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Councillor Scheme
Overview
The Local Government Pension Scheme (LGPS) is available to all Councillors of a Welsh county council or county borough council who are offered membership of the scheme under the council’s scheme of allowances and who are under age 75. Those who are offered membership are termed Eligible Councillors. If you have been offered membership of the scheme it will be for you to decide whether to opt to join. If you make an election to do so you will become a member of the LGPS from the beginning of the first pay period following the receipt of your opt in form. The opt in form can be found in the Councillor’s Forms and Resources section at the bottom of this page.
Contributions
If you opt into the scheme, you pay 6% pension contributions on your allowances as a Councillor. If you pay tax, you will get tax relief on your contributions at the time they are deducted from your allowances. Your council also pays ‘employer’ contributions to cover the rest of the cost of providing your LGPS benefits.
What are the benefits?
Your pension is based on your total membership and your career average pay. The example in the section below shows how your pension is calculated by dividing your career average pay into 80ths and multiplying this figure by your total membership to give you your annual pension.
The lump sum automatically paid on retirement is three times your annual pension and is tax-free. Like your pension, it is based on your career average pay and your total membership. When you draw your benefits you will be able to exchange some of your pension to receive a bigger tax-free lump sum.
Example:
An elected Councillor has been a member of the LGPS for 5 years. He is retiring at age 65. His pensionable earnings and the revaluation factors are as follows:
Year 1 Earnings | £9,400 X Revaluation Factor 1.12 | = £10,528 |
Year 2 Earnings | £9,600 X Revaluation Factor 1.08 | = £10,368 |
Year 3 Earnings | £9,900 X Revaluation Factor 1.05 | = £10,395 |
Year 4 Earnings | £10,400 X Revaluation Factor 1.02 | = £10,608 |
Year 5 Earnings | £11,000 X Revaluation Factor 1.00 | = £11,000 |
Accumulative Total | = £52,899 | |
Career Average Pay (£52,899 ÷ 5 Years) | = £10,579 |
Annual Pension: | Career Average Pay ÷ 80 x total membership |
£10,579 ÷ 80 x 5 years = £661.19 annual pension | |
Lump Sum: | 3 x annual pension |
3 x £661.19 = £1,983.57 lump sum | |
Survivor’s Pension: | Career Average Pay ÷ 160 x total membership |
£10,579 ÷ 160 x 5 years = £330.59 survivor’s pension |
When can you retire?
So long as you have contributed to the scheme for at least 3 months, you will have access to a pension at retirement which will be paid to you for life and which will increase in value in line with the Consumer Price Index.
Normal retirement age in LGPS (Councillor) is age 65.
However, you can retire from office and receive payment of your benefits at any time from age 55 onwards. If you are aged 50 to 55 you may be able to retire from office and receive payment of your benefits immediately, but payment of benefits before age 55 is only possible with your council’s consent. This is a council discretion and under the LGPS your council’s policy about this must be included within their Policy Statement. Please note that if your council gives their consent to pay your benefits before age 55, this may result in a tax charge on your benefits.
Please note: the normal minimum pension age will increase from 55 to 57 from 6 April 2028 across most UK pension schemes. The Finance Act provides for protected pension ages for members who meet the entitlement condition. It is not yet known if it is intended to amend the LGPS regulations to introduce a protected pension age.
If you carry on in office after age 65 you will continue to pay into the scheme, building up further benefits. You can receive your pension when you retire, or when you reach the eve of your 75th birthday, whichever occurs first. If you draw your pension after age 65 the pension you have built up to age 65 will be increased to reflect the fact that it will be paid for a shorter time.
Your pension must be paid before your 75th birthday.
Forms and Resources
Councillors Guide - April 2023
Opt-In form - April 2023
Opt-Out form - April 2023
Death Grant Expression of Wish form - April 2023
Understanding your Annual Benefit Statement - August 2023
Deferred Benefit Statement Guidance Notes - June 2023
Retiring – What Happens Next - April 2023
Retirement Option Form - April 2023
Application for Death and Survivor Benefits Councillors - April 2023
Pensions Taxation - Annual Allowance - May 2023