Members With Pre-2008 Membership
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Final Salary Scheme
The LGPS is continuing as a final salary scheme. This means that when you retire or leave employment your pension benefits will be linked to your whole time pensionable salary and the years and days of membership you have built up in the scheme. However, the rate at which your pension builds up (accrual rate) has changed.
The accrual rate is the proportion of your final pay for each year of membership.
Membership accrued up to 31st March 2008 will remain at 1/80th per year for pension and 3/80th per year for the lump sum. For membership built up from 1st April 2008 the accrual has changed to become 1/60th per year with an option to convert part of your pension into a lump sum.
Example
A member aged 40 who works full time has 12 years pensionable service at 1st April 2008 and expects to work for a further 25 years service to their normal retirement date at age 65. The member earns a full time salary of £16,000 at date of leaving.
Pension Based on Service up to 31 March 2008
Pension = Membership years x Full time pay / 80 = Annual Pension
Pension = 12 years x £16,000 / 80 = £2,400
Plus lump sum of 3 x annual pension = £7,200 |
Plus
Pension Based on Service from 1 April 2008
Pension = Membership Years x Full time pay / 60 = Annual Pension
Pension = 25 years x £16,000 / 60 = £6,667 |
In this example the total benefits at retirement would be:
Pension Service |
Years |
Pension |
Automatic Lump Sum |
| Pre April 08 |
12 |
£2,400 |
£7,200 |
| Post April 08 |
25 |
£6,667 |
Nil* |
| Totals |
37 |
£9,067 |
£7,200 |
* Although you do not receive an automatic lump sum in respect of your membership from 1 April 2008, you will be able to give up part of your pension for a lump sum, at the rate of £1 of pension for each £12 of your lump sum subject to a maximum 25% of your LGPS Life Allowance.
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