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For members of the Local Government Pension Scheme in Scotland

How the LGPS is run

Find out more about how the LGPS rules are made, who makes decisions about your pension and how your contributions are invested.

Overview

The LGPS is a public service pension scheme and its rules are made with the approval of the Scottish Parliament. The Scheme is administered locally by pension funds across the country who make decisions about your pension. Those pension funds decide how pension contributions are invested. A Local Pension Board helps each pension fund administer the LGPS and comply with the Scheme rules.

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Governance

Who runs the LGPS?

The LGPS is one of the largest pension schemes in the UK. It is a national pension scheme for people working in local government or working for other employers that participate in the Scheme. The LGPS in Scotland is administered locally by 11 local pension funds.

LGPS rules

The Scheme rules can only be changed with the approval of the Scottish Parliament. Changes to the rules are discussed at a national level by employer and employee representatives. Your pension fund must inform you if the Scheme rules significantly change. They should do this as soon as possible, which must be within three months of the change.

The LGPS is a qualifying scheme that meets the UK Government’s standards for automatic enrolment. If you have chosen to opt out of the LGPS, your employer is required to bring you into the Scheme every three years, depending on your age and earnings. Find out more about how you may be affected by Automatic enrolment.

The LGPS is a registered public service pension scheme. This means that you receive tax relief on the contributions that you pay, subject to certain limits. You can find out more about these limits in the Tax section.

Local Pension Boards

Your pension fund must operate a Local Pension Board. The Pension Board helps the pension fund comply with the LGPS rules, overriding pensions legislation and guidance from the Pensions Regulator. The Pension Board is made up of equal numbers of employer and member representatives.

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Funding and investment

As a Scheme member, you pay contributions to the LGPS. Your employer pays the balance of the cost of providing your pension benefits. Employees contribute roughly one third of the Scheme’s costs and employers pay the rest.

Every three years an independent actuary calculates how much your employer should pay into the Scheme. The actuary takes investment returns into account when setting how much your employer must pay.

Your pension fund sets out its approach to investment in its investment strategy statement. The statement includes your pension fund’s policy on social and environmental considerations.

See the Islamic Finance Guru website for information about whether the LGPS is sharia compliant. This confirms that the LGPS is halal because it is a defined benefit pension scheme.

Cost management

A cost management process ensures the long-term sustainability of the LGPS. The cost of the Scheme is monitored to make sure it stays within limits agreed by HM Treasury. Changes to the Scheme design may be required if the cost of the LGPS becomes higher or lower than those limits.

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