LGPS Pension Calculator

How to Use This LGPS Pension Calculator

Follow these steps to estimate your Local Government Pension Scheme benefits:

1. Enter your years of LGPS membership since April 2014 — This calculator covers the CARE (Career Average Revalued Earnings) scheme that applies to service from 1 April 2014. If you joined before that date, add your pre-2014 final salary pension separately.
2. Enter your average pensionable pay — Use your average annual salary across your LGPS membership. Your Annual Benefit Statement shows your current accrued pension if you already have service.
3. Set the CPI revaluation rate — The default 3% reflects long-run CPI expectations. Active members get CPI+1.25% in-service revaluation; deferred pensions get CPI only.
4. Enter your planned retirement age — Normal Pension Age is your State Pension age (66). Taking pension early reduces it; the calculator applies approximate early retirement reduction factors.
5. Choose your commutation preference — Decide whether to exchange some annual pension for a tax-free lump sum at the 12:1 rate. Many members choose a modest commutation to provide a lump sum at retirement.

Worked Example: LGPS CARE Pension Calculation

Take a council worker earning £32,000 per year with 25 years of post-April 2014 LGPS service, retiring at their Normal Pension Age of 66:

Complete Guide to the LGPS 2014 CARE Scheme

The CARE Scheme — 1/49th Accrual Explained

The Local Government Pension Scheme underwent a fundamental redesign on 1 April 2014, moving from a final salary basis to a Career Average Revalued Earnings (CARE) model. Under CARE, your pension accumulates year by year: each year you earn a pension of exactly 1/49th of your pensionable pay for that year. That slice of pension is then revalued by CPI inflation (plus 1.25% for active members) each April to maintain its purchasing power until you retire. This means your total LGPS pension is the sum of 49 separate annual slices, each grown by a different number of years of revaluation.

The 1/49th accrual rate is more generous than many other public sector CARE schemes. The Teachers' Pension Scheme uses 1/57th, the NHS Pension Scheme (2015) uses 1/54th for most members, and the Civil Service Alpha scheme uses approximately 1/43rd but with a lower pay ceiling for CARE accrual. The LGPS rate of 1/49th represents excellent value, particularly given the generous employer contributions averaging 23% of salary.

Pre-April 2014 Final Salary Protection

If you were already an LGPS member before 1 April 2014, your pre-2014 service remains under the old final salary rules. This segment is calculated as 1/80th of your final pensionable pay for each year of membership, with an automatic tax-free lump sum of 3/80ths per year. Importantly, the final salary used is your actual final salary at retirement (not your salary in 2014), providing ongoing protection against pay rises. When you retire, your LGPS pension will be the sum of your final salary portion (pre-2014) and your CARE portion (post-2014).

The 50/50 Option — Affordable LGPS Membership

The LGPS 50/50 section allows you to pay half your normal contributions in return for building up half the pension accrual — 1/98th per year instead of 1/49th. It is designed as a temporary measure for members facing financial hardship, not as a permanent strategy. While in the 50/50 section, your employer continues to pay full contributions. Death-in-service and ill-health benefits remain at the full rate. You can move back to the main section at any time by notifying payroll. Periods in the 50/50 section do count towards your qualifying years for entitlement purposes but deliver less pension than full membership.

Ill-Health Retirement and Tier Benefits

The LGPS provides ill-health retirement at any age for members who become permanently incapable of carrying out their current job. There are two tiers depending on the severity of your incapacity. Tier 1 applies if you are permanently unable to work in any gainful employment — your employer can enhance your pension with up to the remaining membership you would have had to your Normal Pension Age, paid immediately without any early retirement reduction. Tier 2 applies if you cannot do your current job but could undertake some other employment — you receive your accrued pension immediately (no early retirement reduction) but without the enhancement. Both tiers are valuable protections unavailable to most private sector workers.

Additional Voluntary Contributions (AVCs)

You can supplement your LGPS pension through AVCs. The in-house AVC arrangement offered by your LGPS fund (often through Prudential or Legal and General) allows you to invest additional contributions in a range of funds. AVC contributions attract full income tax relief at your marginal rate — a 40% taxpayer effectively pays just 60p for every £1 invested. A particularly valuable feature: at retirement, you can take your entire AVC pot as a tax-free lump sum provided it does not exceed HMRC limits and is taken alongside your main LGPS benefits. This can be more tax-efficient than commuting your main pension at 12:1. The AVC option should be seriously considered by any LGPS member who can afford to save more.

Pension Sharing on Divorce

LGPS pensions can be shared on divorce via a Pension Sharing Order (PSO). The court specifies a percentage of your pension to be transferred to your former spouse. The LGPS fund implements the PSO by creating a separate pension credit for your former spouse. This pension credit is held within the LGPS but as a completely separate deferred pension — your former spouse becomes a member in their own right with their own pension credit, payable from their own Normal Pension Age. You receive the remaining reduced pension (the pension debit) at your normal retirement. LGPS funds charge an administration fee for implementing a PSO, typically £1,000–£1,500. You should obtain a Cash Equivalent Transfer Value (CETV) from your LGPS fund at the start of any divorce proceedings.

Employer Contribution Rates and Scheme Funding

Unlike most public sector pension schemes which are pay-as-you-go (unfunded), the LGPS is a funded scheme — employers and employees genuinely invest contributions into real assets managed by 86 separate LGPS pension funds across England and Wales (plus separate Scottish and Northern Irish schemes). Each fund employs professional investment managers and holds a diversified portfolio of equities, bonds, property and alternatives. The scheme is subject to a triennial valuation where each fund's assets are compared against liabilities to set employer contribution rates for the next three years. Average employer contribution rates are around 23% of pensionable pay, reflecting the scheme's generosity and the long-term cost of providing guaranteed inflation-linked pensions.

Sources & Methodology

This calculator uses the statutory LGPS 2014 CARE accrual formula and published revaluation rates.

Official References

• LGPS Member — Official LGPS member website
• The Local Government Pension Scheme Regulations 2013
• MHCLG — LGPS guidance for employers and members