On 1 April 2008, the Local Government Pension Scheme (LGPS) 2007 was introduced in England and Wales, which changed the way benefits are calculated.
If you left the scheme on or between 1 April 2008 and 31 March 2014, the introduction of this Scheme will have affected the way your deferred benefits are calculated.
Please see more information on how your deferred benefits will have been calculated below.
The normal scheme retirement age is 65, but you can elect to receive your LGPS benefits at any time from age 55. However, your pension will be reduced for early payment – please see the Early retirement factors(PDF), calculated by The Government Actuary Department (GAD).
If you left the LGPS with deferred benefits on or after 1 April 2008, you may be able to receive your LGPS benefits voluntarily from as early as age 55.
In cases of ill health, there is NO age limit.
If you left the Local Government Pension Scheme (LGPS) on or between the 1 April 2008 and 31 March 2014, your deferred benefits will have been calculated using your whole-time equivalent pensionable pay at your date of opting out or date of leaving, and your scheme membership up to that point.
Your scheme membership
Your total membership is measured in years and days and includes the length of time in which you have been a member of the LGPS, as well as any membership awarded for the transfer of previous pension rights into the scheme.
If you worked part time during these periods, your total membership will have been pro-rata to take account of your part time hours.
Your final pay
This is the amount of pensionable pay that you have received during your final year of employment i.e. 365 days back from your date of leaving. However, it could be based on one of the previous two years, if higher.
If you worked part time, your final pay will be calculated as a whole-time equivalent.
Non-contractual overtime will NOT be included in the calculation of your final pay.
Calculating your deferred benefits
For membership up to 31 March 2008, benefits will be calculated at an 80th, with an automatic lump sum entitlement, equal to three times your annual pension:
Membership ÷ 80 x Final Pay = Annual Pension
For membership from 1 April 2008 to 31 March 2014, benefits will be calculated using 60ths, but with NO right to an automatic lump sum.
Membership ÷ 60 x Final Pay = Annual Pension
The combined total of your 80th and 60th pension will be your total Deferred LGPS Annual pension, plus you will have an automatic lump sum for your membership period before 31 March 2008.
However, you will also have the option when you retire, to give up some of your pension to increase your automatic lump sum or to gain some tax free cash if you started in the scheme on or after 1 April 2008.
Your deferred benefits are indexed linked, therefore their value will increase each April in line with the Consumer Price Index (CPI) .
When you retire, you will have the option to give up some of your pension to gain a tax free lump sum – this is known as Commutation. For every £1 of pension you decide to give up you will receive £12 cash lump sum, (up to a maximum of 25% of the capital value of your benefits and in addition to any automatic lump sum entitlement that you may have in respect of your membership up to and including 31 March 2008). However, this is not compulsory and you may wish to exchange less than the maximum allowed.
When you tell us you are thinking of retiring we will send you your retirement details, which will include figures for your base pension values and the maximum additional lump sum amounts you can take. Plus we will send details of how to exchange your pension for a lump sum.
If you have ever contributed to an in-house AVC arrangement, you may wish to consider using this fund to boost your LGPS benefits. Any reduction to your annual pension to give you a tax free lump sum, will NOT reduce any survivor’s benefits which may become payable upon your death.
The Local Government Pension Scheme
Visit the LGPS website for more details about your pension and use the online tools to help you calculate how much your pension will be at retirement.
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