How is a local government pension calculated? Each year since April 2014 adds 1/49th of your pay to your pension, and older service uses final pay.

The Local Government Pension Scheme (LGPS) has two sets of sums running side by side, and which one applies to you depends on when you joined. Pension built up from 1 April 2014 follows career average rules in England and Wales, and pension built up before then follows final salary rules. Your pay, your years of membership and any part-time hours all feed in. With final salary years and a career average account to combine, the two parts of the total are worth running past an FCA-authorised adviser, and a free call-back follows once you add your name and phone to the form on this page.

How is local government pension calculated from April 2014?

Each year, 1/49th of your pensionable pay goes into a pension account, according to the member website for England and Wales, which the Local Government Association runs. Pensionable pay is the pay your contributions are deducted from, so a year on £24,500 adds £500 of yearly pension (£24,500 ÷ 49).

Your pension is not worked out from your pay at the end of your career. The balance in the account is adjusted every following April in line with the cost of living, and the scheme's glossary names CPI as the measure currently used. If you have more than one job covered by the scheme, each employment gets its own account.

The member website's own illustration follows a member who joined on 1 April 2014 and got 1% pay rises in the next two years:

Scheme yearPayPension added (pay ÷ 49)Cost of living adjustmentAccount after adjustment
2014-15£24,500£500.001.2%£506.00
2015-16£24,745£505.00-0.1%£1,009.99
2016-17£24,992.45£510.051%£1,535.24

The adjustment can be negative, as the 2015-16 row shows. The member in the example keeps building the account the same way every year until they leave or retire. In the 50/50 section, where you pay half the contributions, 1/98th of pay goes in instead of 1/49th. The contribution rates page has the bands.

Service before April 2014: final pay, 1/60th and 1/80th

If you were a member before 1 April 2014, you also hold final salary benefits. For membership between 1 April 2008 and 31 March 2014 the pension is 1/60th of final pay for each year. For membership before 1 April 2008 it is 1/80th of final pay for each year, plus an automatic lump sum of three times that pension.

The "final pay" in that sum normally means what you earned in your last year in the scheme, with either of the two years before it swapped in if that pay was higher. Overtime that is not in your contract is left out. A part-timer's final pay is the pay you would have received working full time.

Membership itself is reduced for part-time work: someone on 17.5 hours in a 35-hour job would be credited with half of each year. It can also include service you bought, such as a transfer in.

A worked example from the scheme

The member website works through a full-time member who joined on 1 April 2001, has seven years of membership before 1 April 2008 and six years of membership between 1 April 2008 and 31 March 2014, and leaves on 31 March 2018 on final pay of £28,000. This is an illustration with the scheme's own figures, not a forecast for anyone:

PeriodWorkingResult
Membership between 1 April 2008 and 31 March 20146 / 60th × £28,000£2,800 a year
Before 1 April 20087 / 80ths × £28,000£2,450 a year
Automatic lump sum, before April 20083 × 7/80ths × £28,000£7,350

That makes £5,250 a year for the final salary years, "plus the value of pension built up in the pension account since 1 April 2014". So the whole pension is the final salary part plus the career average account, added together.

Maternity leave, sickness and unpaid breaks

During relevant child-related leave, which covers ordinary maternity or adoption leave (normally the first 26 weeks) among others, the pension is usually worked out using an assumed pay figure rather than the reduced pay you actually get. You carry on building pension as if you were working normally. The same idea applies to sickness or injury absence.

Your employer sets the assumed figure, normally from the average of your pensionable pay over the three months before it dropped. Your contributions are still taken from the pay you actually receive.

Unpaid breaks are different. From 1 April 2026, authorised unpaid leave of less than 15 days still builds pension as normal, but a break of 15 days or more does not automatically count, though you can choose to pay extra to buy back the pension you missed. Unpaid breaks and odd leave records are worth raising on a call, which you can arrange via the form on this page with an FCA-authorised adviser, free.

Lump sum, McCloud and what happens after you retire

Most members can give up part of their yearly pension for a tax-free lump sum: for every £1 of pension surrendered you get £12. The choice is made when you first take the pension and cannot be changed later. The lump sum page covers the limits.

Once in payment, the pension rises with the cost of living for life; see how the April increase is worked out. Taking it before your normal pension age normally reduces it, and the early retirement reductions page explains how.

The McCloud remedy can add to the sums. If you first joined the LGPS or another public service pension scheme before 1 April 2012, the pension you built up between 1 April 2014 and 31 March 2022 may be protected. If it is, when you take your pension the fund checks whether that pension would have been higher under final salary rules, and raises it if so. The McCloud page has the rest.

Scottish and Northern Irish members: a different start date

This page covers England and Wales. Scotland has its own member website, and there the move from final salary to career average came on 1 April 2015, a year later. The same 1/49th applies for the new scheme, and the old service is 1/60th for membership between 1 April 2009 and 31 March 2015 and 1/80th before 1 April 2009, with a lump sum of three times the pension. In Scotland the McCloud remedy period is the time between 1 April 2015 and 31 March 2022. Northern Ireland runs a separate Local Government Pension Scheme through NILGOSC, so its figures are its own.

Working out your own figure

The formulas are simple, but the inputs are not: your pay history, part-time years, breaks and any McCloud check all change the answer. Your pension fund holds the records and is the one to contact before you take your pension, so it can tell you your options. The member website lists a lump sum calculator among its tools.

Many readers want one number and a rough monthly figure. Your fund holds the figures that settle it. How they fit your wider plans is worth discussing with an FCA-authorised adviser; leaving your number in the form here gets you a free phone call. The LGPS explained page gives the wider picture.

Pay, part-time hours and annual rises: common questions

What counts as pensionable pay?

The glossary lists normal pay, bonuses, shift allowance, and both contractual and non-contractual overtime, along with maternity, paternity, adoption and shared parental pay. Final salary pension uses a narrower measure, because final pay leaves out non-contractual overtime.

Can I use a final salary pension calculator for my LGPS pension?

Only for the service built up before April 2014. Later years follow the pension account sums above, so a final salary calculator would miss that part. The final salary pension guide explains that kind of scheme.

Does the pension go up once it is being paid?

Yes, it increases in line with the cost of living for the rest of your life, according to the member website. The yearly rise is covered on the increase page.

Do part-time hours change how the sums work?

For service before April 2014, membership is reduced to match your hours. After that, the account takes 1/49th of the pay you actually earn, so a smaller wage builds a smaller amount.

When can I start taking it?

That is a separate question from the calculation; see the normal pension age page.

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