13. Part time workers
The Local Government Pension Scheme (LGPS) changed from a final salary scheme to a career average scheme on the 1 April 2014. All benefits built up in the LGPS for membership after 31 March 2014 are worked out under the rules of the new career average scheme.
But if you joined the scheme before 1 April 2014 you will also have built up benefits in the final salary scheme. Your benefits in the LGPS built up before 1 April 2014 are based on your membership in the scheme up to 31 March 2014 and your final pay when you leave the scheme. The benefits based on membership to 31 March 2008 are worked out differently to benefits based on membership between 1 April 2008 and 31 March 2014.
How are benefits worked out?
For membership built up to 31 March 2008. You receive a pension of 1/80th of your final pay plus an automatic tax-free lump sum of 3 times your pension.
For membership built up from 1 April 2008 to 31 March 2014, you receive a pension of 1/60th of your final pay. There is no automatic lump sum for membership built up after March 2008. But you do have the option to exchange some of your pension for a tax-free lump sum.
For membership built up from 1 April 2014. Every year you will build up a pension at a rate of 1/49th of the amount of pensionable pay you received in that scheme year if you are in the main section of the scheme. It will build up at half this rate for any time you have elected to be in the 50/50 section of the scheme (1/98th). This pension is added to your pension account and revalued at the end of each scheme year so your pension keeps up with the cost of living.
What counts towards membership in the scheme before 1 April 2014?
Your benefits in the LGPS built up before 1 April 2014 are based on your membership built up in the scheme before this date and your final pay when you leave the scheme.
If you worked part-time before 1 April 2014, your membership is reduced to its whole-time equivalent length to calculate the amount of your retirement benefits. For example, if you worked half-time for 10 years, your benefits would be based on 5 years' membership.
If your hours changed during your membership of the scheme before 1 April 2014, your benefits will be worked out to include the hour changes.
If you did not have any contractual hours, your membership for each year in the LGPS before 1 April 2014 will be calculated on average weekly hours worked during each year.
What counts towards final pay to work out my benefits in the LGPS before 1 April 2014?
While the scheme changed for all active members on 1 April 2014, there are protections in place. This ensures that, when you leave, your final pay is used to work out your pension for the membership you built up to 31 March 2014.
The definition of final pay for benefits built up before 1 April 2014 remains the same as before the scheme changed from a final salary to a career average scheme on 1 April 2014. This means that if you are working part-time when you leave the LGPS, or worked part-time at some point during your last year of membership, your final pay is the whole-time pay that you would have received, if you had worked whole-time.
How is my pension worked out from 1 April 2014?
Every year, you will build up a pension at a rate of 1/49th of the amount of pensionable pay (and any assumed pensionable pay) you received in that scheme year if you are in the main section of the scheme. If you have elected to join the 50/50 section of the scheme your pension will build up at half this rate (1/98th). The calculation is based on your part time pensionable pay if you work part time hours.
If during the scheme year you had been;
on leave on reduced contractual pay or no pay due to sickness or injury, or
on relevant child related leave or reserve forces service leave,
then for the period of that leave, your pension is based on your assumed pensionable pay. The amount of pension built up during the scheme year is then added to your pension account. Your pensions is revalued at the end of each scheme year so that it keeps up with the cost of living.
You can take a tax-free lump sum by giving up some of your annual pension. You can take up to 25% of the capital value of your LGPS benefits as a lump sum. For every £1 of annual pension that you give up you will receive a £12 lump sum. In the same way, giving up £100 of your annual pension would give you £1,200 lump sum, and so on.
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Last updated: 23 March 2021