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Local Government Pension Schemes

Government pension scheme consultation

The government is consulting members of public sector pension schemes about the age discrimination that occurred in the schemes between 2015 to date. The remedy is to give everyone a choice about how they want their pension to be calculated for the period 2015 to 2022 either final salary or career average and when to make the choice  now or at retirement.

Watch our webinar to find out more.

The rules of LGPS are contained in statutory regulations similar to those governing TPS and are funded schemes run by local authorities.

2014 scheme changes

There has been agreement reached between the employers, the unions and the government on the Local Government Pension Scheme that is coming into existence in 2014, the main points are below.

Main points of the outcome:

  1. A Career Average Revalued Earnings (CARE) scheme using CPI as the revaluation factor (the current scheme is a final salary scheme). The accrual rate would be 1/49th (the current scheme is 1/60th).
  2. There would be no normal scheme pension age, instead each member's Normal Pension Age (NPA) would be their State Pension Age (the current scheme has an NPA of 65).
  3. Average member contributions to the scheme would be 6.5% (same as the current scheme) with the rate determined on actual pay (the current scheme determines part-time contribution rates on full time equivalent pay).
    While there would be no change to average member contributions, the lowest paid would pay the same or less and the highest paid would pay higher contributions on a more progressive scale after tax relief (see table below).
  4. Members who have already or are considering opting out of the scheme could instead elect to pay half contributions for half the pension, while still retaining the full value of other benefits. This is known as the 50/50 option (the current scheme has no such flexible option).
  5. For current scheme members, benefits for service prior to 1 April are protected, including remaining 'Rule of 85' protection. Protected past service continues to be based on final salary and current.
  6. Where scheme members are outsourced they will be able to stay in the scheme on first and subsequent transfers (currently this is a choice for the new employer).
outline of changes table 1

LGPS 2014

LGPS 2008

Contribution flexibility

Yes, members can pay 50% contributions for 50% of the pension benefits


Normal Pension Age

Equal to the individual member's State Pension Age (minimum 65)


Lump sum trade off

Trade £1 of pension for £12 lump sum

Trade £1 of pension for £12 lump sum

Death in Service Lump sum

3 x pensionable pay

3x pensionable salary

Death in Service Survivor Benefits

1/160th accrual based on Tier 1

Ill health pension enhancement

1/160th accrual based on Tier 1 ill-health pension enhancement

Ill-Health Provision

Tier 1 - immediate payment with service enhanced to Normal Pension Age

Tier 2 - immediate payment of pension with 25% service Enhancement to Normal Pension Age

Tier 3 - temporary payment of pension for up to 3 years

Tier 1 - immediate payment with service enhanced to Normal Pension Age (65)

Tier 2 - immediate payment of pension with 25% service enhancement to Normal Pension Age (65)

Tier 3 - temporary payment of pension for up to 3 years

Indexation of pension in payment


CPI (RPI for pre 2011 increases)

Vesting period

2 years

3 months

contributions changes

Actual Pensionable Pay

Gross Contribution

Contributions after Tax Relief

Up to £13,500



£13,501 -£21,000



£21,001 - £34,000



£34,001 - £43,000



£43,001 - £60,000



£60,001 - £85,000



£85,001 - £100,000



£100,001 - £150,00



More than £150,000




All of the schemes were actuarially valued during 2003/4 and a deficit of £400 million was identified, which the Office of the Deputy Prime Minister (ODPM) tried to address by imposing changes in April 2005, supposedly designed to stabilise the costs of the schemes and pave the way for a new scheme in April 2008. The order implementing the change to a normal pension age of 65 and removing the 85-year rule was revoked in July after pressure from trade unions, MPs and threatened strike action around the general election.

The ODPM set a deadline to complete the changes by April 2006 and a tripartite committee established. The employers' outline proposal to bridge the deficit includes:

  • a normal retirement age of 65 for future benefits;
  • employees being permitted to pay a higher contribution rate to take unreduced benefits between 60 and 65;
  • immediate increase to early retirement age from 50 to 55 (required in all schemes by April 2010);
  • 1% increase in employee contributions over the next two years to pay for the delayed change;
  • removal of the 85-year rule.

The latest news can be found on the UNISON website.

The main differences from TPS for those in LGPS are as follows.

  • Normal retirement age is 65, except that it is 60 for those with 25 years service who joined before April 1998. Members whose years of age, plus length of service in the scheme add up to more than 85 are currently able to retire, with the employer's consent, and receive their accrued pension with no reduction. For example a member age 54 with 31 years' service can retire with immediate payment of unreduced pension, provided the employer consents. Members who do not come within the 85 year rule (but are aged 50 or over) may, with employer consent, still retire on immediate pension before normal retirement age, but their benefits will be actuarially reduced.
  • Widow's/widower's pensions continue for life unlike those of the TPS which normally cease on re-marriage or cohabitation.
  • Pension is not payable to adult dependants other than widows/widowers, except as a result of allocation.
  • On severance, redundancy and premature retirement provisions are identical except that where the employer grants premature retirement on the grounds of redundancy, LGPS pays the full accrued pension and lump sum.

Further information on LGPS can be found on the LGPS website.

Last updated: 9 October 2020