Somewhere in your inbox, buried under all the emails, is a letter about your pension. Most people ignore it. That's understandable, pension documents read like they were written to be ignored. But here's the thing: if you work for a council or local government body, you're sitting on one of the best workplace pensions in the country. This guide tells you exactly what you've got.
The Local Government Pension Scheme (LGPS if you want to save yourself two seconds) is a workplace pension for people working in councils and other participating public bodies in England and Wales. Scotland has its own LGPS, while Northern Ireland uses NILGOSC.
The LGPS pension is what's known as a defined benefit scheme. Here's the difference:
1. Defined benefit (LGPS): you know roughly what you'll get before you retire, because it's based on a formula, not the stock market.
2. Defined contribution (most private pensions): what you get depends on how your investments performed. Great when markets are up. Less fun when they're not.
With the LGPS pension, your retirement income is guaranteed. It goes up with inflation. It pays for life. That's not nothing, that's actually quite a lot.
The scheme covers over 6 million members and manages around £402 billion in assets across more than 80 funds. Each fund is run locally, but the rules are set nationally, so the basics are the same wherever you work.
Every month, you and your employer both pay into the LGPS. Your share is based on how much you earn, so lower earners pay a smaller percentage.
Contribution bands for 2026/27
|
Your pensionable pay |
Your contribution rate |
|
Up to £18,400 |
5.5% |
|
£18,401 – £29,000 |
5.8% |
|
£29,001 – £47,300 |
6.5% |
|
£47,301 – £59,800 |
6.8% |
|
£59,801 – £84,000 |
8.5% |
|
£84,001 – £119,100 |
9.9% |
|
£119,101 – £140,400 |
10.5% |
|
£140,401 – £210,700 |
11.4% |
|
£210,701 or more |
12.5% |
Employers pay the remaining balance needed to fund the scheme, generally roughly three-quarters of the total cost.
Your contributions also benefit from tax relief as they’re deducted before tax. That means the actual hit to your take-home pay is lower than the percentage suggests. A 5.8% contribution doesn't cost you 5.8% of your net pay.
Sometimes, retirement feels so far away, that opting out feels like the best way to save some money. But you'd lose your employer's contributions, tax relief, and all the extra protections that come with the scheme.
The LGPS uses a Career Average Revalued Earnings model (CARE for short).
Here's how it works: each year you work, you earn a slice of pension worth 1/49th of that year's pay. Those slices stack up over your career. Each one also increases with inflation each year, so the slice you earned back in year one doesn't shrink in real terms.
Earn £25,000 this year
Add £510/year to your pension
(Revalued during term in line with CPI)
Do that for 20 years
~£10,000+/year in retirement
Then it rises with inflation, every year, for life. When in payment, it’s revalued every year too.
You can take your pension from your normal pension age, which is tied to your State Pension age (currently 66). You can take it earlier from 55 (rising to 57 in 2028), but it'll be reduced, so the longer you leave it, the more you get.
The bit that really matters: your LGPS pension pays for life and goes up with inflation every year. You can't outlive it, and it doesn't lose value. That's the whole point of a defined benefit pension.
Your LGPS isn't just about retirement. There are protections built in that most people in the private sector have to pay extra to get, if they can get them at all.
Death in service
If you pass away while still working, your nominated person receives a lump sum worth three times your annual pay.
Survivor benefits
Your spouse, civil partner or eligible partner receives a pension after you pass away, whether that’s before or after you’ve retired.
Ill-health retirement
If a serious illness or injury means you can’t keep working, you could access an enhanced pension early, at any age, not just from 55.
Inflation protection
Your pension rises with the Consumer Prices Index every year so what may be £10,000 a year now won’t become worthless in 20 years.
You can also swap some of your yearly pension for a tax-free lump sum at retirement if you'd rather have a chunk of cash. For every £1 of annual pension you give up, you get £12 as a lump sum. Whether that's a good swap depends on your circumstances, but the option is there*.
*Limits apply.
Yes, and it's easier than you might think. The LGPS is already generous, but there are ways to top it up if you want a bigger income in retirement (or more flexibility when you get there).
1. Additional Voluntary Contributions (AVCs): a Defined Contribution arrangement. You pay extra on top of your normal contributions, invested to build up a separate pot.
2. Shared Cost AVCs: a smarter version that runs through salary sacrifice, which reduces your tax and National Insurance bill as well as building a separate retirement fund.
3. Buying extra pension: you can pay to purchase additional annual pension directly from your fund, either in a lump sum or spread over time.
Shared Cost AVCs are a great way to boost your fund while paying less tax. Plus, £100 contributed doesn’t add £100 to your pot, it adds £138.75 with tax relief.
Find out more about them here.
Is the LGPS actually a good pension? Yes, genuinely, one of the best available in the UK. Your retirement income is guaranteed, rises with inflation and pays for life. Most private-sector workers can only access defined contribution pensions, where what you get depends on how markets perform. The LGPS pension also comes with death-in-service cover and ill-health protection built in, at no extra cost to you. It really is as good as it sounds.
How much will I actually get from the LGPS? It depends on what you earn and how long you've been in the scheme. Each year, you build up 1/49th of that year's pay as annual pension. So if you earned £25,000 for 20 years, you'd accumulate around £10,200 a year in retirement before inflation adjustments. Your pension fund will have an online tool that can give you a personalised estimate. It's usually more than people expect.
When can I access my LGPS pension? Your normal pension age is tied to your State Pension age, currently 66. You can take your LGPS pension early from 55, with a reduction applied to account for the longer payment period. If you have a serious illness that prevents you from working, you may be able to access it at any age with no reduction, and potentially with enhancements.
Is my local government pension guaranteed? Yes, and this is one of the most important things to understand about the LGPS. Your local government pension is backed by law and underwritten by your employer. Even if a fund's investments underperformed, your council is legally required to make up the shortfall. It's nothing like a private pension that can lose value when markets drop. The guarantee is real, and it's written into statute.
What happens to my LGPS pension if I leave my council job? You don't lose it. If you've been a member for at least two years, your pension is preserved and will be paid when you reach pension age, still index-linked. If you move to another LGPS employer, your pension continues building up seamlessly. A transfer may be required within two years if you move from one region to another. If you move to a non-LGPS employer, you may be able to transfer, though whether that's a good idea depends on what you're moving to.
Can I opt out of the LGPS? Yes. Opting out means losing your employer's contributions (typically around 19% of your pay), tax relief on your own contributions and all the extra protections like death in service, survivor benefits, ill-health cover.
Shared Cost AVCs let you top up your retirement fund straight from your salary, so you save on tax and National Insurance too. Worth two minutes of your time. Find out how Shared Cost AVCs work here.