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Calculating your pension benefits

The LGPS is a defined benefit scheme which means that your pension is calculated using formulas which are set out in law.

The basic formulas used to calculate your pension depend on when you are a member.

Membership from 1 April 2014

From 1 April 2014, the LGPS became a Career Average Revalued Earnings (CARE) pension scheme. CARE pensionable pay is your actual pensionable pay that you pay contributions on. It is used to calculate your pension.

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.

If you are in the 50/50 section of the scheme, a pension equal to a 98th of your pensionable pay is added to your pension account in each scheme year. Find out about the 50/50 section

Your pension account is revalued to keep up with the cost of living. The revaluation rate is the Consumer Price Index (CPI). It is applied in April each year under orders set by HM Treasury. Find out about revaluation of pension from 1 April 2014

Example

Your pensionable pay is £12,000. You are in the main section of the scheme.
The annual pension you build up that year is 1/49 x £12,000 = £244.90
The next year your pensionable pay remains the same therefore you build up annual pension of £244.90 again.
After 2 years, your annual pension built up is £244.90 + £244.90 = £489.80.
Your pension account is revalued to ensure it keeps up with the cost of living.

Membership between 1 April 2008 and 31 March 2014

Your annual pension is calculated by dividing your total membership by 60 and multiplying this figure by your final salary pensionable pay. If your pay has dropped within the last 10 years, find out what happens if you had a reduction in pay

Final salary pensionable pay is based on the previous 365 days. Find out how final pay is calculated. Membership is adjusted if you work part-time. Find out how membership is calculated

Example

Your  final salary pensionable pay is £12,000 when you retire. You were a full-time member between 1 April 2008 and 31 March 2014.
Your  annual pension for this period is 1/60 x 6 x £12,000 = £1,200

Membership before 1 April 2008

Your annual pension is calculated by dividing your total membership by 80 and multiplying this figure by your final salary pensionable pay. If your pay has dropped within the last 10 years, find out what happens if you had a reduction in pay.

Final salary pensionable pay is based on the previous 365 days. Find out how final pay is calculated. Membership is adjusted if you work part-time. Find out how membership is calculated.

Example

Your final salary pensionable pay when you retire is £12,000. You were a member between 1 April 2006 and 31 March 2008.
Your annual pension is 1/80 x 2 x £12,000 = £300
In addition, an automatic tax-free lump sum is payable.

Your benefits can be reduced or increased, depending upon your reason for retirement.

Tax-free lump sum

You can take a tax-free lump sum by giving up some of your annual pension.  Find out about converting your pension to a lump sum

Use the pension account modeller tool. The pension account modeller is a tool which helps you understand how your pension account works. It shows you how your pension builds up from April 2014 onwards.It does not provide you with an estimate of your pension.