About the LGPS

Welcome to the Local Government Pension Scheme

This guidance is to help you understand the roles and responsibilities you will inherit as an employer within the Devon County Council or Somerset County Council Pension Funds. It will take you through what you need to know about the Local Government Pension Scheme, what you need to consider and what you need to do. 

The Local Government Pension Scheme (LGPS) is a nationwide pension scheme for people working in Local Government and for other qualifying employers participating in the scheme. There is no minimum age to become a member and employees can remain in the scheme until the eve of their 75th birthday. 

The LGPS is a statutory public service scheme, so the scheme’s benefits and terms are set out in regulations passed through parliament. This pension scheme includes members working in various sectors such as local government, education (including non-teaching staff in primary to higher education) police staff, the voluntary sector, environment agencies and private contractors. 

In 2010 the LGPS regulations were amended to allow non-teaching employees of academies to be members of the pension scheme. 

Prior to April 2014, the LGPS was a final salary pension scheme based on the final 365 days pensionable pay and pensionable service. From April 2014 the LGPS became a ‘Career Average Revalued Earnings’ (CARE) pension scheme based on the actual annual salary each year. 

Benefits from the scheme include: 

• a secure annual pension 
• a tax-free lump sum 
• death benefit cover 
• Normal retirement age is the state pension age for both men and women 
• Accrual rate is at 1/49th of a member’s actual pensionable pay 
• Option to draw pension from age 55 to 75 without employer’s consent *From April 2028 NMPA is increasing to age 57 from age 55
• 50/50 option to pay half contributions and accrue half pension 

For more information on the LGPS and the benefits it provides, please visit our LGPS member’s pages. 

• Legal Background

  Every employer participating in the scheme is responsible for ensuring they have enough funds to support their employees’ pensions, It’s important to know that certain actions taken by the employer, like deciding on pay increases and handling cases of ill-health among employees, can affect the overall funding of the pension scheme in the long term. These actions may also influence the cost of participating in the pension scheme.  

  The scheme goes through a formal valuation process every three years, setting the employer’s contribution rates payable for the subsequent three year period. These are variable and dependent on the underlying funding position of the employer. 

  The LGPS is a qualifying pension scheme under the automatic enrolment provisions of the Pensions Act 2008 and is a tax approved, defined benefit, occupational pension scheme set up under the Superannuation Act 1972 and was contracted out of the State Second Pension scheme (S2P). 

  Automatic enrolment certificates for both the Devon and Somerset schemes can be found on our Automatic enrolment page – for your convenience, all the important reference numbers are listed below: 

  	Devon County Council Pension Fund	Somerset County Council Pension Fund
  Schemes contracted out reference	S2700145L	S2700167A
  Funds contracted out reference	E3900002R	E3900002R
  Pension Scheme Registration number	10079150	10079159
  Pension Scheme Tax Reference number	PSTR00328754RF	PSTR0033039RW

  Peninsula Pensions are compliant with the General Data Protection Regulations 26 May 2018. 

  • Privacy Notice 
  • Memorandum of Understanding – Devon 
  • Memorandum of Understanding – Somerset 

  Current legislation in force for the Local Government Pension Scheme 

  • The Local Government Pension Regulations 2013 
  • The Local Government Pension Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014 

  We also have regard to the Pension Regulators Code of Practice 14 

  Useful links 

  • Devon Pension Fund Administration Strategy 
  • Somerset Pension Fund Administration Strategy 
  • Pension Fund Investments 
  • LGPS Regulations and Guidance 
  • LGPS national website 
• Scheme overview

  The three tranches 

  The Local Government Pension Scheme has three tranches and the date the member joined the scheme determines which tranche or tranches they have membership in so they could have membership in all three of the tranches: 

  Membership up to 31 March 2008   (Based on Final Salary)   Normal Retirement Age = 60 or 65	Annual Pension =  Membership x Final Pensionable Pay / 80	Provides an automatic tax-free cash lump sum = 3 x Annual pension
  Membership from 1 April 2008 to 31 March 2014  (Based on Final Salary)  Normal Retirement Age = 65	Annual Pension =  Membership x Final Pensionable Pay ÷ 60	No automatic tax-free cash lump sum but member has the option to convert pension into tax-free cash.£12 tax-free cash is provided for every £1 of pension given up
  Membership from 1 April 2014  (Career Average Revalued Earnings (CARE))  Normal Retirement Age = State Pension Age	Annual Pension = Pensionable Pay for each year / 4950/50 Section = Pensionable Pay for each year / 98	No automatic tax-free cash lump sum but member has the option to convert pension into tax-free cash.£12 tax-free cash is provided for every £1 of pension given up

  Benefits of being in the scheme 

  • Guaranteed defined benefit funded pension scheme 
  • Individual pension accounts – pension benefits calculated on a yearly basis with accrual rate of 1/49 of actual pensionable pay (from 1 April 2014) 
  • Protected final salary benefits for pensionable service before April 2014 
  • Option to take a tax-free cash lump sum 

  • Index-linked pensions based on consumer price index (CPI) 
  • Built-in Ill-health benefits/life cover 
  • Retirement between 55* and state pension age 
  • Dependants’ pensions 

  *From April 2028 NMPA is increasing to age 57 from age 55

• How does the CARE scheme work?

  A CARE scheme is still a defined benefit scheme so the member is guaranteed a pension, but the basis of accrual is different to how final salary benefits accrue.

  The CARE Pension is calculated on 1/49ths of a member’s actual pensionable pay for each year in the scheme (April to March) and the accruing pension is increased each year in line with HM Treasury Orders.

  For example:

  Scheme year	Opening balance	Pensionable pay	Pension pot	Add annual increase	Total in account
  Year 1	£0.00	£24,500 / 49 = £500	£500 in pot as at 31 March	+ 3% = £15	£515
  Year 2	£515	£25,333 /49 = £517	Add to year 1 = £1032 in pot as at 31 March	+ 3.1% = £32	£1,064