Each scheme year you will build up a pension of 1/49th of your annual pensionable pay which is added to your pension account. 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.
Let's look at Andre who is leaving with 5 years membership in the scheme.
He earned pensionable pay of £10,000 in his first year of joining the scheme and then received 1% pay rises every year after that.
Let's assume the cost of living was 0.5% every year which is the rate his pension will be revalued by.
Andre's annual pension is:-
|Year 1||1/49 x £10,000 = £204.08||x 0.5% x 4 years||£208.16|
|Year 2||1/49 x £10,100 = £206.12||x 0.5% x 3 years||£209.21|
|Year 3||1/49 x £10,201 = £208.18||x 0.5% x 2 years||£210.26|
|Year 4||1/49 x £10,303 = £210.27||x 0.5%||£211.32|
|Year 5||1/49 x £10,406 = £212.37||No revaluation||£212.37|
|Total||£1,041.02 a year||Total £1,051.32 a year|
You can take a tax-free lump sum by giving up some of your annual pension. For every £1 of annual pension that you give up you will receive £12 lump sum. In the same way, giving up £100 of your annual pension would give you £1,200 lump sum, and so on. You can take up to 25% of the capital value of your Local Government Pension Scheme (LGPS) benefits as a lump sum.
If you die in service
- a lump sum death grant is payable equal to 3 times your annual pensionable pay
- an annual pension is payable to your spouse, civil partner, eligible cohabiting partner and eligible children.
View further information in Death in LGPS service.