Educational, not advice. This article explains a change to the actuarial reduction factors used in the Local Government Pension Scheme in England and Wales from 1 August 2026. Pension Plain is not authorised or regulated by the Financial Conduct Authority. Nothing here is a recommendation about when to retire. If you want a personal recommendation, speak to a qualified FCA-authorised financial adviser, or use the free MoneyHelper service.
Scope: This covers the new LGPS early retirement factors for England and Wales, in force for retirements dated 1 August 2026 or later: what changed, what date the factors attach to, the published before and after figures, and who is and is not affected. Scotland and Northern Ireland run their own LGPS regulations and their own factor timetables, and are not covered here.
In short
- New early retirement reduction factors apply in the LGPS in England and Wales for retirements dated 1 August 2026 or later. The old table still applies to retirements before that date.
- The date that counts is the date your pension becomes payable. It is not the date you ask for a quote, not the date the fund runs the calculation, and not the date you sign the election form.
- For 1 to 10 years early, both the pension reduction and the automatic lump sum reduction have gone up, so both are worth less than under the old table.
- The lump sum reduction rose by much more in relative terms. At five years early it went from 8.1% to 9.4%, a relative increase of about a sixth. The pension reduction over the same span went from 20.9% to 21.5%.
- At 11 to 13 years early the new pension factors are very slightly lower than the old ones. The change is not worse in every band.
- The automatic lump sum only exists for membership before 1 April 2008, so if all your service is later than that, the lump sum column does not apply to you.
- There is no transitional protection for cases already in progress. The only test is the retirement date.
What actually changed
On 13 July 2026 the Ministry of Housing, Communities and Local Government issued a batch of revised actuarial factors for the LGPS in England and Wales, prepared with the Government Actuary’s Department. The covering letter, signed by Will King, Joint Head of Pensions, lists nine sets of factors and the date each one takes effect. Early retirement is one of them, and its stated effect date is 1 August 2026.
Actuarial reduction factors are the arithmetic behind a familiar rule. If you take your LGPS pension before your normal pension age, the pension is reduced, because it is going to be paid for longer. The factors are the published percentages that decide how big that reduction is for each year you are early. They aren’t a matter of local discretion, and your fund doesn’t set them. They come from the Government Actuary’s Department, and every administering authority in England and Wales uses the same table.
What changed on 1 August is the table itself. The registry of actuarial guidance that MHCLG and GAD maintain now records the previous factor spreadsheet, version 2023-04, as extant “Yes, but only for retirement dates before 1 August 2026”. That is about as unambiguous as a cutover gets. Before that date, the 2023 table. On or after it, the new 2026-02 table.
The date that matters is the date your pension starts
This is the part most likely to catch people out, so let’s be precise. The transitional arrangements document published alongside the new factors states it directly:
“Retirement date before 1 August 2026: Use factor table version 2023-04 dated 26 September 2023. Retirement date on or after 1 August 2026: Use factor table 2026-02. ‘Retirement date’ means the date from which the pension becomes payable. For example, if a member takes their pension immediately on leaving active membership, the retirement date is the day after the last day of active membership.”
Read that carefully, because it rules out the thing people naturally assume. Asking for a quote in July doesn’t lock in the July factors. Having your benefits calculated in July doesn’t lock them in either. Neither does signing and returning your election form. If the pension itself doesn’t start being paid until 1 August or later, the new table applies, whatever date is printed on the paperwork.
In practice, anyone who received a quotation in the weeks before the change, and whose pension starts in August or later, is going to be paid slightly less than that quotation suggested. That isn’t an error by the fund. It’s the cutover working as designed. If you are in that position and the numbers on your award don’t match the numbers on your estimate, this is the most likely explanation, and your fund can confirm which factor table was used on your award.
One further wrinkle. The 13 July batch didn’t move everything on the same day. Early retirement and pension debits, the latter being the adjustment made when a pension is split on divorce, changed on 1 August. But late retirement, trivial commutation, inverse commutation, added pension and the conversion of AVCs all changed earlier, on 14 July 2026. So “the factors changed in August” is only true of some of them, and if your case involves one of the others, the relevant date is different.
The new LGPS early retirement factors, before and after
These are GAD’s own published percentages, taken from the consolidated factor spreadsheets for the old table (version 2023-04) and the new one (version 2026-02). The percentage is the amount by which the benefit is reduced, so a higher number is a smaller payment. The pension factors are the same for men and women. The retirement grant column is the automatic lump sum, and there is one figure for all members.
| Years early | Pension reduction, old | Pension reduction, new | Lump sum reduction, old | Lump sum reduction, new |
|---|---|---|---|---|
| 1 | 4.9% | 5.0% | 1.7% | 2.0% |
| 2 | 9.3% | 9.6% | 3.3% | 3.9% |
| 3 | 13.5% | 13.9% | 4.9% | 5.8% |
| 4 | 17.4% | 17.8% | 6.5% | 7.6% |
| 5 | 20.9% | 21.5% | 8.1% | 9.4% |
| 6 | 24.3% | 24.9% | 9.6% | 11.2% |
| 7 | 27.4% | 28.1% | 11.1% | 12.9% |
| 8 | 30.3% | 31.1% | 12.6% | 14.7% |
| 9 | 33.0% | 33.9% | 14.1% | 16.3% |
| 10 | 35.6% | 36.6% | 15.5% | 18.0% |
| 11 | 39.5% | 39.0% | Grant table stops at 10 years | |
| 12 | 41.8% | 41.4% | ||
| 13 | 43.9% | 43.6% | ||
Two things stand out. The first is that the lump sum has taken the bigger hit. At five years early the pension reduction moved by six tenths of a percentage point, from 20.9% to 21.5%. The lump sum reduction moved by 1.3 points, from 8.1% to 9.4%, which is a relative increase of about a sixth. The same pattern holds at ten years early, where the pension reduction goes from 35.6% to 36.6% while the lump sum reduction goes from 15.5% to 18.0%.
The second is that the bottom three rows go the other way. At 11, 12 and 13 years early the new pension reduction is slightly smaller than the old one. It is a small move, a few tenths of a point, but it means the common description of this change as uniformly bad for members is not accurate. For the earliest takers the pension side improved marginally.
What that looks like in pounds
The published documents give the factors but not any illustration of what they do to a real award, so the following is simply GAD’s percentages applied to round numbers. It is an illustration of the arithmetic, not a projection of anyone’s benefits, and your own figures will depend on your service, your pay and your normal pension age.
Take a member with an unreduced pension of £12,000 a year and an automatic lump sum of £24,000, going five years early. Under the old table the pension is reduced by 20.9% to £9,492, and the lump sum by 8.1% to £22,056. Under the new table the pension is reduced by 21.5% to £9,420, and the lump sum by 9.4% to £21,744. So the pension is about £72 a year lower, and the lump sum about £312 lower as a one-off.
The same member going ten years early sees the pension fall from £7,728 to £7,608, about £120 a year, and the lump sum from £20,280 to £19,680, about £600. The pension difference is modest and it is paid for life. The lump sum difference is larger and it lands once.
That is the honest shape of it. This isn’t a change that upends anyone’s retirement plans. It’s a real reduction, it falls harder on the lump sum than on the pension, and it belongs in the understand-it column rather than the panic-about-it column.
Who this does not affect
The automatic lump sum, which the factor tables call the retirement grant, only arises from membership before 1 April 2008. If your entire LGPS service is from April 2008 onwards, you have no automatic lump sum and the lump sum column above is not about you. You may still be able to give up pension for cash at retirement, but that is voluntary commutation, it runs on a different set of factors, and those changed on 14 July rather than 1 August.
The factors also only bite where a reduction applies in the first place. Retiring at or after your normal pension age? Then there is no early retirement reduction and none of this touches you.
The rule of 85 needs a careful word. It is the LGPS protection that can remove or soften an early retirement reduction for certain longer-serving members retiring after 60, and it sits in the scheme regulations rather than in the factor tables. Nothing in the 13 July batch addresses it. That is not the same as a guarantee that it is untouched, and none of the documents in the batch say either way, so the accurate statement is that this particular change is about the size of a reduction when one applies, and does not itself alter who qualifies for protection. If the rule of 85 covers your service, your fund is the place to confirm how much of your reduction it removes.
Why it happened
The trigger is the SCAPE discount rate, which is the rate the Treasury uses to put a present-day value on public service pension promises. On 19 May 2026 the Minister for Pensions, Torsten Bell, made a written ministerial statement confirming that the rate had been adjusted to reflect the long-term GDP growth figures the Office for Budget Responsibility published in July 2025. The rate moved from CPI plus 1.7% to CPI plus 2%.
A higher discount rate means future payments are valued lower today, and the actuarial factors that convert between pensions and lump sums, or between one retirement date and another, move with it. That is why a change to a Treasury rate in May turned into a change to your reduction percentage in August. The LGPC bulletin covering the change puts the reach of the rate plainly: the SCAPE rate is “used to calculate the actuarial factors across all PSPS”, meaning all public service pension schemes.
It is also why funds across the country paused calculations through early summer. Administering authorities were suspending transfer quotations and, in several cases, retirement calculations too, while they waited for the revised factors to arrive. If your fund told you it couldn’t give you a figure in June, that is what was going on.
Does this apply to the NHS, Teachers’ and other schemes?
The SCAPE rate change is not LGPS-specific, and other schemes are affected. They are affected through different calculations and on their own dates, though, so the percentages above do not transfer. The House of Commons Library’s briefing on the change, published on 20 July 2026, sets out what happens elsewhere. Retiring members of the 1987 Police Pension Scheme and the 1992 Firefighters’ Pension Scheme who commute part of their annual pension to create a tax-free lump sum “can expect the value of their lump sum to be reduced by around 5% as a result of the changes”. That is a commutation factor rather than an early retirement reduction, so it is a different sum from the LGPS one, but it has the same cause.
The same briefing also answers, bluntly, why none of this came with any shelter for people already part-way through retiring: “There is no requirement for the government to consider the impact on members or to put in place transitional protections when changing the SCAPE rate.” That is the position across all of these schemes, not just the LGPS.
It has not gone unchallenged. The Police Federation of England and Wales has said it is taking legal and actuarial advice on the scope of the changes, and the Fire Brigades Union has said it will keep pressing the government over pension arrangements for firefighters.
There is a structural reason to expect differences. The LGPS is funded, meaning benefits are paid from invested assets, while the other large public service schemes are unfunded and paid from current revenue. For the unfunded schemes the SCAPE rate drives employer contribution rates as well as member-facing factors, and their factor updates run on their own timetables through their own guidance. So the sensible position is that members of other schemes should expect their own factor changes at their own dates, and should not read the LGPS percentages above as applying to them. If you are in one of those schemes, your own scheme’s actuarial guidance is the thing to check.
FAQ
I got a quote in July. Does that quote still stand?
Only if your pension actually becomes payable before 1 August 2026. The published rule is that the factor table is chosen by the retirement date, defined as the date from which the pension becomes payable, not by the date the quotation was produced. A July quotation for an August retirement will have been calculated on the old table but paid on the new one. Your fund can confirm which table applies to your award.
Is there any protection for people already part-way through retiring?
No transitional protection was provided for early retirement. The only test is the retirement date. This was a choice rather than an oversight: the same batch of guidance explains that transitional protections were introduced in 2023 for non-Club transfers in, because the new factors were less favourable then, and were judged unnecessary this time because the transfer-in factors improved. No equivalent protection was put in place for early retirement.
How much worse off am I, really?
It depends on how early you are going and how much of your service predates April 2008. On the pension itself the move is a fraction of a percentage point at each year-count, and it widens the earlier you go: about a tenth of a point at one year early, rising to a full point at ten years early. On the automatic lump sum it is larger in relative terms, around a sixth more reduction at five and ten years early. For a £12,000 pension taken five years early the illustration in this article works out at about £72 a year and about £312 off the lump sum.
I am taking my pension 12 years early. Am I better off under the new table?
On the pension, marginally, yes. At 11, 12 and 13 years early the new reduction percentages are a few tenths of a point lower than the old ones, so the reduced pension is very slightly higher. The published grant table only runs to 10 years early, so the lump sum comparison does not extend that far.
Does this change the rule of 85?
Nothing in the 13 July 2026 guidance addresses the rule of 85. That guidance is about the size of the actuarial reduction where one applies, and the rule of 85 sits elsewhere, in the scheme regulations and their transitional provisions. If your service qualifies for rule of 85 protection, your administering authority can tell you how it applies to your case.
Why did my fund stop giving out figures earlier this year?
Because the factors they calculate with were being replaced. Once the SCAPE rate change was announced in May, funds could not produce reliable quotations until GAD issued the revised tables, so many paused transfer calculations and some paused retirement calculations as well. The 13 July batch is what unblocked that.
Where can I see the actual factors?
They are public. The consolidated factor spreadsheets and the covering letter are published in the LGPS regulations library, and the actuarial guidance registry lists which version applies from which date. The Key sources at the foot of this article link to both.
Pension Plain’s take
The change itself is small. The way it was communicated is the problem. A member who asked for a quotation in June, waited through a suspension they were never really told the reason for, received a figure in July and starts drawing in August will be paid less than the number they were given, and nothing in that sequence will have explained why. The rule that decides it, that the retirement date means the date the pension becomes payable, is written down clearly enough, but it is written down in a transitional arrangements table aimed at pension administrators, not at the people whose money it is.
The other thing worth saying is that the lump sum moved more than the pension, and that is the part nobody leads with. If you have pre-2008 service and you were counting on a particular cash figure, that is the number most likely to have shifted under you. It is still a few hundred pounds rather than a few thousand, but it is the difference people notice, because the lump sum is the bit that arrives as a single payment you have already spent in your head.
Information, not advice. This article explains a published change to LGPS actuarial factors in England and Wales as at 28 July 2026. It is general information and not a personal recommendation. Pension Plain is not authorised or regulated by the Financial Conduct Authority. Your own figures depend on your service history, your normal pension age and your fund’s application of the scheme regulations, so your administering authority is the authority on your case.
Key official sources
- MHCLG, Local Government Pension Scheme: Revised Actuarial Factors, covering letter of 13 July 2026, which lists each set of revised factors and its effect date.
- SCAPE rate change transitional arrangements, England and Wales, version 3.0, 13 July 2026, the document that defines which factor table applies from which retirement date.
- GAD consolidated factor spreadsheet, version 2026-02, the new factor tables in force from 1 August 2026.
- LGPS actuarial guidance registry, England and Wales, which records each guidance version and whether it remains extant.
- LGPC Bulletin 279, May 2026, the LGA’s briefing on the SCAPE rate change and its consequences for the scheme.
- House of Commons Library, SCAPE discount rate change, 20 July 2026, for how the change reaches the other public service schemes and the absence of any duty to provide transitional protection.
- Our LGPS guide, for how the scheme works more generally, including normal pension age and the rule of 85.