Local government pension scheme

The LGPS (local government pension scheme) is a statutory pension scheme for employees of local authorities. Find out about the benefits and your rights as a doctor.

Location: UK
Audience: All doctors
Updated: Friday 19 November 2021
Piggybank illustration

Membership of the LGPS is automatic for local authority employees who hold a contract of employment for at least three months, are under age 75 and are unable to join any other pension arrangement.

 

Eligibility

I work for a local authority - am I eligible?

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 a 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.

Calculating your pension

How is my pension calculated?

For 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.

For pension scheme membership accrued after 1 April 2008 up to 31 March 2014, you will receive the following benefits:

  • annual pension based on pensionable service x final pensionable pay / 60.

For pension scheme membership accrued after 1 April 2014, benefits are calculated on a career average revalued earnings basis with a 1/49th accrual.

Read more from LGPS.

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 annual 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
  • service credited as a result of ill health retirement.

During periods of working 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 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, accrued before 1 April 2014, 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 13 years of your pensionable employment. In this calculation, the pensionable earnings which are considered are for the year up to 31 March.

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

What if I hold multiple local authority roles?

Each period of membership is treated separately.

If you terminate one post while continuing to contribute to the scheme for another post(s), 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 posts.

Your employer

Does my employer have any discretion?

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.

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%.

Retiring

Your normal pension age since 1 April 2014 is linked to your state pension age - this is when you can draw your pension without employer approval and without actuarial reduction.

Can I contribute to the scheme indefinitely?

If you continue to work and contribute to the LGPS beyond your normal pension age, 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.

Your pension will be increased by a late retirement factor.

Can I retire early?

You may be able to retire from age 55 onwards.

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.

What if I am made redundant?

If you are age 55 or over, with two years service or more, you will be entitled to the immediate payment of your unreduced LGPS benefits.

Any additional voluntary contribution plans paid toward and accessed before your normal pension age will still be subject to a reduction.

Can I reduce my hours or responsibility?

Yes - this is known as flexible retirement.

From age 55, if you reduce your hours or move to a less senior position, and your employer agrees, you can take some or all of your accrued benefits. You should discuss this with your employer.

Transferring pension

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)
  • 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 result of a divorce settlement) into the LGPS.

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.

 

Ill health retirement

The LGPS provides a tiered ill health retirement package. There are 3 tiers of ill health retirement. 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.

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

How is my pension calculated if I need to retire from ill health?

If there is no prospect of you being capable of gainful employment before your normal pension age, 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 your normal pension age.

What if there is a chance I will be able to work again after 3 years?

If there is no prospect of you being capable of gainful employment within three years, but you may be able to work again before your normal pension age.

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 normal pension age.

What if I am likely to be able to work again?

If there is prospect of you being capable of gainful employment within three years, or before you’re normal pension age, whichever is 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.

When the payment is stopped, it will normally become payable again from your normal pension age but there are provisions to allow it to be paid earlier.

End of life

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

Yes. This is 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 over 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.

If you have a deferred pension, the lump sum will be equivalent to the payment of five years of pension.

What benefits are payable to my dependents 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 / 160 = dependent’s pension

The benefits for 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 your normal pension age.

Will a lump sum death grant be payable if I die after retirement?

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 after retirement?

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 / 160 = dependant’s pension

The benefits for co-habiting partners is calculated using the same formula only using benefits 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.

Are my children eligible to receive benefits?

Your child will receive a child’s pension if they are eligible.

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 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 / 320 = children’s pension

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 / 160 = children’s pension

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 / 240 = children’s pension

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 / 120 = children’s pension

The membership used to calculate this pension will include the membership which you would have accrued had you remained in the LGPS until your normal pension age (if you do not have a deferred pension).

Increasing your pension

You can increase your pension paying additional regular contributions. These contributions will provide additional pension, for you or for you and a dependant.

Alternatively, you could pay into an additional voluntary contribution arrangement, or personal pension, stakeholder or free standing additional voluntary contribution.

How does additional pension work?

You are able to purchase additional scheme pension, by lump sum or regular contribution, up to a maximum of £7,316 of additional pension.

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.

Find further information on additional pension from LGPS.

Please note an LGPS pension is subject to annual and lifetime allowance tax charges.

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.

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.