Additional Voluntary Contributions, or AVCs, are extra payments to increase your future benefits. You can also pay AVCs to provide life cover. All LGPS pension funds have an AVC arrangement. You can invest money through their AVC provider, which is often an insurance company or building society. AVCs are taken directly from your pay and attract tax relief.
An admission body is an employer that participates in the LGPS under an admission agreement. Admission bodies tend to be employers such as charities and contractors.
Assumed Pensionable Pay is a notional pay figure that means your pension is not affected if your pay is reduced when you are absent. Your pension will be based on Assumed Pensionable Pay during a period of reserve forces leave, relevant child related leave and when your pay is reduced because of sickness or injury. See the section If you are away from work for more information on how this works.
If you retire due to your ill health, Assumed Pensionable Pay is used to work out any enhancement to your pension.
If you die in service, the lump sum death grant is based on Assumed Pensionable Pay. Any enhancement to the survivor benefits paid after your death will also be based on Assumed Pensionable Pay.
Your automatic enrolment date is the earlier of:
Automatic enrolment will only affect you if you are employed by an LGPS Scheme employer, but you are not paying into the LGPS. See the section on Automatic enrolment for more information.
A civil partnership is a relationship between two people that is formed when they register as civil partners of each other.
Club transfer rules allow certain pension schemes to calculate pension transfers on special terms. Public service pension schemes generally operate club transfers. See the section on Transferring in for more information.
The Consumer Prices Index, or CPI, is a measure of inflation in the UK. CPI is currently the measure that is used to adjust the balance in your pension account at the end of every Scheme year when you are an active member. CPI is also used to increase the value of any LGPS deferred pensions and pensions in payment every April. The adjustment ensures that the value of your pension account, deferred pension or pension in payment keeps up with the cost of living.
The LGPS was contracted out of the State Earnings Related Pension Scheme, known as SERPS, and the State Second Pension (S2P) from 6 April 1978 to 5 April 2016. This meant that most LGPS members paid reduced National Insurance contributions in this period. If you reached your State Pension age before 6 April 2016, the increases to your pension may be worked out differently. See the FAQs section covering ‘After leaving’ for more information about how your LGPS increases.
Discretion is the power given by the LGPS to choose how to apply the Scheme rules in certain situations. Your employer and pension fund have the power to exercise different discretions. See the section on What to expect from your pension fund and employer for more information.
A disqualifying gap is a period of more than five years when you were not paying into the LGPS or any other public service pension scheme.
An eligible child is:
A child sponsored by the member through a registered charity is not an eligible child.
An eligible child must also be:
Gainful employment means paid employment for at least 30 hours per week that lasts for at least a year.
An eligible cohabiting partner is a partner you are living with who, at the date of your death, was free to marry or enter into a civil partnership with you and has met all of these conditions for a continuous period of at least two years:
Your partner is financially dependent on you if you have the highest income. Financially interdependent means that you rely on your joint finances to support your standard of living. It doesn’t mean that you need to be contributing equally. For example, if your partner’s income is more than yours, he or she may pay the mortgage and most of the bills and you may pay for the weekly shopping.
When you die, a survivor’s pension would be paid to your cohabiting partner if your partner satisfies the pension fund that:
You are not required to complete a form to nominate your cohabiting partner. However, you can provide your cohabiting partner’s details to your pension fund. Contact your pension fund to see if they have a form you can use to do this.
A pension will only be paid to your eligible cohabiting partner if you paid into the LGPS after 31 March 2009.
An eligible jobholder is a worker aged between 22 and State Pension age who earns more than £10,000 per year.
Final pay is the figure used to work out final salary benefits in the LGPS. Final pay is usually the pay due for your final year of Scheme membership. Pay for one of the previous two years will be used if it is higher. Final pay includes:
Final pay does not include non-contractual overtime.
If you were part time during your final year, your final pay is based on the pay you would have been due if you had worked full time.
If your pay in the final year is reduced because of sickness or child-related leave, final pay is the pay that would have been due if you had not been sick or on leave.
Flexible benefits are ways that members of defined contribution pension schemes can take money from their pension pots after age 55. The LGPS is not a defined contribution pension scheme. The introduction of flexible benefits in 2015 did not bring in any new ways that you can take your LGPS pension.
There are four main ways that members of defined contribution pension schemes that offer flexible benefits can take money from their pension pots. Those four ways are:
If you were a member of the LGPS between 6 April 1978 and 5 April 1997, you paid reduced National Insurance contributions. You did not pay into the State Earnings Related Pension Scheme, or SERPS, when you were an LGPS member. The LGPS guarantees to pay you a pension at least as good as you would have received from SERPS. This is called the Guaranteed Minimum Pension or GMP.
The term local government on this website also covers:
Normal Pension Age is the age you can take the pension you have built up from April 2015 in full. It is linked to your State Pension age, but with a minimum of age 65. If you choose to take your pension before your Normal Pension Age, it will normally be reduced because it is being paid early. If you take it after your Normal Pension Age, your pension will be increased because it’s being paid late. See the section on Taking your pension for more information.
Occupational pension schemes are also called company pension schemes. An occupational pension scheme is a scheme set up by an employer to provide pension or death benefits for its employees.
An occupational pension scheme can provide pension benefits on a money purchase, defined benefits, cash balance or hybrid arrangement basis. Occupational pension schemes are most commonly money purchase or defined benefits schemes. The LGPS is a defined benefits scheme.
When you leave a job you will generally have to stop building up pension savings in that employer’s scheme.
Each Scheme year the amount of pension you have built up is worked out and added to your pension account. You can find out more about pension accounts in the How your pension is worked out section.
You will have a separate pension account for each employment. That pension account will hold the total pension built up in that employment.
In addition to an active members’ pension account there are also deferred members’, flexible pension members’, pensioner members’, pension credit members’ and survivor members’ pension accounts.
A pension credit is a share of an ex-spouse’s or ex-civil partner’s pension benefits. A pension credit is awarded by a Court under a Pension Sharing Order or by a qualifying agreement in Scotland following a divorce or dissolution of a civil partnership. You can read more about pension credits in the FAQs.
Pensionable pay is the pay that pension contributions are deducted from. Pensionable pay includes:
You do not pay pension contributions on:
A public service pension scheme is a pension scheme covering:
Relevant child related leave means periods of:
Reserve forces leave occurs when a reservist is mobilised and called on to take part in military operations. A reservist can be mobilised for a period of up to 12 months. If you are on reserve forces leave, you can choose whether to stay in the LGPS for the period. If you choose to stay in the LGPS, you will build up pension based on your assumed pensionable pay during the reserve forces leave.
The Scheme year runs from 1 April to 31 March.
The State Earnings Related Pension Scheme or SERPS is the earnings-related part of the State Pension that employed people could build up before 6 April 2002. LGPS members were automatically contracted out of SERPS and most paid a lower rate of National Insurance as a result. SERPS was replaced by the State Second Pension (S2p) between 6 April 2002 and 5 April 2016. Contracting out ended on 5 April 2016.
Your State Pension age is the earliest age that you can receive the basic State Pension. State Pension age was equalised at 65 for men and women in 2018 and increased to 66 in 2020.
Under current legislation State Pension age is due to rise to 67 between 2026 and 2028 and to 68 between 2044 and 2046. However, the UK Government has announced plans to link rises in State Pension age to increases in life expectancy.
You can use the UK Government’s State Pension age calculator to Check your State Pension age.
The State Second Pension or S2P was the additional state pension payable to people who attained State Pension Age before 6 April 2016. LGPS members were contracted out of S2P and paid a lower rate of National Insurance as a result.
Initially S2P was an earnings-related pension but from April 2009 it built up as a flat rate pension. It was replaced with the new single tier State Pension from 6 April 2016. You can find out more about the new State Pension on the UK Government website.
The LGPS changed to a career average scheme in 2015. Pension built up in the remedy period between 1 April 2015 and 31 March 2022 is protected for qualifying members. This protection is known as the underpin. Underpin protection ended earlier if you left the Scheme or reached age 65 before 1 April 2022.
The underpin ensures that protected members get a pension that is at least as good as they would have received if the Scheme had remained a final salary scheme until 2022.
You are protected by the underpin if you:
You are not protected by the underpin if you left the Scheme or reached age 65 before 1 April 2015.
If you are protected, your pension fund will perform an underpin check when you take your pension. They will check that the pension you have built up in the career average scheme during the remedy period is at least as good as you would have built up in the final salary scheme. If it isn’t, your pension will be increased.
The underpin removes the discrimination found in the McCloud court case. You can find out more about how your pension might be affected by the underpin in the McCloud remedy section of this site.
The vesting period is the length of time that you must be an active member of the LGPS to qualify for benefits in the Scheme. The vesting period in the LGPS is two years. You can meet the vesting period with less than two years’ membership in certain circumstances.
You will meet the two year vesting period if you: