How your pension is calculated depends on when you joined 

The LGPS is a defined benefit pension scheme, which means that your pension is worked out using a set formula. How your pension is calculated depends on when you joined the scheme. 

The LGPS changed from a final salary scheme to a Career Average Revalued Earnings (CARE) scheme on 1 April 2014. If you joined the Scheme before 1 April 2014, you will also have built up benefits in the final salary scheme. Therefore, your pension could be made up of both pre-April 2014 service in the final salary scheme and post 1 April 2014 April service in the CARE scheme.

Your membership in each of the schemes will be calculated and added together to give you your total annual pension amount.

If you joined on or after 1 April 2014

In summary,

• Annual Pension = Pensionable pay for each scheme year x 1/49 + cost of inflation added
• you can exchange some pension for a cash lump sum (each £1 of annual pension you give up will buy you £12 of lump sum)

Your annual pension under the CARE scheme (from 1 April 2014) is worked out as follows:

For each year you are in the scheme from 1 April 2014, you build up a pension based on your pensionable pay in that year. Your pensionable pay will determine the amount you pay in pension contributions. 

For each scheme year that you are a member, a pension equal to a 49th of your pensionable pay is added to your pension account (or half this rate of build up for any period you have elected to be in the 50/50 section of the scheme).

Inflation increases are added each year to ensure that your pension account keeps up with the cost of living.

There is no automatic tax-free cash lump sum, but you can give up some of your pension in exchange for a cash lump sum (£1 of pension exchanged for £12 of cash).

You can take a tax-free lump sum by giving up some of your annual pension. You can take up to 25 per cent of the capital value of your LGPS benefits as a lump sum. For every £1 of annual pension that you give up you will receive a £12 lump sum. In the same way, giving up £100 of your annual pension would give you £1,200 lump sum.

For post 1 April 2014 membership your actual pay figure is used rather than whole-time equivalent. 

If during the scheme year you had been:

• on leave on reduced contractual pay or no pay due to sickness or injury
• on relevant child-related leave
• reserve forces service leave 

then, for the period of that leave, your pension is based on your assumed pensionable pay. Assumed pensionable pay is a notional pay figure used to make sure your pension builds up as if you were at work receiving normal pay.

The amount of pension built up during the scheme year is then added to your pension account and revalued at the end of each scheme year. At this point inflation increases are added, so your pension keeps up with the cost of living.

If you joined before 1 April 2014

Membership up to 31 March 2008 provides:

• Annual Pension = Total membership in years  x Final Pay x 1/80
• Automatic Lump Sum = Total membership in years x Final Pay x 3/80

So in summary, for each year of membership built up before 1 April 2008 you receive a pension based on 1/80th of your final pay. You will also receive an automatic tax-free lump sum of three times your pension.

Membership from 1 April 2008 to 31 March 2014 provides:

• Annual Pension = Total membership in years x Final Pay x 1/60
• no automatic lump sum, but you can exchange some pension for a cash lump sum (each £1 of annual pension you give up will buy you £12 of lump sum).

So in summary, for each year of membership built up between 1 April 2008 to 31 March 2014 you receive a pension based on 1/60th of your final pay.

You can give up some of your pension in exchange for a cash lump sum (£1 of pension exchanged for £12 of cash). You can take up to 25% of the capital value of your LGPS benefits as a lump sum.

Final pay is normally the pay in your last 12 months of work that you’ve paid pension contributions on. But, we can sometimes use previous years pay where that would be higher.

If you worked part-time, the same calculation is used, but the total number of years of membership is reduced down to reflect your part time working, for example, if you work 18.50/37.00 hrs per week over a year, your membership in that year would be 182.5 days. The total reduced membership is then multiplied by your full-time equivalent final pay.