The Local Government Pension Scheme (LGPS) is provided to you by your Employer, who then pays the bulk of the cost of your benefits. How much it costs you depends on how much you are paid, but it will be between 5.5% and 12.5% of your pensionable pay under the MAIN Section of the Scheme.
The rate you pay depends on which pay band you fall into, which will be based on your actual pensionable pay. However, the amount you actually pay is far less than you think because you will attract tax-relief on the contributions that you pay.
As a member of LGPS, you have the option to opt out at anytime, however, this is NOT a decision to be taken lightly.
As an alternative, you have the option to reduce your normal contribution rate by half, to build up half the level of pension in the scheme during this time; which may be a better option than having to opt out of the scheme altogether. This is known as the 50/50 Section of the scheme.
You will start to pay contributions under the MAIN Section of the scheme, unless you make an election to pay under the 50/50 Section.
The Contribution Banding Arrangement for the MAIN Section of the Scheme for the period from 1 April 2020 to 31 March 2021 is as below.
Your Actual Pensionable Pay Rate of Contribution for the MAIN Section Up to £14,600 5.50% £14,601 to £22,800 5.80% £22,801 to £37,100 6.50% £37,101 to £46,900 6.80% £46,901 to £65,600 8.50% £65,601 to £93,000 9.90% £93,001 to £109,500 10.50% £109,501 to £164,200 11.40% More than £164,201 12.50%
The Contribution Banding Arrangement for the 50/50 Section of the Scheme for the period from 1 April 2020 to 31 March 2021 is as below.
Your Actual Pensionable Pay (£) Rate of contribution for the 50/50 Section Up to £14,600 2.75% £14,601 to £22,800 2.90% £22,801 to £37,100 3.25% £37,101 to £46,900 3.40% £46,901 to £65,600 4.25% £65,601 to £93,000 4.95% £93,001 to £109,500 5.25% 109,501 to 164,200 5.70% More than 164,201 6.25%
How do I elect for the 50/50 Section?
You will need to inform your Employer in writing and your contribution rate will be reduced from the next available pay period. You are able to receive the appropriate Election Form by contacting your Employer.
You can revert back to your normal contribution rate at any time, by informing your Employer in writing. Your pension will then start to build up at the normal rate from the next available pay period.
Note that this option is designed to be a short term solution for when times are financially difficult. Your Employer will be required to re-enrol you back into the 'Main Section' of the scheme every 3 years. This will be carried out in line with your Employer’s automatic re-enrolment date.
When contributing to the 50/50 Section, you will retain full ill health and death cover throughout this period.
Your Employer is responsible for allocating your contribution rate. If you believe it to be incorrect, please contact your Employer.
Any contractual or non-contractual overtime that you undertake will be deemed as pensionable.