If you work for a local council, a school, a fire and rescue service, or one of the many other employers connected to local government in England and Wales, there's a good chance you're a member of the Local Government Pension Scheme, usually just called the LGPS. It's one of the largest pension schemes in the country, covering well over six million members between current employees, deferred members and pensioners. Despite its size, the way it actually works often isn't well understood — how your pension builds up, what makes it different from schemes like the NHS Pension Scheme or Teachers' Pension Scheme, and what happens if you move jobs or need to retire early on ill-health grounds. This guide walks through the essentials in plain English, without the jargon.
What is the Local Government Pension Scheme?
The LGPS is a defined benefit pension scheme, which means your eventual pension is based on a formula set out in the scheme rules, rather than on how well any investments happen to perform. It covers employees of local councils and a long list of related bodies — including many housing associations, academies, colleges, and outsourced contractors who took on staff from the public sector — making it genuinely one of the broadest pension schemes in the UK by number of active employers as well as members.
The scheme operates on a career average basis, known formally as a Career Average Revalued Earnings (CARE) scheme. This means every year of your working life adds a small slice of pension based on that year's actual pay, rather than everything being calculated at the end based only on your final salary. Over a full career, all those annual slices are added together, with each one revalued for inflation along the way, to produce your total LGPS pension.
How your LGPS pension builds up
Each year you're an active member, you build up a pension equal to a fraction of your pensionable pay for that year — currently 1/49th under the main section of the scheme. So if your pensionable pay for a particular year is £29,400, you'd add £600 to your pension pot for that year alone (£29,400 divided by 49). That amount is then added to your total accrued pension and revalued each April in line with the Consumer Prices Index, so pension built up in earlier years doesn't lose its value to inflation before you come to draw it.
Because each year's pension is calculated separately and then revalued, a promotion, pay rise, or a spell of part-time working doesn't retrospectively change what you built up in previous years — it only affects the new pension you add from that point forward. This is one of the most important differences between a career average scheme like the LGPS and an older final salary scheme, where your whole career's pension would traditionally be recalculated against your salary right at the end.
How much do you pay into the LGPS?
Your own contribution rate depends on how much you earn, using a banded structure that runs from around 5.5% of pay for the lowest earners up to 12.5% for the highest, with nine bands in between reviewed periodically by the scheme. Unlike auto-enrolment schemes in the private sector, there's no flat percentage that applies to everyone — someone earning £20,000 a year pays a lower percentage of their pay than someone earning £60,000, which is designed to make the scheme fairer and more affordable for lower earners while asking higher earners to contribute proportionately more for the same generous accrual rate.
Your employer also pays a substantial contribution on top, set by the fund's actuary at each valuation to make sure the fund can meet its long-term liabilities — often considerably more than your own contribution, though this employer share isn't usually shown on your payslip. Because the LGPS is a defined benefit scheme, your eventual pension doesn't depend on how these combined contributions are invested; the scheme promises a specific formula-based pension regardless of investment performance, with the employer (and ultimately the fund) bearing that investment risk rather than you.
A funded scheme — not "pay as you go"
One of the most distinctive features of the LGPS, and something that sets it apart from most other public sector pension schemes, is that it is a genuinely funded scheme. Contributions paid in by you and your employer are invested by one of the regional LGPS pension funds — administered by a local authority acting as the administering authority for that fund — in real assets such as equities, bonds, and property, in exactly the same way as a private sector defined benefit scheme would invest its assets.
This is quite different from schemes like the NHS Pension Scheme, the Teachers' Pension Scheme, or the Civil Service pension arrangements, all of which are unfunded (sometimes called "pay as you go") schemes. In those schemes, there's no big pot of invested assets sitting behind your pension promise — today's pensions are paid directly out of today's contributions and, where needed, general taxation, with the government underwriting the promise. Both approaches are backed by extremely strong guarantees in practice, but the LGPS's funded status means its financial position is regularly assessed through formal actuarial valuations of real assets against real liabilities, in a way that mirrors how private sector pension funds are supervised.
The extra benefits bundled into your LGPS membership
Beyond the core retirement pension, LGPS membership includes several valuable extra protections that are easy to overlook until you actually need them. Ill-health retirement is one of the most important: if you become permanently unable to do your job because of ill health, you may qualify for one of three tiers of ill-health pension, each providing a different level of enhancement to your accrued pension depending on how limited your capacity for any gainful employment is judged to be.
If you die while still an active member, your family typically receives a tax-free lump sum death grant, usually equal to three times your annual pensionable pay, along with an ongoing survivor's pension for a spouse, civil partner, or eligible cohabiting partner, and pensions for eligible dependent children. These death-in-service benefits apply from your very first day of membership, with no minimum service requirement, which makes the scheme considerably more valuable than its headline pension alone might suggest.
When can you take your LGPS pension?
Your Normal Pension Age in the LGPS for benefits built up from April 2014 onwards is linked to your State Pension age (with a minimum of age 65), rather than being fixed at a set age like 60 or 65 as in some older schemes. This means your Normal Pension Age can move if the government changes State Pension age in the future, and it may differ from one member to another depending on their date of birth. You can choose to take your pension earlier, from age 55 (rising to 57 from 2028 in line with wider pension rules), though taking it before your Normal Pension Age usually means an actuarial reduction is applied, since the pension is expected to be paid out for longer. Conversely, if you carry on working and delay drawing your pension past your Normal Pension Age, it's usually increased to reflect the shorter period it will then be in payment. Anyone with membership from before April 2014 will also have some benefits protected under older, more generous Normal Pension Age rules for that earlier period specifically, so a long-serving member's total pension can be made up of several tranches, each with its own applicable age.
Key LGPS features at a glance
How LGPS compares with other public sector schemes
It's easy to lump all public sector pensions together, but the LGPS's funded status is a genuine structural difference from schemes covering NHS staff, teachers, civil servants, and the armed forces and police, which are unfunded. All of these schemes moved to broadly similar career average designs following the 2015 public sector pension reforms, and all were affected in some way by the McCloud age discrimination remedy that gave many older transitional members a choice between legacy and reformed scheme benefits for the 2015-2022 period. If you've moved between local government and another public sector employer during your career, it's worth keeping track of which scheme covered which period of service, since each pot is calculated and revalued under its own scheme's rules, and transferring between them isn't always straightforward without checking the detail first. Read our guide to defined benefit pensions explained for how career average and final salary schemes generally work.
Pension rules, accrual rates, and Normal Pension Age calculations can be genuinely intricate, and this guide is a general explainer rather than a substitute for checking your own LGPS member record. For free, impartial guidance about your workplace pension, visit MoneyHelper.
Transferring your LGPS pension if you change jobs
Because so many different employers participate in the LGPS — not just councils themselves, but academies, housing associations, and outsourced contractors — it's fairly common to move between LGPS employers during a career without ever really leaving the scheme. If you move from one LGPS employer to another within a short window (usually within a year, though the exact rule depends on scheme regulations at the time), your new employment is often treated as a continuation of the same LGPS membership, meaning your benefits carry on building up under a single, continuous record rather than being split into separate pots.
If you leave local government altogether — for example, to work in the private sector or for an employer outside the scheme — you can normally leave your LGPS benefits as a deferred pension, which continues to be revalued each year in exactly the same way as an active member's pension, just without any further accrual. Alternatively, you may be able to transfer the value of your deferred LGPS pension to another registered pension scheme, though because the LGPS is a valuable defined benefit scheme, transferring out is a decision that needs to be considered very carefully, and larger transfers above a certain value legally require you to take regulated financial advice before the transfer can proceed.
LGPS survivor benefits in more detail
Beyond the death-in-service lump sum, the LGPS provides an ongoing survivor's pension if you die, whether you're still working, have a deferred pension, or are already retired. A surviving spouse, civil partner, or eligible cohabiting partner typically receives a pension based on a proportion of the member's own accrued pension, calculated using broadly similar rules regardless of whether death occurs before or after retirement, so the protection doesn't simply disappear the moment you stop working.
Eligible children can also receive a pension until a specified age (often extended if they remain in full-time education), and unlike some older pension arrangements, the LGPS's cohabiting partner provisions mean an unmarried partner can qualify for survivor benefits provided certain conditions about the relationship are met and, in some cases, formally notified to the pension fund in advance. Because these rules can be detailed and depend on the specific relationship and notification requirements in place, it's worth checking your own LGPS fund's member guide, or contacting your administering authority directly, if you want to understand exactly how your own family would be provided for.
Buying extra pension: Additional Pension Contributions
If the standard accrual rate doesn't feel like enough, the LGPS allows members to buy Additional Pension, up to a maximum amount set each year, either through regular extra contributions taken from pay or as a one-off lump sum payment. This effectively lets you top up your future LGPS pension by a specific fixed amount, on top of whatever you'd otherwise build up through your normal pensionable pay, which can be a useful option for members who join the scheme later in their career or who simply want to boost their eventual retirement income.
Members can also pay Additional Voluntary Contributions (AVCs) into a separate, linked defined contribution arrangement run alongside the main LGPS, which behaves more like a typical workplace pension pot that's invested and grows (or falls) with the markets, rather than adding to your guaranteed formula-based LGPS pension directly. Choosing between Additional Pension and AVCs — or a combination of both — depends on whether you'd rather have a guaranteed increase to your defined benefit pension or a flexible, investment-based pot you can typically access more flexibly at retirement, and it's worth understanding the difference clearly before deciding which route, if either, suits your circumstances.
How the LGPS stays financially sustainable
Because the LGPS is funded rather than unfunded, each of its regional pension funds undergoes a formal actuarial valuation every three years, comparing the value of the fund's invested assets against the projected cost of paying out pensions built up so far and expected to be built up in future. Where a valuation reveals a shortfall, employer contribution rates are typically adjusted upwards over time to close the gap; where a fund is running a healthy surplus, employer rates may be held steady or reduced, but member contribution rates and accrual formulas are set nationally and don't change simply because one regional fund is performing better or worse than another.
This valuation cycle is one of the reasons the LGPS is often held up as a well-governed and financially sound example of a defined benefit pension scheme: because it's genuinely funded, its financial health is visible, measurable, and independently checked on a regular basis, rather than relying purely on an ongoing government funding commitment as unfunded public sector schemes do.