates for 2013/14 are as follows:

Band Range Contribution Rate
1 £0 to £12,000 5.5%
2 £12,001 to £14,000 5.8%
3 £14,001 to £18,000 5.9%
4 £18,001 to £30,000 6.5%
5 £30,001 to £40,000 6.8%
 6  £40,001 to £75,000  7.2%
 7  More than £75,000  7.5%

 

How much does my employer pay?

This will be determined by the scheme actuary at the triennial valuation and can vary from employer to employer.  Generally employers pay a higher level of contribution into the LGPS than that paid by NHS employers. The average employer contribution to the LGPS is around 19%.

 

What is my normal pension age?

Your normal pension age is 65.  This is the age at which you can draw your benefits without employer approval or actuarial reduction.

 

Can I remain in pensionable employment indefinitely?

If you continue to contribute to the LGPS you will be paid your pension when you retire, take flexible retirement or at the latest when you reach the eve of your 75th birthday.

 

Can I retire early?

You can retire from age 60 onwards. 

You may be able to retire from age 55 onwards. This is available only with your employer’s consent, and is subject to your employer’s discretion which can be different for each employer.  Please contact your employer for details of their discretions policies.

If you were contributing to the LGPS on 31 March 2008 you would be able to retire from age 50 providing you have obtained the consent of your employer. Please note this right expired on 1 April 2010. 

If your benefits are paid early as a result of voluntary early retirement they will be reduced to reflect the fact that they will be in payment for longer.

Further information on these reductions

 

If I delay my retirement beyond age 65 is my pension enhanced?

Yes. Your pension will be increased by a late retirement factor. 
Further information on this

 

What if I leave before I reach normal pension age?

If you leave the scheme before age 65 and your total membership is three months or more, or you have transferred other pension rights into the LGPS, or if you already have a deferred pension in the LGPS, you will be entitled to a deferred benefit. 

This benefit will be calculated using the relevant method described above.

This benefit is payable at age 65, but can be paid prior to age 65 in line with the rules described earlier.

 

What options are available to me if I seek medical retirement?

The LGPS provides a tiered ill health retirement package. This can provide benefits that are paid immediately which could be increased if you are unlikely to be capable of gainful employment within three years of leaving.

 

How will my pension be calculated if I have no reasonable prospect of being capable of gainful employment before age 65?

You will receive an ill health retirement pension calculated with reference to the membership which you would have accrued had you remained in the LGPS until age 65.

 

How will my pension be calculated if I am unlikely to be capable of gainful employment within three years of leaving but I may be capable for doing so before age 65?

You will receive an ill health retirement pension calculated with reference to membership which you have accrued up to the date you leave the LGPS plus 25% of your prospective service to age 65.

How will my pension be calculated if I am likely to be capable of gainful employment within three years of leaving, or before age 65 if sooner?

You will receive an ill health retirement pension calculated with reference to the membership which you have accrued up to your date of leaving.  Payment of these benefits will be stopped after three years or earlier if you are in gainful employment or become capable of such employment.  Where the payment is stopped it will be normally become payable again from age 65 but there are provisions to allow it to be paid earlier.

 

What is gainful employment?

Gainful employment refers to paid employment for no less than 30 hours in each week for a period of no less than 12 months. 

 

What if I retire due to redundancy or business efficiency?

If you are age 55 or over you will be entitled to the immediate payment of your unreduced LGPS benefits.
If you were a member of the LGPS on 31 March 2008 and retire on the grounds of redundancy or business efficiency before 31 March 2010 you will receive immediate payment of your unreduced LGPS pension providing you are age 50 or over.

 

What is flexible retirement?

From age 55, if you reduce your hours or move to a less senior position, and provided your Local Authority employer agrees, you can take some or all of your accrued benefits.  Awarding flexible retirement is at the discretion of your employer. 

Further information on flexible retirement

  
 

Can I transfer benefits in to the LGPS?

Yes.  The LGPS can accept transfers of pension rights from other LGPS pension funds, other pension schemes who use the public sector transfer club (like the NHS pension scheme) and from other registered pension schemes who do not operate the public sector transfer club.

Transfers of pension rights must be requested within 12 months of joining the scheme.  Your employer has the discretion to extend this time limit.

You cannot transfer a pension credit (as a reult of a divorce settlement) into the LGPS.

 

Can I transfer pension rights from the LGPS to another pension scheme?

Yes.  If you leave the scheme at least one year before age 65 with entitlement to deferred benefits you can transfer your pension rights to another pension scheme.

 

Will a lump sum death grant be payable if I die in service?

Yes. This is equivalent to three times your final pensionable pay.  If you are working part-time this will be your actual pay and not the notional whole-time equivalent, unless you were working part-time wholly on account of the condition which caused or contributed to your death. In this event no account will be taken of the reduction in your pay resulting from the reduction in your service.

Your employer has complete discretion regarding the recipient of the death grant, although you are able to complete an ‘Expression of Wish’ form to indicate to whom you would like this to be paid.

 

What benefits are payable to my dependants if I die in service?

A surviving spouse, registered civil partner or, subject to certain qualifying conditions, a co-habiting partner will qualify for a pension.  The benefit for widows and widowers is calculated using the following formula:
Membership X final pensionable pay = dependant’s pension
 160

The benefits for registered civil partners and qualifying co-habiting partners is calculated using the same formula but only using membership accrued after 5 April 1988.

This pension is payable from the day after your death.

The membership used to calculate this pension will include the membership which you would have accrued had you remained in the LGPS until age 65.

 

Will a lump sum death grant be payable if I die with a deferred pension?

Yes. This is equivalent to the payment of five years of pension as a lump sum.

 

What benefits are payable to my dependents if I die with a deferred pension?

A surviving spouse, registered civil partner or, subject to certain qualifying conditions, a co-habiting partner will qualify for a pension.  The benefit for widows and widowers is calculated using the following formula:
Membership X final pensionable pay = dependant’s pension
 160

The benefits for registered civil partners and qualifying co-habiting partners is calculated using the same formula but only using membership accrued after 5 April 1988.

This pension is payable from the day after your death.

 

Will a lump sum death grant be payable if I die while in receipt of my pension?

Yes.  If you are under age 75 at the time of death a death grant will be payable. The grant is equivalent to ten times your pension less the value of any pension benefits which have been paid.

 

What benefits are payable to my dependents if I die while in receipt of my pension?

A surviving spouse, registered civil partner or, subject to certain qualifying conditions, a co-habiting partner will qualify for a pension.  The benefit for widows and widowers is calculated using the following formula:
Membership X final pensionable pay = dependant’s pension
 160

The benefits for registered civil partners and qualifying co-habiting partners is calculated using the same formula only using membership accrued after 5 April 1988.

This pension is payable from the day after your death.

If you marry after you have retired the dependent’s benefits may be calculated slightly differently.  

 

Will my children qualify for benefits?

The LGPS regulations permit the payment of a children’s pension to an eligible child.

 

What is an eligible child?

Your child will qualify to be treated as an eligible child if he or she is wholly or mainly dependent on you, at the time of your death and is under 18 years of age.  If your child is between 18 and 23 and in full time education, at the time of your death, they will be treated as an eligible child. If your child is disabled within the meaning of the Equality Act 2010 they will be treated as an eligible child.

 

How much will my child receive if I die in service?

If a survivor benefit is paid to an eligible spouse, registered civil partner or co-habiting partner then a single child will receive the following:
Membership X final pensionable pay = children’s pension
 320

If a survivor benefit is paid to an eligible spouse, registered civil partner or co-habiting partner then two or more children will receive a share of the following:
Membership X final pensionable pay = children’s pension
 160

If no survivor benefit is paid to an eligible spouse, registered civil partner or co-habiting partner then a single child will receive the following:
Membership X final pensionable pay = children’s
 240

If no survivor benefit is paid to an eligible spouse, registered civil partner or co-habiting partner then two or more children will receive a share of the following:
Membership X final pensionable pay = children’s pension
 120

The membership used to calculate this pension will include the membership which you would have accrued had you remained in the LGPS until age 65.

 

How much will my child receive if I die with a deferred pension?

If a survivor benefit is paid to an eligible spouse, registered civil partner or co-habiting partner then a single child will receive the following:
Membership X final pensionable pay = children’s pension
 320

If a survivor benefit is paid to an eligible spouse, registered civil partner or co-habiting partner then two or more children will receive a share of the following:
Membership X final pensionable pay = children’s pension
 160

If no survivor benefit is paid to an eligible spouse, registered civil partner or co-habiting partner then a single child will receive the following:
Membership X final pensionable pay = children’s pension
 240

If no survivor benefit is paid to an eligible spouse, registered civil partner or co-habiting partner then two or more children will receive a share of the following:
Membership X final pensionable pay = children’s pension
 120

 

How much will my child receive if I die while in receipt of a pension?

If a survivor benefit is paid to an eligible spouse, registered civil partner or co-habiting partner then a single child will receive the following:
Membership X final pensionable pay = children’s pension
 320

If a survivor benefit is paid to an eligible spouse, registered civil partner or co-habiting partner then two or more children will receive a share of the following:
Membership X final pensionable pay = children’s pension
 160

If no survivor benefit is paid to an eligible spouse, registered civil partner or co-habiting partner then a single child will receive the following:
Membership X final pensionable pay = children’s pension
 240

If no survivor benefit is paid to an eligible spouse, registered civil partner or co-habiting partner then two or more children will receive a share of the following:
Membership X final pensionable pay = children’s pension
 120

 

I hold concurrent Local Authority employments. How is my pension calculated?

Each period of membership is treated separately.

If you terminate one concurrent post while continuing to contribute to the scheme in respect of another post or posts, you can elect to combine the periods of membership.  The membership credited to the active account will be adjusted to reflect any differential in pensionable pay between the concurrent posts.

 

Can I increase my pension?

Yes.  The LGPS includes a facility to enable you to pay Additional Regular Contributions (ARCs).  These contributions will provide Additional Pension, for you or for you and a dependent.

Alternatively you could pay into an Additional Voluntary Contribution (AVC) arrangement, or personal pension, stakeholder or Free Standing AVC.

 

What benefit is available from Additional Pension?

You are able to purchase blocks of additional scheme pension in units of £250. You can purchase up to twenty of these blocks, equivalent to a maximum of £5,000 of additional pension.

 

How is the cost of Additional Pension determined?

The cost varies and is determined by the following factors:

  • your age at your last birthday
  • your gender
  • the amount of additional pension being purchased
  • the end date chosen for the contract
  • whether the cost is being met by a single lump sum payment or by regular contributions
  • whether you have chosen to purchase personal benefits only or to also provide benefits for dependants.

Further information on Additional Pension

 

Are benefits in the LGPS subject to the Annual Allowance and Lifetime Allowance?

Yes. Please see the BMA FAQs on Annual Allowance and Lifetime Allowance for further guidance.
Information on receiving benefits from the LGPS which exceed the Lifetime Allowance

 

What increases will apply to my pension?

For deferred and pensioner members benefits increase in line with the Pensions (Increase) Act.  This act currently links increases to your benefits to changes in the Consumer Prices Index (CPI).
If you retire before age 55, other than on the grounds of ill health, you will not receive any increases to your pension until you reach age 55.

Please see the BMA FAQ on Increases to benefits 

 

Is the LGPS subject to similar changes as those being proposed to other public sector pension schemes?

Yes.  In the LGPS these changes will be implemented on 1 April 2014.