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Thinking about joining the LGPS

  1. You will get an annual pension payable for life when you retire and it increases every April in line with the cost of living.
  2. You make contributions towards your pension. However, they come out of your pay before tax so the real cost to you is less (this is called tax relief).
  3. Your employer makes contributions as well.
  4. You can pay extra contributions if you want to increase your annual pension or lump sum amount at retirement.
  5. There are no hidden charges or administration fees.
  6. You can currently retire between ages 55 and 75. The lower age will go up to 57 from 6th April 2028.
  7. When you retire, you can exchange some of your pension for a one-off lump sum. The lump sum will usually be tax-free and will be based on HM Revenue & Customs lump sum allowance limits. For every £1 of annual pension you give up you will get a lump sum of £12.
  8. You will receive a pension if you have to stop work because of ill health at any age.
  9. Your loved ones will receive a grant following your death.
  10. Your partner and any children (if they qualify) would also receive pensions after you die.

You contribute a percentage of your gross salary, depending on what you earn.

LGPS has a main section and a 50:50 section:

  • In the Main section, you pay full rate contributions and build up pension at full rate.
  • In the 50:50 section, you pay half rate contributions and build up pension at half rate.

The contribution rates for 1st April 2025 to 31st March 2026 for both sections are:

Your actual gross salaryContribution rate for the main sectionContribution rate for the 50:50 section
Up to £17,800 5.50% 2.75%
£17,801 to £28,000 5.80% 2.90%
£28,001 to £45,600 6.50% 3.25%
£45,601 to £57,700 6.80% 3.40%
£57,701 to £81,000 8.50% 4.25%
£81,001 to £114,800 9.90% 4.95%
£114,801 to £135,300 10.50% 5.25%
£135,301 to £203,000 11.40% 5.70%
More than £203,001 12.50% 6.25%

Your employer also contributes to make sure there is enough money at the time you retire to pay your pension.

Every three years, our Actuary works out what your employer’s contribution percentage should be.

Your employer lets us know the annual salary you’ve paid contributions on from one April to the next. This is known as your pensionable salary.

  • In the Main section, the pension you build up each year will be a 49th of your annual pensionable salary.
  • In the 50:50 section, the pension you build up each year will be a 98th of your annual pensionable salary.

Your pension then increases each year to help it keep pace with the cost-of-living. We base the increases on an inflation measure called the Consumer Price Index (CPI).

Example of LGPS Main section

Scheme yearPension at start of yearGross pensionable salary and build up ratePension (for that year)Pension (built up to date)Inflation increasePension at end of year
Year 1 £0.00 £19,600 ÷ 49 £400.00 £400.00 1.20% £404.80
Year 2 £404.80 £23,129 ÷ 49 £472.02 £876.82 -0.10% £875.94
Year 3 £875.94 £25,000 ÷ 49 £510.20 £1,386.14 1.00% £1,400.00

You will carry on building up your pension in this way each year, until you either retire, leave employment or opt out of paying pension contributions.

At retirement, you will have an option to turn some of this pension into a one-off lump sum. For every £1 of annual pension you give up you will get a lump sum of £12.

HM Revenue & Customs limits the amount of tax-free lump sum you can take when your pension is paid to you. This limit is called a lump sum allowance (LSA). Currently, the maximum lump sum is the lowest of:

  • 25% of the capital value of your benefits
  • £268,275*
  • £268,275* less the total lump sums you have already taken

*If you hold a valid Lifetime Allowance protection, you may be able to take a lump sum that is larger than £268,275.

The lump sum will usually be tax-free, but if you go over the lump sum allowance, you will have to pay tax on the excess at your marginal rate.

If your employment contract runs for three months or more and you are under age 75, your employer will enrol you into LGPS without you having to do anything.

If your employment contract is under three months or you have opted out of LGPS in the past, you can complete an opt in form and send it to your employer’s payroll department. They will then start to take pension contributions from your salary.

LGPS is a valuable part of your pay and reward package.

It is a defined benefit pension scheme. This means that the value of your LGPS pension at retirement is based on your salary over the length of time you are a member. You can keep track of the amount of pension you are building up.

(You may also have come across defined contribution schemes, for example personal pensions, where your benefits depend on the contributions you have paid in, and how your investments perform).

LGPS is one of the largest public sector pension schemes in the UK. It is a nationwide pension scheme for people working in local government or working for other employers who use LGPS as their work pension. The LGPS in England and Wales is administered locally through 86 local pension funds, including the Clwyd Pension Fund. There are over 6.5 million LGPS members nationwide.

For more in-depth information about LGPS, please look at our currently paying pension contributions tab or download our short scheme guide.

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