How is my pension calculated?

The LGPS in England and Wales moved over to a Career Average Revalued Earnings (CARE) arrangement from 1 April 2014.

The LGPS is a Defined Benefit (DB) pension arrangement which means the benefits you build up are not based on the contributions that you or your employer pay. The benefits paid from the LGPS are defined in legislation and therefore set out in law. There are set formulae and strict regulations governing how benefits are to be calculated and paid.

In the CARE scheme you build up annual pension income based on your gross pensionable pay earned in the year. A formula is applied to your total gross pay to work out how much annual pension income you have built up in that year. The formula we use depends on which section of the LGPS you are in.

The LGPS is made up of two sections - the MAIN Section and the 50/50 Section.

On commencement of your LGPS membership you are placed into the MAIN section of the Scheme. Under the Main Section you pay normal contributions and receive the normal pension build-up based on a 49th of your pensionable pay earned every scheme year. A scheme year runs from 1 April to 31 March.

The 50/50 section has been available since 1 April 2014. You can elect to move to this section if you wish. If you do so, you will then pay half contributions and your pension will build up based on a 98th of your pensionable pay received every scheme year. Anyone in the 50/50 section can move back to the MAIN section whenever they wish.

Regardless of the section you are in, you still receive full life cover from day one of your membership.

CARE Scheme example

Based on a scheme member in the Main section of the LGPS, earning £20,000 gross pay per year assuming they have an annual 1% salary increase and a 1% cost of living increase: