Local Government Pension Scheme

Overview

  • The Local Government Pension Scheme (LGPS) is a defined benefit pension plan provided by local government employers to their employees. The scheme is designed to offer financial security post-retirement through regular pension payments. It is funded by contributions from both employers and employees and is managed by a pension fund administrator.

    Key Features of the LGPS

  • Eligibility:

    • Open to employees of local government and certain other organizations that participate in the scheme, such as academies, charities, and contractors.

  • Contributions:

    • Employees contribute a percentage of their salary based on their income band.

    • Employers contribute a varying rate to ensure the scheme remains adequately funded.

  • Defined Benefits:

    • Provides a guaranteed income in retirement based on a formula considering years of service and final average salary or career average earnings, depending on when the benefits are accrued.

  • Vesting Period:

    • Employees become eligible for benefits after a vesting period, typically 2 years of service.

  • Retirement Age:

    • The scheme’s normal retirement age is linked to the state pension age but with flexibility for early or late retirement.

Admission Agreements

  • Admission agreements enable organizations outside the local government sector to participate in the LGPS. These agreements are commonly used when services are outsourced or when non-standard employers wish to join the scheme.

  • Types of Admission Bodies:

    • Community Admission Bodies:

      • Non-profit organizations with a community focus, such as charities.

    • Transferee Admission Bodies:

      • Organizations that take on staff from a local authority or other scheme employer under a contract.

  • Key Requirements:

    • Approval from the administering authority.

    • Agreement to comply with LGPS regulations and funding arrangements.

    • Provision of a bond, indemnity, or guarantee to protect the pension fund.

  • Employer Responsibilities:

    • Ensure timely payment of contributions.

    • Provide regular employee data to the administering authority.

    • Adhere to scheme policies and reporting requirements.