How is your LGPS Pension Calculated?
The LGPS is a defined benefit scheme; this means the pension benefits you receive on leaving the scheme are calculated using a set formula. From 1st April 2014, the scheme is a Career Average Revalued Earnings scheme or CARE scheme. This means for each year you are in the scheme, your pension builds up based on a proportion of your pensionable pay received in that year.
Depending on when you became a member of the LGPS, there will be a specific formula to work out how your benefits have built up for that period of membership.
All membership up until 31 March 2008
Membership between 1 April 2008 to 31 March 2014
1/60th of your final pay (2008 definition) for each year of membership
Membership from 1st April 2014
This means the pensionable pay you receive for each scheme year you are a member will be divided by 49 and will equal the pension built up for that year. Each consecutive scheme year of membership will accrue the same way and will be added to your pension account. To ensure that your pension account keeps up with the cost of living, it will be revalued each year.
Amount of pension built up for individual scheme year in pension account =
Pensionable pay (2014 definition) divided by 49
Can I take a lump sum?
All members have the option to convert pension to a lump sum on retirement. This is a tax free lump sum at a conversion rate of £1 pension to gain £12 lump sum. The amount converted must not exceed 25% of the total capital value of your retirement benefits. We will tell you when your benefits become payable how much lump sum you could receive.
Not a member of the LGPS?
The Pension Account Modeller is available on the national LGPS member website to help you understand how the LGPS works and shows how a pension builds up from 1 April 2014. The Modeller is not designed to provide you with an estimate of benefits. It shows how a pension will be worked out in the LGPS from 1 April 2014 onwards.
Pension Account Modeller (This link will redirect you the the national LGPS website)