How benefits built up before April 2015 are worked out
The LGPS changed from a final salary scheme to a career average scheme on 1 April 2015. If you joined the Scheme before 1 April 2015, you have built up benefits in the final salary scheme.
For membership built up between 1 April 2009 and 31 March 2015 you receive a pension of 1/60th of your final pay as a pension.
For membership before 1 April 2009, you receive a pension of 1/80th of your final pay plus an automatic lump sum of three times your pension.
Your final pay is usually your pensionable pay in the year you leave the Scheme. Pay from one of the previous two years will be used if it is higher.
How membership is worked out
If you worked part time before 1 April 2015, your membership is reduced accordingly. If you worked 17.5 hours per week and the whole time hours for your job were 35 per week, your membership would be reduced by 17.5 / 35, which is half. You would be credited with one year of membership every two years. Your membership may also be reduced if you are paid for less than 52 weeks per year.
If you are working part time in your final year, the final pay used to work out your pension is the pay you would have received if you worked whole time.
Your total membership in the final salary scheme may include:
- how long you were a member of the LGPS before 1 April 2015 in years and days, reduced for any period that you worked part time
- membership that was bought by transferring pension benefits from another scheme before 1 April 2015
- membership that was bought by transferring final salary benefits from another public service pension scheme at any time
- extra membership you have bought by paying added years contributions or by converting an in-house AVC into membership
- extra membership awarded by your employer.
Example of final salary benefits
Let’s look at the final salary benefits built up by a member who:
- joined the LGPS on 1 April 2000
- worked full time throughout and has nine years membership before 1 April 2009 and six years membership between 1 April 2009 and 31 March 2015
- leaves the LGPS on 31 March 2018
- has final pay of £28,000, based on the period from 1 April 2017 to 31 March 2018.
For the period 1 April 2009 to 31 March 2015 :
Annual pension: 6 / 60th x £28,000 = £2,800
For the period 1 April 2000 to 31 March 2009:
Annual pension: 9 / 80ths x £28,000 = £3,150
Plus a tax-free lump sum: 3 x 9 / 80ths x £28,000 = £9,450
The total annual pension would be £5,950, plus the value of pension built up in the pension account since 1 April 2015.
As the member in this example joined the LGPS before 1 April 2009, they will automatically receive a tax-free lump sum when they take their pension. Most members will be able to give up part of their annual pension in exchange for a tax-free lump sum. For every £1 of annual pension you give up you get £12 of lump sum. HM Revenue and Customs set a limit on how much you can receive tax-free. Use our Lump sum calculator to find out more about this option.