Quick facts about the Local Government Pension Scheme

A quick run through the pension scheme.

• a pension that will increase each April using an index determined by over-riding legislation
• an option to exchange your pension to provide a tax free lump sum. Every £1 pension converted will provide £12 lump sum. Up to 25 per cent of the capital value of your pension can be taken as a lump sum.                        

The basic benefits are a yearly pension of 1/60th of your final year's pay for each year of scheme membership after 1 April 2008, with an option to exchange your pension to provide a lump sum.

Any membership up to 31 March 2008 will continue to provide pension calculated on 1/80th plus an automatic 3/80th lump sum. The amount of the lump sum can be increased by exchanging pension for additional lump sum.

Final year's pay is the best one of the last three years pay before leaving on which contributions have been taken. If a member works part time, the final year's pay is the whole time equivalent. This is to compensate for the fact that if a member works part time the membership is reduced. Where a member has a period of reduced or no pay due to sickness, the final year's pay is the amount that would be payable had the member worked normally.

Members who downgrade or move to a job with less responsibility can choose to have benefits calculated on the average of the best three consecutive years pay in the last 10 years of service (ending 31 March).

For contributors with at least three months membership or with a transfer of pension rights the scheme also provides:

• Payment of unreduced benefits at the normal retirement age of 65, but with the right to take pension from age 60 or, with employer's consent, from age 55.

• Immediate payment of benefits on redundancy/efficiency from age 55.

• Employees can be in the same scheme beyond age 65 but benefits must be drawn before age 75. Benefits drawn after age 65 will be actuarily increased to reflect the fact that they are being paid after the normal retirement age of 65.

• If you have to leave work with at least three months membership due to permanent ill health, a tiered ill health package is available at any age. This could give you increased benefits, paid straight away, if you are unlikely to be capable of gainful employment within a reasonable time after you leave.

  • A higher enhancement of 100 per cent membership to age 65 will be awarded if there is no reasonable prospect of obtaining gainful employment before age 65.

  • A lower enhancement of 25 per cent of membership to age 65 will be awarded if the member is unlikely to obtain gainful employment within three years of leaving but is likely to do so before age 65.

  • If you are likely to be capable of obtaining gainful employment within three years of leaving, benefits are paid without enhancement. These benefits will be stopped after three years or earlier if you become gainfully employed or become capable of undertaking gainful employment.

  • Gainful employment is defined as paid employment (in local Government or elsewhere) for no less then 30 hours per week for a period of not less then 12 months.

• Flexible retirement with employer consent, may be permitted from age 55, allowing scheme members to draw some or all of their benefits while continuing work on reduced hours or in a post of less responsibility.