The Local Government Pension Scheme

The Local Government Pension Scheme (LGPS) is a defined benefit pension scheme.

The Local Government Pension Scheme (LGPS) is a nationwide scheme but is administered by local authorities. The scheme is for local government employees and people employed by other non-profit organisations who are carrying out a service which was, or could be, carried out by the local authority. The LGPS does not include teachers, firefighters or police officers because these specific jobs have their own pension schemes.

You can join the LGPS if you are under the age of 75 and are employed in local government, or employed by another organisation that has chosen to be part of the scheme.

Teaching assistants and civilian staff from the police and fire service can join. Teachers, police officers and firefighters are not allowed to join.

If you start a job in which you are eligible for membership of the LGPS, you will be automatically brought into the scheme if your contract is for three months or more. If it is for less than three months you can opt to join by contacting your payroll section and electing to do so in writing.

For pension benefits built up before 31 March 2014, you get a proportion of your pay for every year and also the days that you are a member of the scheme.

For pension accrued before 31 March 2008, the proportion is an 80th of your whole time equivalent pay.

For any pension built up after 1 April 2008, it is an improved 60th rate.

However, from 1 April 2014 that formula is different because the Scheme changed from a final salary scheme to a career average scheme:

• For each year in the new scheme, you will build up a pension based on your actual pensionable pay in that year. 
• For each scheme year that you are a member after 1 April 2014, a pension equal to a 49th of your pensionable pay will be added to your pension account.
• For each year that passes, the amount of pension that is building up is revalued in line with inflation.  This could be an increase or a decrease, depending on the Consumer Prices Index.

Your employer pays contributions into the fund. Every 3 years, an independent review is carried out to calculate how much your employer should contribute. Employers pay into the fund at a much higher percentage rate than employees. As a rough guide, the employee pays for approximately a third of the cost of their pension and the employer pays for the rest.

If you want to investigate a transfer, you must start the process by informing the Pensions Section within 12 months of starting your employment.

If you have been a member of the LGPS before or a member of another public sector pension scheme and you have started a new employment the Leicestershire LGPS in the last 12 months, please complete Section 2 of the membership form and send it to the Pensions Section.

Following this, the Pensions Section will provide you with information about the transfer. You will be able to consider this information before you decide to proceed with or decline the transfer.

Generally speaking, if you have deferred benefits from a previous LGPS employment you can choose to either leave the benefits separate or transfer the membership into the Leicestershire fund.

The normal pension accrual is calculated by dividing your pay by 49. For example, if you were paid £1000 in a month, then the pension accrual for that month would be £1000 divided by 49, which is approximately £20.41.

If you want to, you can increase you pension build up. There are two options: paying Additional Pension Contributions (APCs) or by paying into an Additonal Voluntary Contribution (AVC) plan.

Additional Pension Contributions (APCs)

You can purchase extra pension by making payments under an Additional Pension Contribution (APC) arrangement. For example, you can make an arrangment to pay an extra amount each month, or purchase some extra pension by making a one-off payment. There is a limit to the amount of extra pension you can purchase.

Additional Voluntary Contributions (AVCs)

A flexible way to boost your retirement income is to pay into an Additonal Voluntary Contribution (AVC) plan. Members of the Local Government Pension Scheme can pay Additional Voluntary Contributions through Prudential, our in-house AVC provider. Once you reach retirement, you can use the funds in the AVC account to increase your pension benefits.

For more information, please see our main page about increasing your pension benefits.

The main scheme is the scheme you will be in when you start your pensionable employment. In the main scheme, you pay normal contributions and get the normal pension build up (your pay divided by 49).

The 50/50 scheme allows you to pay half the normal contributions, but you will only build up half the normal pension ( your pay divided by 98). It is designed to be a short-term option when times are financially tough. Your employer is required to re-enrol you back into the main scheme every 3 years. If you wish to continue in the 50/50 scheme at that point, you would need to make another election in writing to re-join the 50/50 scheme.

Regardless of the section you are in, you get full life cover and any death grant is unaffected.

Joining the 50/50 scheme

To join the 50/50 scheme, you must instruct your employer (payroll team) to move you from the main scheme. This will take place from the next available pay period. Please complete the form below and send it to your employer.

Choosing the 50/50 Scheme -Option form  PDF

If you are a member of the Local Government Pension Scheme, you are covered by a package of benefits. This includes the payment of a Death Grant. You can choose who would received this payment, should the event happen.

Is there any advantage in making an expression of wish?

Yes. The advantage of making an expression of wish is that the payments can normally be made quickly without waiting for the estate to be settled. Also, payment usually means that no inheritance tax needs to be paid on the Death Grant.

Are there any disadvantages?

No, although the Leicestershire Pension Fund has absolute discretion to make payment of the Death Grant to the member’s nominee or personal representatives or any person appearing to the authority to have been his/her relative at any time. This means that, in theory, it does not have to be paid to the named nominee. However, this only happens in very unusual circumstances. For example, someone who is now married with children may have nominated their parents many years ago when they were single. In those circumstances we might think it reasonable that the person had forgotten to update their wishes and might make the payment to the person’s estate to benefit their spouse, civil partner, cohabiting partner or children.

How much will the Death Grant be?

If you die in service before the age 75, the Death Grant will be 3 times your pay. If you are a Deferred Member and you left the scheme before 31st March 2008, the Death Grant will be 3 times the value of the deferred pension that was calculated for you upon leaving, plus index-linked increases. If you left the scheme after 1st April 2008, then the Death Grant will be 5 times the value of the deferred pension that calculated for you upon leaving, plus index-linked increases.

Who can the Death Grant be paid to?

You can make an expression of wish to whoever you would like to receive the lump sum – family, friends, partners or an organisation such as your favourite charity. All we ask is that if naming more than one beneficiary you indicate what share each should get (making sure the shares add up to 100%). If you wish to nominate someone under 18 years old, you should consider setting up a trust fund. This can be done as part of your will and a solicitor could assist you in this respect.

What happens if my circumstances change?

There will be circumstances where you will need to change your beneficiary, e.g. if one of your nominees die, and there will be other circumstances where you will want to consider changing your beneficiary, e.g. following a divorce. You can do this simply by updating the form below.

What if I have more than one LGPS pension?

If you have more than one LGPS pension – that is to say, if you have separate benefits either within the Leicestershire scheme or under another local authority – in the event of your death only one Death Grant may be payable, subject to scheme rules. This will be the one that is the higher of the payments, once they have been calculated.

What will happen to my Death Grant if I don’t complete this form?

As mentioned earlier, the Pension Fund has absolute discretion regarding who to make payment to. If you do not complete an expression of wish form, the Death Grant may be paid to your estate and will be paid to whoever is legally entitled to receive payment. The Probate Office decide who that is and will issue Grant of Probate or Letters of Administration, depending on whether you have written a Will or not. This process can take time and the Death Grant then forms part of your estate and may be liable for inheritance tax. If you have not written a Will, your estate might not be distributed in the way you would wish. Remember though; the Death Grant may only be a small part of your estate and you may be better off tying up all your affairs with a properly drawn up Will.

What if I have already written a Will?

You can still complete the Death Grant - expression of wish form, which will speed up the process and give the advantages listed earlier.

If you become employed in Local Government (other than Town and Parish Councils where the Council must pass a resolution of membership first) with a contract for at least 3 months, you will automatically become a member of the LGPS unless you opt not to join.

If you choose to opt out of the scheme, your election to do so must be made within the first 3 months of your employment to enable a refund of any contributions already paid to be refunded to you through your payroll.

Should you opt out of the LGPS with between 3 months and 2 years membership, then the refund will be paid to you direct from the Pension Section. Once you have been a member for more than 2 years, a refund is no longer possible.

In all cases, you will need to send an opt out form to your employer (payroll) to action. You may wish to obtain independent financial advice before you make a decision not to join the LGPS.

Please note that if you opt out of the LGPS in an employment on or after 11th April 2015 with an entitlement to a deferred benefit (and do not have a concurrent employment in which you are still a member of the scheme) you will not have the right if you subsequently re-join the scheme, to aggregate (combine) those deferred benefits with any future period of membership in the LGPS.

Please see our main page on leaving the scheme for more information and a copy of the Opt-out form.

The Local Government Association have produced a series of short videos to explain the key features of the LGPS. To view the videos, please visit the Pensions Made Simple page of the LGPS website.