LGPS guide: how the Local Government Pension Scheme works

There’s something quietly unusual about the Local Government Pension Scheme that most members never get told. It’s the only funded public sector pension in the UK, the only one that actually has money in it. Every other big scheme, NHS, Teachers’, Civil Service, Armed Forces, Police, Firefighters, is unfunded, paid out of current tax receipts on the promise of the Treasury. The LGPS holds real assets: £402 billion across the funds in England and Wales as of March 2025, plus tens of billions more in Scotland and Northern Ireland.

That funded structure shapes almost everything about how your LGPS pension works. It’s why your scheme is run by your county council or unitary authority rather than a single national body. It’s why the rules feel slightly different in Scotland and Northern Ireland. And it’s why government’s recent push to merge the eight investment pools into six is being argued about in Parliament rather than quietly waved through. We’ll get to all of that. First, the basics for 2026/27.

What the LGPS actually is

You won’t find a single LGPS website where you log in to check your pension. There isn’t one. The scheme is national in its rules but local in its administration. If you work for a council, your contributions and benefits are managed by your administering authority, usually your county council, unitary authority, London borough or, in a handful of cases, a joint authority covering several local areas. That fund is a statutory ring-fenced pot of money. Your benefits are paid out of it, and the assets must be used solely for paying members’ pensions.

The LGPS catches more than just council staff. Police support staff (not warranted officers), fire and rescue support staff (not firefighters), probation officers, non-teaching staff at maintained schools and academies, college staff, university staff and a long list of admitted bodies, charities, contractors and voluntary sector organisations under formal admission agreements, are also in it. If you’re a teacher, you’re in the Teachers’ Pension Scheme instead. Everyone else in the school catches the LGPS.

To find your fund, the easiest route is the official member site at lgpsmember.org/contact-your-fund. Scotland has its own equivalent at scotlgpsmember.org, and Northern Ireland is administered by NILGOSC. Your fund, not the central LGPS body, is who you ring when you want a quote, change your nominee form, or query a contribution rate.

Three things make the LGPS distinctive among UK public sector pensions, and they all flow from the funded structure: the existence of a real pot of money, the local rather than national administration, and the way investment decisions interact with your benefits. Investment performance doesn’t change what you’re paid, that’s set in regulation, but it does affect how much your employer has to pay in to keep the fund solvent, which in turn shapes the political pressure on the scheme. More on that further down.

Which bits of LGPS are you actually in?

If you joined before the 2014 switchover (or 2015 in Scotland and NI), your pension is in three pieces. If you joined after, you’ve only got the third one. Each tranche has its own rules, its own normal pension age, and its own way of being calculated.

If you joined the LGPS for the first time on or after 1 April 2014 (E&W) or 1 April 2015 (Scotland and NI), only the third column applies to you. If you’ve been in longer, all three may matter, and the older parts can quietly add up to a meaningful slice of your eventual pension.

How CARE works today

The Career Average Revalued Earnings scheme is what every active member is currently building up. Each scheme year (1 April to 31 March), 1/49 of your pensionable pay for that year goes into your pension account. At the end of the scheme year, your account is revalued in line with the cost of living, specifically the previous September’s CPI, set out in the annual Public Service Pensions Revaluation Order.

Take a member earning £30,000 in 2026/27. That year they add £612.24 to their pension account (£30,000 × 1/49). Going into 2027/28 the £612.24 is revalued, say September 2025 CPI of 3.8% applies, and becomes £635.50. The next year’s accrual (based on 2027/28 pay) stacks on top. Each year’s slice grows independently. The total at retirement is the sum of all those revalued slices.

Pensionable pay includes basic pay, contractual and non-contractual overtime, bonuses, shift allowances, acting-up pay, voluntary overtime, maternity, paternity, adoption and shared parental pay. It excludes mileage, expenses, redundancy payments and one-off non-pensionable benefits. If your pay is reduced because of authorised sick leave, child-related leave or reserve forces leave, the LGPS uses Assumed Pensionable Pay, typically the average of pensionable pay for the 12 weeks (or 3 months if monthly paid) before the reduction. Your accrual continues as if pay had been maintained.

This bit matters more than people realise. Periods of maternity leave, paternity leave or paid sickness don’t dent your pension build-up. If you’re off on half-pay or nil-pay sick, APP keeps your accrual full. The death-in-service lump sum and ill-health enhancement also work off APP, so a member taken ill or killed in service isn’t penalised for being mid-rehabilitation when it happens.

The 50/50 section

The 50/50 section is one of those quietly clever bits of scheme design that nobody talks about. It’s unique to the LGPS, no other UK public sector scheme has anything like it. The deal is straightforward: pay half the normal contribution rate, build half the normal pension (1/98 instead of 1/49), and keep your full life cover and full ill-health cover.

It’s intended as a short-term option for periods of financial pressure rather than a permanent setting. If a big bill lands, a partner stops working, or you’re on reduced hours through circumstance rather than choice, dropping into 50/50 cuts your pension cost in half without losing the protection that matters most. You can switch back to the main section at any time. Employers also automatically re-enrol all 50/50 members back into the main section at every three-yearly auto-enrolment date, you can immediately re-elect 50/50 if you still want it.

If you’ve got more than one job that’s pensionable, the 50/50 election can be applied to one, some or all of them separately. The forms are with your employer, not your fund.

Pre-2014 service: the final salary link

If you’ve service before the CARE switchover, that part isn’t frozen at the date the scheme changed. Your final-salary tranche is calculated using the pay you’re earning when you eventually leave the scheme, not your pay back in 2014 or 2015. That’s the final salary link, and it can be worth a great deal of money over a long career with rising pay.

The mechanics are straightforward enough. Pre-2008 service: 1/80 of final pay × years of service, plus an automatic tax-free lump sum of 3 × the annual pension. 2008-to-2014 service (or 2009-to-2015 in Scotland): 1/60 of final pay × years, with no automatic lump sum but the option to swap pension for cash at £12 of lump sum for every £1 of annual pension surrendered.

“Final pay” in England, Wales and Northern Ireland is normally the pensionable pay in your final year before leaving the scheme. Scotland uses the average of the best 365 days in the last three years. Certificates of Protection are available where pay has dropped or been restricted for reasons outside your control, these let you use an earlier year’s higher pay instead.

The link survives any future job changes within the LGPS, provided you don’t have a continuous break of more than five years. Move from one council to another, switch into an academy, work at a college that’s in the scheme, the link holds. Take a five-year-plus career break with no pensionable LGPS employment in between, though, and the final salary tranche is locked in at your pay at the date you left.

The Rule of 85, which used to allow retirement from age 60 without an actuarial reduction if your age plus scheme membership totalled 85 or more, was abolished from 1 December 2006. Members who were already in the scheme on 30 September 2006 retain protection on certain pre-protection service, but the rules are fiddly enough that you’ll want a personal calculation from your fund rather than working it out yourself.

Member contributions for 2026/27

The LGPS has nine pay bands in England, Wales and Northern Ireland, ranging from 5.5% at the bottom to 12.5% at the top. Bands are uplifted each April in line with the previous September’s CPI, for 2026/27, that’s 3.8%. The rate is set on 1 April each year, and reviewed only if your pensionable pay changes materially mid-year. If you’ve got more than one job, each gets its own rate based on the pay for that job alone, not your combined pay.

Scotland has a flatter structure, five tiers ranging from 5.5% to 12%, with the top rate 0.5 percentage points below E&W. Bands are set annually by the Scottish Public Pensions Agency.

Contributions are deducted from gross pay before income tax, so most members get tax relief automatically through what’s called a net pay arrangement. Non-taxpayers in net pay schemes used to miss out on this tax relief; from the 2024/25 tax year HMRC pays a top-up to non-taxpayers caught by net pay, with first payments expected to land in 2026.

Employer contributions are set fund-by-fund by the fund actuary at each triennial valuation. The 2022 valuation across the 87 E&W funds showed an aggregate funding level of 107%, a £22.1bn surplus, and an average total employer contribution rate of 21.1% of payroll. Your employer’s specific rate will vary depending on your fund’s funding position and its own past employment patterns.

When you can take it

Normal Pension Age (NPA) for your CARE benefits is linked to your State Pension Age, with a floor of 65. So if your State Pension Age is 67, your NPA is 67. If it’s 68, your NPA is 68. Once you start drawing your pension, future increases to State Pension Age don’t change it. For pre-2014 final salary benefits, the protected NPA is the historical scheme age, usually 65 for the 1/60 tranche and a mix for the 1/80 tranche.

The Normal Minimum Pension Age, the earliest you can take any pension at all, is currently 55, rising to 57 from 6 April 2028. Members with an unqualified right to take their pension before 57 as of 4 November 2021 will keep a Protected Pension Age and won’t be pushed back. The LGPS regulations are being updated to reflect the change.

You’ve got several routes out:

• Normal retirement at NPA, full benefits, no reduction.
• Early retirement from NMPA, actuarially reduced pension. Between NMPA and 60 you usually need employer consent. From 60 onwards you can take it without consent in most cases.
• Late retirement beyond NPA, actuarially enhanced pension.
• Flexible retirement from age 55 (rising to 57), with employer consent, you can draw some or all your accrued pension while continuing in the same job, often on reduced hours or a lower grade. You keep building up pension on the new role.
• Redundancy or efficiency retirement, if you’re leaving by redundancy or business efficiency from age 55 onwards, your pension is payable immediately with no actuarial reduction. This is a regulatory entitlement, not a discretion.

You can usually exchange up to 25% of the capital value of your pension for a tax-free lump sum, at £12 of cash for every £1 of annual pension surrendered. Whether that’s a good deal depends on your circumstances, your other retirement income, and how long you expect to live, it’s the kind of decision MoneyHelper or a regulated adviser can help you think through.

The McCloud underpin: how the LGPS does it differently

If you’ve read about McCloud in the context of the NHS, Teachers’ or Civil Service schemes, you’ve probably come across the “Deferred Choice Underpin” or “DCU”, affected members will get a one-off choice at retirement between legacy scheme benefits and reformed scheme benefits for the remedy period (1 April 2015 to 31 March 2022). The LGPS doesn’t work that way.

The LGPS uses a statutory underpin instead. There’s no choice for the member to make. When you take your pension, your fund automatically calculates two things and pays whichever is higher:

1. The pension actually built up under the CARE scheme between 1 April 2014 and 31 March 2022, plus
2. The pension that would have been built up under the pre-2014 final salary rules over the same period, using your final salary at the underpin date.

Whichever produces the bigger pension wins. You don’t elect, the fund does the comparison and pays the higher amount.

To qualify for the underpin you need to have been in the LGPS or another public service pension scheme on 31 March 2012, in the LGPS at any point between 1 April 2014 and 31 March 2022, and continuously a member of public service schemes since (no break of more than five years). The remedy regulations came into force on 1 October 2023 and were backdated to 1 April 2014. Pensions already in payment that should have been higher are being retrospectively increased, with arrears paid plus interest.

Two things worth knowing about how this plays out in practice. First: for most members, CARE produces a higher pension than final salary would have. Increases under the underpin are uncommon, and where they exist they’re usually small. The underpin matters most for members whose pay rose less than CPI revaluation over the remedy period, or for part-time workers whose hours don’t fully feed into a final-salary final-pay calculation. Second: from 1 April 2022 onwards, all members accrue purely in CARE. The McCloud judgment was about the discrimination in 2014’s transitional protection, not the design of the reformed scheme itself, so there’s no underpin for service after April 2022.

Annual Benefit Statements from August 2025 onwards include underpin information for affected active and deferred members. Funds are working through the back-stock of pensioners requiring review. That’s going to take time. The original judgment is on the judiciary.uk site if you want to read it.

Death, ill-health and the rest

The LGPS includes substantial protection on top of your accrued pension. Death in service pays a lump sum of three times your Assumed Pensionable Pay to whoever you’ve nominated, regardless of how long you’ve been in the scheme. You complete a Death Grant Expression of Wish form at your fund, keep it up to date, especially after a divorce, a new partner, or a child being born. The fund retains discretion but normally follows the wish.

A survivor’s pension is also payable to a spouse, civil partner or eligible cohabiting partner (continuous cohabitation of at least two years immediately before death, satisfying the regulations’ qualifying criteria). It’s calculated as if you’d retired with a Tier 1 ill-health pension on the date of death, your pension already accrued, plus an enhancement for the years between the date of death and your NPA, at 1/160 × APP per year. Children’s pensions are also payable, running to age 18 normally or 23 in continuous full-time education.

Ill-health retirement uses three tiers, set by an Independent Registered Medical Practitioner who assesses your prospects of “gainful employment”, defined as paid work for at least 30 hours a week for at least 12 months. Tier 1 (permanently unable to do any gainful employment before NPA) credits you with the full pension you’d have built up to NPA, payable for life. Tier 2 (not capable within three years of leaving but likely capable before NPA) credits you with 25% of that. Tier 3 (capable within three years of leaving) pays your accrued pension only, for up to three years, then stops. None of the tiers come with an actuarial reduction.

AVCs and APCs are the two main ways to boost your benefits. Additional Voluntary Contributions go into a separate defined-contribution pot run by your fund’s chosen provider, usually Scottish Widows or Prudential, that grows with investment returns. At retirement you can take up to 100% of the AVC pot as tax-free cash if combined with your main scheme cash, subject to the lump sum allowance of £268,275.

Additional Pension Contributions buy extra defined-benefit pension within the main LGPS, up to £8,903 of additional annual pension at the 2026/27 limit, paid by lump sum or regular contributions over 1 to 20 years. Shared Cost APCs cover periods of “lost” pension during unpaid maternity, paternity, adoption or authorised leave. Your employer pays two-thirds of the cost provided you elect within 30 days of returning to work, worth setting a reminder in your diary if you’re going on extended leave.

Most LGPS members never hit the Annual Allowance. The standard AA for 2026/27 is £60,000. For DB schemes the test isn’t on contributions paid, it’s on the increase in the capital value of your pension over the year, broadly, the increase in your annual pension multiplied by 16, plus any increase in tax-free lump sum, less an inflation adjustment. Senior managers, members buying significant added pension, and members with promotion-driven pay jumps are the ones who occasionally trip it. If you’ve crossed the line, you can use Carry Forward of unused AA from the previous three tax years, and if there’s still a charge, the LGPS Scheme Pays facility lets the fund settle it in exchange for an actuarial reduction to your eventual pension. HMRC’s guidance and the public service pensions adjustment calculator are both worth a look if it might apply to you.

What’s changing: pooling and the Pension Schemes Act 2026

For ordinary members the most important thing to know about LGPS investment policy is that it doesn’t change your benefits. Your pension is set by regulation, not by how the fund invests. What investment policy does affect is how much your employer has to pay in, and over the long run, how politically pressured the scheme is.

Since 2015, E&W LGPS funds have been required to pool their investments, sharing fund manager mandates across groups of funds to cut fees and strengthen governance. There were eight pools. Chancellor Rachel Reeves’s “Fit for the Future” reforms, launched at Mansion House in November 2024, pushed the pools further: all assets to be transferred to pool management, all pools to be FCA-authorised investment management companies, and each administering authority to set a target for local economic investment.

The government’s response in May 2025 narrowed the eight pools to six. ACCESS and Brunel were rejected as not meeting the policy vision; their 21 partner funds were told to find new homes. The remaining six are Border to Coast, LGPS Central, Local Pensions Partnership Investments, London CIV, Northern LGPS and Wales Pension Partnership. Border to Coast is on track to exceed £100bn in assets, and LGPS Central isn’t far behind, the megafunds the government has been pushing for.

The Pension Schemes Act 2026 received Royal Assent on 29 April 2026 after four rounds of parliamentary ping-pong over the controversial mandation provisions. For the LGPS specifically, it codifies the six-pool structure in statute, requires FCA authorisation for pools, gives the Secretary of State a backstop power to direct an administering authority to a specific pool in prescribed circumstances, and brings forward the governance changes from the Scheme Advisory Board’s 2021 Good Governance review, including the appointment of a senior LGPS officer with overall delegated responsibility, and new knowledge and training requirements.

Strategic asset allocation stays with each administering authority. Tactical allocation and execution moves to the pool. Your fund still decides how it wants to be invested at the high level. The pool decides which managers to use and where to actually put the money. None of this changes your accrued or future benefits one penny, but it does change who’s making the investment decisions on the funds backing your pension. The Pension Schemes Act 2026 also brings in unrelated changes for private-sector DC and DB schemes, including the much-publicised mandation power capped at 10% of default DC funds, that don’t directly affect LGPS members.

Two other small changes worth knowing about. From 11 May 2026, mayors and councillors in England gain access to the LGPS, Welsh, Scottish and NI councillors already had it. And the 2025 triennial valuation results, due to be published in Q3 2026, will set employer rates for 1 April 2026 to 31 March 2029. Interim funding indices already point to record highs, with most funds well into surplus.

A worked example: Sarah, planning officer

Sarah’s situation is the typical mixed-service member. The pre-2014 tranche is small in years but valuable because it’s still tracking her current salary. The CARE tranche does most of the heavy lifting. Take a member who joined post-2014 and only has the CARE tranche, same career length, same final salary, and the total pension is meaningfully smaller, mostly because four years of 1/60 final salary service is worth more than four years of 1/49 CARE if pay rose faster than CPI. The 2014 reform was, on balance, a benefit reduction. Long careers full of CARE are still very respectable pensions by UK standards, just not as generous as the same career under the old scheme.

Common questions