LGPS Pensions UK: Complete Guide for Council Workers
The LGPS is the UK Local Government Pension Scheme — CARE-based, 1/49th accrual, inflation-linked. How it works, AVCs, transfer rules, and McCloud remedy.
Updated
Quick answer: The LGPS (Local Government Pension Scheme) is a defined benefit, Career Average (CARE) scheme for UK council and local-government staff. You build 1/49th of your pay each year, revalued by CPI, paid for life and inflation-linked. It's one of the most valuable pensions in the UK — almost never worth transferring out.
How LGPS is calculated
Since April 2014 the LGPS is a CARE scheme:
Each year you earn 1/49th of your pensionable pay
That amount is revalued every year by CPI inflation
At retirement, all years are added to give your starting pension
The pension then rises each year with CPI
Example: earning £30,000 adds £612 to your pension that year (£30,000 ÷ 49), revalued by inflation until you retire.
Pre-2014 service: final salary
Pre-2008: 1/80th × final salary × years, plus a 3× lump sum
2008–2014: 1/60th × final salary × years
These stay linked to your final salary at retirement — valuable if your pay has grown.
Contributions
You pay 5.5%–12.5% of pay depending on salary band; your employer typically adds 14–25%.
The McCloud remedy
For service between April 2014 and March 2022, eligible members get the better of CARE or final-salary benefits — calculated automatically at retirement. You'll receive a Remediable Service Statement; you don't have to choose now.
Taking your LGPS pension
Normal pension age = your State Pension age (usually 67)
From 55 (57 from 2028) with an actuarial reduction (~5%/year early)
Ill-health and redundancy provisions can pay unreduced
Convert pension to tax-free lump sum at 12:1
Should you transfer out?
Almost never. The LGPS provides guaranteed, inflation-linked income for life that would cost £400,000–£500,000 to replicate privately. Regulated advice is legally required to transfer benefits over £30,000, and most advisers recommend against it. Consider it only for permanent emigration or severe ill health — and get specialist advice first.
AVCs
The in-house AVC (usually Prudential) lets you save extra with full tax relief, often taken as part of your tax-free lump sum. Powerful for higher-rate taxpayers near retirement.
Frequently asked questions
LGPS is a Career Average Revalued Earnings (CARE) scheme. Each year you earn 1/49th of your pensionable pay, revalued by CPI annually. The total adds up to your pension at retirement, paid for life and inflation-linked.
You can take LGPS from age 55 (rising to 57 in 2028) but it will be actuarially reduced — typically 5% per year before your normal retirement age (currently your State Pension age, often 67). Each council/scheme may differ slightly.
Almost never. LGPS is a guaranteed inflation-linked pension that would cost £25-£35 of capital per £1 of annual income to replicate. Regulated advice is legally required to transfer LGPS rights worth over £30,000.
Additional Voluntary Contributions are an extra pension you pay alongside your main LGPS. The LGPS in-house AVC is usually with Prudential. AVCs let you take a larger tax-free lump sum at retirement.
LGPS is a funded scheme — unlike NHS/Civil Service which are pay-as-you-go from taxes, LGPS holds investments. Each council's section is valued every 3 years by an actuary.
After a 2018 court ruling that age-discrimination provisions in 2014 reforms were unlawful, the McCloud remedy gives certain LGPS members a choice between old (final-salary) and new (CARE) benefits for service from April 2014 to March 2022. Affected members get a Remediable Service Statement.
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