How much pension you build up in the LGPS is based on your pay. The pension you build up each year is added to your pension account.
The amount of annual pension that you build up, from 1 April 2014, is known as a Career Average Revalued Earnings (CARE) scheme.
If you joined the LGPS before 1 April 2014, you have membership in the final salary scheme. Your final salary benefits are worked out differently.
Find out more about how the Final Salary Scheme from the video below.
From 1st April 2014 the LGPS became a Career Average Revalued Earnings (CARE) scheme. A CARE scheme calculates pension using the formula:
Pension = Accrual Rate x Pensionable Pay
Every year, if you are part of the main scheme, 1/49th of your pensionable pay is put into your pension account. Assumed pensionable pay is used if your pay has been reduced for certain reasons.
The balance in your pension account at the end of each year is adjusted in the following April in line with the cost of living. If you have more than one job, you will have a separate pension account for each employment.
If you are buying extra pension by paying Additional Pension Contributions or Shared Cost Additional Pension Contributions, the amount you buy in each year is added to your pension account.
If you join the 50/50 section of the LGPS, you would pay half your normal contributions for half the normal pension build-up. So, for each year you are in the 50/50 section 1/98th of your pay is put into your pension account instead of 1/49th. See the Paying less section for more information about the 50/50 section.
Log on to your 'My Pension' Portal online account to see how your LGPS pension has been calculated.
For Service built up before 1st April 2014
Prior to 1 April 2014, the LGPS was as a Final Salary scheme. If you joined Surrey Pension Fund before 1 April 2014, you have built up benefits in the Final Salary scheme.
The calculation for the Final Salary part of the Scheme is:
Final Pay x Service x Accrual Rate = Pension Total.
Final Pay is usually the pensionable pay (or full time equivalent if you are part time) earned in the year prior to leaving the scheme. However, one of the two previous years' pay can be used if higher (and sometimes other protections may apply).
Service is how long you have been a member of the LGPS in years and days up to 31 March 2014. Your service is adjusted proportionally if you worked part-time. This can also include transferring benefits from another scheme.
Accrual Rate is a fraction of your pensionable pay and is dependent on the time you were contributing to the LGPS. There were two different accrual rates at different points in time (as explained below)
For membership built up between 1 April 2008 and 31 March 2014, you receive a pension of 1/60th of your final pay for every year of membership you have built up as a pension.
For membership built up to 31 March 2008 you receive a pension of 1/80th of your final pay plus an automatic lump sum of 3 times your annual pension (built up to 31 March 2008) for every year of membership you have built up.
Example:
Ariah contributed to the LGPS between 1 April 2006 to 31 March 2014 and worked full time, with a final salary of £20,000 a year.
Membership up to 31 March 2008
1/80 x £20,000 x 02/000 (Years/Days) = £500
Membership between 1 April 2008 and 31 March 2014
1/60 x £20,000 x 06/000 (Years/Days) = £2,000
Total annual pension built up: £2,500
Total Automatic Lump Sum (pre-2008): £1,500.
Find out more information on the LGPS Member website.
Working part time
If you worked part time your service is reduced accordingly.
For example, if you worked 18.5 hours per week and the whole-time equivalent hours for the job were 37 hours per week, your service will be reduced by 18.50/37.00, which is half.