Local Government Pension Scheme
The Local Government Pension Schemes (LGPS) is one of the largest pension schemes in the UK with more than six million members, including contributors, ‘deferred members’ and pensioners. It is made up of individual funds with assets running into billions of pounds.
It has members in local government, education from primary to higher, police staff, the voluntary sector, environment agencies and private contractors. It is a statutory public service scheme, meaning its benefits and terms are set by government regulations.
Whether you are a member of the LGPS or considering joining, it’s important to understand the scheme and how it supports financial security in retirement.
On this page
What are the benefits of the LGPS?
Membership for LGPS is automatic for nearly all eligible employees taken on before the age of 75, but you can opt out.
The scheme is administered locally through regional pension funds (86 in England and Wales, 11 in Scotland and one in Northern Ireland), and offers:
- a pension based on your pay and how long you’ve been in the scheme, not the state of the financial markets, when you retire;
- the option to exchange part of your pension for tax-free cash on retirement;
- immediate life cover and a pension for your husband, wife, partner and/or children when you die;
- an option means you can retire from 55 and receive benefits immediately, although if you voluntarily retire early, your pension is likely to be significantly reduced for being paid early;
- an option to flexibly retire from 55 with employer’s consent, and you can negotiate with your employer to continue working on reduced hours and draw part or all your pension;
- immediate payment of pension benefits, without reduction, if you are made redundant or retired for business efficiency purposes after 55;
- access to a pension, which could be enhanced, from any age if the medical evidence shows you should be retired on the grounds of permanent ill health;
- the ability to boost your pension by paying more contributions, for which you receive tax relief;
- employers’ contributions averaging between 14% and 18% on top of the contributions you pay towards the cost of your pension.
Are you eligible for the LGPS?
To become a LGPS member, you have to be under the age of 75. If you are not sure whether you are already paying into the scheme, check your payslip.
How much do scheme members receive?
Long-standing scheme members will have some benefits that are linked to final salary. The pension you receive will be based on your best year’s final pensionable earnings within the last three years of your scheme membership, and on your length of service in the scheme.
All pension benefits that are now being accrued in the scheme are based on Career Average Revalued Earnings (CARE). Each year’s pensionable pay affects pension benefits. Entitlement is revalued with CPI inflation.
Pay bands and rates
In the LGPS, you currently pay between 5.5% and 12.5% (before tax relief) of the pay you receive, depending on how much you earn.
You only pay contributions on the pay you actually earn. If your pay is reduced – for example, because of ill health or maternity – there are rules that set out when ‘assumed pay’ is to be used so you are not penalised.
For the latest contribution bands, visit the LGPS websites for England and Wales, Scotland and Northern Ireland.
Part-time workers’ contribution rates are based on their actual pay, rather than what they would be earning if they worked full time, and non-contractual overtime pay counts toward deciding a member’s contribution rate.
LGPS boards
Each LGPS fund must have a board to assist in the decision-making process. The funds need to be governed efficiently so that pensions can be paid and costs kept to a minimum. The boards are required to have an equal number of representatives from employers and scheme members. UNISON encourages members to join the LGPS boards.
UNISON resources
- UNISON response to new statutory guidance on SSP UNISON voices its concerns over the new statutory guidance on discretionary benefits in the LGPS (England). Read our response
- UNISON consultation on Cost-Cap scheme
- Housing Association LGPS to SHPS Briefing Paper The main differences between the LGPS and SHPS in England and Wales
- LGPS Redundancy Guide A short guide on what happens to your pension during redundancy
- UNISON response to the LGPS: Changes to the Management of Employer Risk
- Responsible investment in LGPS Research and review of the pension fund’s investment strategy statements (England and Wales)
Frequently asked questions
Up until 2016, there were two parts to the state pension; the basic state pension and the additional state pension. Qualification for the basic state pension was through making national insurance contributions. LGPS members could find that their entitlement to the additional state pension is minimal, or even zero, as public service pension schemes including the LGPS were contracted-out of this, meaning while in the LGPS you pay less national insurance contributions and don’t get the additional state pension as a result.
Legal disclaimer
The information contained within this article is not a complete or final statement of the law and is based on the laws of England, Wales, Scotland and Northern Ireland.
While UNISON has sought to ensure that the information is accurate and up to date, it is not responsible and will not be held liable for any inaccuracies and their consequences, including any loss arising from relying on this information. If you are a UNISON member with a legal problem, please contact your branch or region as soon as possible for advice, or for non-employment matters call UNISONdirect.