Estimate your LGPS annual pension under the 2014 CARE scheme. Calculate pension in the main section or 50/50 section, with optional commutation to a tax-free lump sum.
Results are estimates only. Your actual pension will depend on your full service record, revaluation applied to each year's earnings, and actuarial adjustments made by your LGPS administering authority.
The Local Government Pension Scheme (LGPS) in England and Wales changed to a Career Average Revalued Earnings (CARE) scheme on 1 April 2014. Unlike the old final salary schemes, your pension is no longer based solely on your pay at retirement. Instead, you build up a small pension each year based on that year's pensionable pay, and those slices are revalued by CPI each April until you retire.
The main section accrual rate is 1/49th of your pensionable pay each year. So if you earn £35,000 in a year, you build up £35,000 ÷ 49 = £714 of annual pension from that year alone. Repeat that over a 20-year career and — ignoring revaluation — you would have around £14,286 per year at normal pension age. With revaluation the figure is typically higher in real terms.
If you need to reduce your take-home pay impact, you can join the 50/50 section. You pay half the normal employee contribution rate and build up half the pension: 1/98th of pay per year. Your employer still contributes the same amount. You can switch back to the main section at any time.
Each year's pension slice is revalued by CPI every April. If CPI is 3%, every prior year's pension slice grows by 3%. Over a long career this can substantially increase your pension compared to a simple projection based on today's salary.
For post-2014 CARE benefits, your normal pension age is linked to your State Pension age — currently 67 for most workers. Benefits built up before April 2014 may have a protected normal pension age of 60 or 65 depending on when you joined. You can retire from age 55 (rising to 57 in 2028), but your pension will be reduced to account for the longer payment period.
| Years before NPA | Approximate reduction factor | Pension retained |
|---|---|---|
| 0 | None | 100% |
| 1 | ~5% | ~95% |
| 2 | ~10% | ~90% |
| 3 | ~14.3% | ~85.7% |
| 5 | ~23% | ~77% |
Exact actuarial reduction factors are published by the Government Actuary's Department and applied by your LGPS fund.
The LGPS post-2014 does not provide an automatic lump sum. However, you can choose to commute part of your annual pension to take a one-off tax-free cash payment at retirement. The exchange rate is fixed at £12 lump sum for every £1 of annual pension given up.
Your tax-free lump sum is limited by HMRC to 25% of the capitalised value of your pension. For defined benefit schemes, HMRC uses a capitalisation factor of 20:1, so:
For example, a £20,000 annual pension has a capitalised value of £400,000, giving a maximum tax-free lump sum of £100,000. A £60,000 pension would hit the £268,275 HMRC cap.
If you want a £30,000 lump sum: pension given up = £30,000 ÷ 12 = £2,500 per year. Your annual pension would reduce by £2,500. The break-even point — when the cumulative pension you would have received exceeds the lump sum — is 12 years. If you live beyond 12 years after retirement you would have been better off not commuting, in pure cash terms. However, the lump sum has the advantage of being tax-free and immediately available.
In the main section of the LGPS 2014 CARE scheme, you build up 1/49th of your pensionable pay each year. If you join the 50/50 section you build up 1/98th but pay half the contributions.
The 50/50 section lets you pay half your normal contribution rate and in return you build up half the pension (1/98th instead of 1/49th). It is useful if you need to manage take-home pay short term.
Each year's pension built up in the LGPS is revalued each April in line with the Consumer Prices Index (CPI) until you take your pension. This protects your pension against inflation during your working life.
For benefits built up from 1 April 2014, the normal pension age is linked to your State Pension age (currently 67 for most people). Benefits built up before April 2014 have a protected normal pension age of 65 or 60 depending on when you joined.
No. Post-2014 LGPS members do not receive an automatic lump sum. However, you can commute up to 25% of the capitalised value of your pension — at a rate of £12 lump sum for every £1 of annual pension you give up, subject to the £268,275 HMRC limit for tax-free cash.
Yes, from age 55 (rising to 57 in 2028). If you retire before your normal pension age, your pension is reduced to reflect the longer payment period. The reduction is approximately 5% per year early, though exact factors depend on your age and the actuarial tables used by your fund.
The standard LGPS commutation rate is £12 lump sum for every £1 of annual pension you give up. For example, giving up £1,000 a year of pension gives you a £12,000 tax-free lump sum.
CARE means your pension is based on your pensionable pay in each year of membership, revalued to retirement. Unlike final salary schemes, your pension is not solely based on your last salary, so it is fairer to people whose salary plateaus late in their career.
Yes. Once in payment, LGPS pensions are increased each April in line with CPI under the Pensions (Increase) Act 1971, providing real protection against the cost of living throughout retirement.
The maximum tax-free lump sum you can take from any pension including the LGPS is £268,275. Within the LGPS you can take up to 25% of the capitalised pension value (annual pension × 5), capped at this HMRC limit.
If you leave with two or more years of qualifying service, your pension is preserved (deferred) and revalued by CPI each year until you take it. You cannot normally access it before age 55 (57 from 2028).
Your LGPS pension is taxable income in retirement, added to other income and taxed under PAYE. The tax-free lump sum from commutation is not taxable. For high earners, LGPS membership may trigger an annual allowance charge if total pension input exceeds £60,000 in a tax year.