The LGPS changed from a final salary scheme to a career average scheme on 1 April 2014.
If you joined before 1 April 2014, you have benefits in the final salary scheme:
- For membership between 1 April 2008 and 31 March 2014 you receive a pension of 1/60 of your final pay.
- For membership before 1 April 2008, you receive a pension of 1/80 of your final pay, and a lump sum of three times your pension.
Your final pay is usually your pensionable pay in the year you leave the LGPS, or from one of the previous two years if that is higher.
As a result, all your future pay increases and promotions will count towards final pay for working out pension you built up before April 2014 as well as after.
If you were part-time, we will use the full-time equivalent of your pay and scale down your service in line with your hours to work out your pension (and any lump sum) for that period.
The benefits you build up in the LGPS from 1 April 2014 will have a normal retirement age linked to the State Pension Age. But if you have a different normal retirement age for benefits built up before 1 April 2014, you will keep it.
If you were a member of the LGPS at any time between 1 April 1998 and 30 September 2006, you may be protected under the 85-year rule. You can find out more about the 85-year rule here.
You may choose to exchange some of your pension for a lump sum (or a larger lump sum if you are already due to receive a lump sum automatically).
You can usually take up to 25% of the overall value of your pension benefits as a tax-free lump sum.
If you have any questions about your benefits, please visit the Contact details page.
You can take your LGPS pension at any time between age 55 and 75, if you have more than two years’ service.
We’ve set out the different options below.
Normal retirement
You will receive your benefits in full if you take them from your Normal Pension Age.
- For benefits built up from April 2014, your Normal Pension Age is your State Pension age, or age 65 if higher.
- For benefits built up before 1 April 2014, the Normal Pension Age for most people is protected at 65.
You cannot take the benefits you built up before and after 1 April 2014 separately – you have to take your whole LGPS pension at the same time. The rules are different if you take flexible retirement.
Early retirement
You can retire from age 55 onwards. Your benefits will normally be reduced because you’re taking them early. The earlier you take your pension, the lower your pension will be.
Your employer may choose not to apply the whole reduction. You can ask them about their policy on this.
This table shows the current reductions for taking your benefits early. If the number of years is not exact, we will adjust the percentage to allow for the part-year.
The Government changed the reductions on 3 July 2023 - the reductions in the table below apply to retirements from that date. The Government could revise these at any time. The reductions that are in place at the date you retire will apply to your benefits.
| Number of years | Pension reduction | Lump sum reduction (if you have service before 31 March 2008) |
|---|---|---|
| Number of years 0 | Pension reduction 0% | Lump sum reduction (if you have service before 31 March 2008) 0% |
| Number of years 1 | Pension reduction 4.9% | Lump sum reduction (if you have service before 31 March 2008) 1.7% |
| Number of years 2 | Pension reduction 9.3% | Lump sum reduction (if you have service before 31 March 2008) 3.3% |
| Number of years 3 | Pension reduction 13.5% | Lump sum reduction (if you have service before 31 March 2008) 4.9% |
| Number of years 4 | Pension reduction 17.4% | Lump sum reduction (if you have service before 31 March 2008) 6.5% |
| Number of years 5 | Pension reduction 20.9% | Lump sum reduction (if you have service before 31 March 2008) 8.1% |
| Number of years 6 | Pension reduction 24.3% | Lump sum reduction (if you have service before 31 March 2008) 9.6% |
| Number of years 7 | Pension reduction 27.4% | Lump sum reduction (if you have service before 31 March 2008) 11.1% |
| Number of years 8 | Pension reduction 30.3% | Lump sum reduction (if you have service before 31 March 2008) 12.6% |
| Number of years 9 | Pension reduction 33.0% | Lump sum reduction (if you have service before 31 March 2008) 14.1% |
| Number of years 10 | Pension reduction 35.6% | Lump sum reduction (if you have service before 31 March 2008) 15.5% |
| Number of years 11 | Pension reduction 39.5% | Lump sum reduction (if you have service before 31 March 2008) N/A |
| Number of years 12 | Pension reduction 41.8% | Lump sum reduction (if you have service before 31 March 2008) N/A |
| Number of years 13 | Pension reduction 43.9% | Lump sum reduction (if you have service before 31 March 2008) N/A |
Late retirement
If you carry on working after age 65 you will keep paying into the LGPS, building up further benefits.
If you take your pension after your Normal Pension Age, it will be increased, because you are taking it later. The later you go, the higher your pension will be.
You must take your pension by the day before your 75th birthday.
Flexible retirement
You can take flexible retirement as long as your employer agrees, and you have at least two years’ service in the LGPS.
From age 55, you can reduce your hours or grade and take some or all of the pension benefits you have built up – helping you ease into retirement.
You can still receive your lower pay or salary from your job and carry on paying into the LGPS, building up further benefits.
You can take flexible retirement early if you want to – however, remember it will be reduced further to allow for early payment.
If you want to know more about flexible retirement, please contact your employer.
Receiving your pension
We will pay your pension into your bank account on the 20th of each month (or the working day before the 20th if this isn’t a working day) and send you a P60 every April.
If you’re due a lump sum, or you’ve chosen to exchange some of your annual pension for a lump sum, you’ll receive that after you’ve retired.
If you have to leave work due to illness, you may qualify for ill health benefits, as long as you have at least two years’ service in the LGPS.
You can receive ill health benefits at any age – they are not reduced for early payment. There are three levels of benefit, or ‘tiers’, based on how likely you are to be capable of ‘gainful employment’ after you leave.
Gainful employment generally means paid work for 30 hours or more each week over a period of at least 12 months. The three tiers are:
Tier 1: You’re unlikely to manage gainful employment again before Normal Pension Age.
Your ill-health benefits are based on the pension you would have received if you had stayed in the LGPS until Normal Pension Age, using your Assumed Pensionable Pay.
Your pension is payable for the rest of your life and receives cost of living increases each year.
Note: if you have already received an ill-health pension from the LGPS, any extra pension you receive may be limited if you take ill-health retirement again.
Tier 2: You’re unlikely to manage gainful employment in the next three years, but should recover before Normal Pension Age.
Your ill-health benefits are based on the pension you have built up, plus 25% of the pension you would have received if you had stayed in the LGPS until Normal Pension Age, using your Assumed Pensionable Pay.
Your pension is payable for the rest of your life and receives cost of living increases each year.
Note: if you have already received an ill-health pension from the LGPS, any extra pension you receive may be limited if you take ill-health retirement again.
Tier 3: You’re likely to manage gainful employment within three years.
Your ill-health benefits are based on the pension you have built up.
We’ll review the pension after 18 months and it will stop after three years, or earlier if you are back in or capable of gainful employment.
You’ll then start receiving it again from Normal Pension Age (or earlier, if certain conditions apply).
In some circumstances, we may upgrade a Tier 3 pension to a Tier 2 pension on review. If this happens your higher pension (including the extra) will then be payable for life with no further reviews.
A 'protection', or guarantee, applies to any ill-health pension (based on extra service – so, Tier 1 or Tier 2) you might receive, if you were:
- paying into the LGPS on 31 March 2008
- aged 45 or over on that date; and
- in the LGPS ever since.
If this applies to you, your ill health retirement benefits will be at least the level they would’ve been from the LGPS before 1 April 2008. However, please note that this protection wouldn’t apply if you’ve already taken benefits through flexible retirement.
Assumed Pensionable Pay
‘Assumed Pensionable Pay’ is used to work out your ‘extra’ pension when you receive Tier 1 or 2 ill health benefits. It is your average pay in the period before you leave because of ill health retirement, based on three months’ pay if you are paid monthly, and 12 weeks’ pay otherwise.
Assumed Pensionable Pay is adjusted:
- If your pensionable pay was reduced because you were away from work, your employer will generally ignore the reduction when working out your Assumed Pensionable Pay. This will be the case for absences due to sickness or injury, authorised unpaid leave or trade dispute.
- If the pay you received leading up to your leaving date is lower than the pay you would normally receive, your employer may use a higher pay figure from the last 12 months to work out your Assumed Pensionable Pay.
- If you reduced your hours leading up to your leaving date, an independent doctor must confirm whether this was because of the condition that led to your ill health retirement. If so, your employer will work out your Assumed Pensionable Pay based on the pay you would have received if your hours had not been reduced.
For more information about ill health retirement, please contact your employer.
A protection called the ’85-year rule’ may apply to you if you were a member of the LGPS at any time between 1 April 1998 and 30 September 2006.
You meet the 85-year rule if your age and length of LGPS service (both in whole years) add up to 85 or more. Any years you work part-time count in full.
The way the 85-year rule works is complex.
If you are over 60:
- If you take your benefits after meeting the 85-year rule, some or all of your benefits will not be reduced, even if you retire before Normal Pension Age.
- If you take your benefits before meeting the 85-year rule, the reduction to your benefits for early payment would be lower than if you weren’t protected.
If you are between 55 and 60 when you take your benefits, the 85-year rule will only apply if your employer agrees.
On flexible retirement, the 85-year rule will apply to the benefits built up to the date you first take flexible retirement, even if you are under 60. It will not protect benefits built up after you first take flexible retirement.
If you are thinking of retiring, you can contact us for an estimate of your benefits.
If you are thinking about flexible retirement, ask your employer about their policies on flexible retirement.