Thinking of joining
How to join
Between October 2012 and 2017, new government legislation will progressively apply to all LGPS employers which will require such organisations to meet a number of new pension requirements. This means all categories of new staff that are currently auto-enrolled under the LGPS Regulations, AND must continue to be auto-enrolled after the staging date.
The purpose of the auto-enrolment legislation is to increase the number of staff across the country's workforce that will be enrolled automatically into a qualifying pension scheme. This will not necessarily be the LGPS for all current employers, unless they are required to do so under the LGPS Regulations.
Who is eligible for auto-enrolment?
- Employees of a Local Government employer or an employer that uses the LGPS
- Be aged between 22 and State Pension Age
- Earn above the current earnings threshold of £10,000 per year
Individuals who are not eligible for auto-enrolment can still join their workplace pension scheme - they just aren't put in automatically, this can be done by opting in.
If you wish to join the scheme you will need to complete an Opt-in form and send this to your employer's payroll department, who shall deduct pension contributions from your pay at the earliest opportunity.
You must opt to join if you don't have a continuous employment contract that is for at least 3 months or more.
What to expect when joining the scheme
Upon entering the scheme your employer is obliged to notify the Clwyd Pension Fund that you have commenced paying contributions in the LGPS.
The administration team at the Clwyd Pension Fund will write out to you with an activation key for Member Self Service and forms to be completed along with a welcome pack, which includes a Short Guide to the LGPS and a number of forms to be completed.
Upon joining the LGPS a pension account will be set up (for each employment in the scheme, if you have more than one) and an official notification of your membership of the LGPS will be sent to you. You should check your pay slip to make sure that pension contributions are being deducted.
Contributions will continue to be taken from your pay on a regular basis unless you opt out of the scheme or leave your employment.
Reasons to join
Membership of the Local Government Pension Scheme is a great perk of the job, and its open to you if you work for one of the local authorities in North East Wales, or one of a whole range of other organisations.
You can join the scheme any time before your 75th birthday, it doesn't matter whether you are full time or part time, permanent or temporary you can join, no matter how long your contract is for.
|1||Your pension is underwritten by Government, making it guaranteed by law|
|2||Relieved of tax, as tax is deducted from your pay after pensions contributions are made|
|3||Your employer pays in too, covering approximately 2/3rds of the cost to assure the payment of your pension benefits|
|4||Pensions available to spouse/partner and children in the event of your death|
|5||Option to create or increase your tax free lump sum at retirement|
|6||Income payable for life when you retire, which increases with the cost of the living|
|7||Early retirement available from age 55 if you stopped paying in after 01/04/2014|
|8||No charges or administration fees|
|9||Availability to increase or decrease your pension contributions to control your finances|
|10||Protections for loved ones through payment of a death grant lump sum|
|Guaranteed benefits not reliant on investment returns||Yes||Yes||No||No|
|Pensions increases in line with inflation||Yes||Yes||Yes (costs)||Yes (costs)|
|Option for tax free money at retirement||Yes||No||Yes||Yes|
|Relieved of tax upon contributing||Yes||No||Yes||Yes|
|Lump Sum if member dies as active member||Yes||No||Yes||Yes|
|Ill Health benefits||Yes||No||Yes||Yes|
|Option for early retirement||Yes||No||Yes||Yes|
|Reduced National Insurance Contributions||Yes (pre 2016)||No||No||No|
Building a pension
The MAIN section of the scheme is the section you will be placed in automatically from when you join the LGPS, where you pay normal contributions and receive the normal build up of pension. This is calculated using 1/49th of your annual pensionable pay (CARE pay).
The 50/50 section is a new option (since 01/04/2014) which you can opt to join. If you do so, you will then pay half contributions but build up half the normal pension. This is calculated using 1/98th of your annual pensionable pay (CARE pay) instead of the 1/49th in the MAIN scheme.
If you have more than one employment you can elect for the 50/50 option in one, some or all your employments. However, regardless of the section you are in, you get full life assurance cover and you are fully protected under ill-health retirement regulations.
Since 1st April 2014 you will accrue pensionable benefits in a different way, and although the scheme remains a defined benefit scheme and will continue to be worked out using a set formula.
Your pensionable pay is based upon what you pay pension contributions on, and shall be your actual pensionable earnings.
- For each year in the new scheme, you will build up a pension based on the pensionable pay in that year.
- For each scheme year that you are a member, a pension equal to a 1/49th of your pensionable pay will be added to your pension account.
- Inflation will be added annually to ensure that your pension account keeps up with the cost of living (CPI).
Everything that was pensionable prior to 31/03/2014 has remained pensionable into the CARE scheme. However, all overtime is now pensionable and will be included in the CARE pensionable pay.
Your contributions and your pension in the LGPS are different. Often people think that their contributions are their pension – but your contribution is "a contribution" towards the cost of the pension scheme similar to that of your employers contributions, where both guarantee you a pensionable benefit.
As well as your contribution, your employer also contributes to the fund, and is responsible for ensuring there is enough money at the time you retire to pay your pension.
Every three years, an independent actuary calculates how much your employer should contribute to the scheme. Your pension is worked out using a defined formula which is used to work out what your pension will be when you retire.
These contributions are paid to the Clwyd Pension Fund, and cover the cost of the scheme (which includes paying out pensions and death grants).
Contribution rates 2020/2021
The rate of contribution you pay will be based on your actual pensionable pay, and there are nine different contribution rates ranging from 5.5% to 12.5% in the MAIN scheme and 2.75% to 6.25% in the 50/50 scheme. Your employer will assess the rate of your contributions for each employment based on your actual pensionable pay in each single employment.
If you earn enough to pay tax then you will be subject to tax relief, meaning if you are a standard rate tax payer, every £1 you contribute into your pension only costs you 80p after this tax relief, and if you are a higher rate tax payer you get tax relief at that higher rate.
These are based on the pay bands for 2020/2021, please find below the updated contributions table which will take effect from 1st April 2020.
|Contributions table 2021/2022|
|Band||Actual Pensionable Pay
for an employment
|Contributions rate for
MAIN scheme Benefits
|Contributions rate for
50/50 scheme benefits
|1||Up to £14,600||5.50%||2.75%|
|2||£14,601 to £22,900||5.80%||2.90%|
|3||£22,901 to £37,200||6.50%||3.25%|
|4||£37,201 to £47,100||6.80%||3.40%|
|5||£47,101 to £65,900||8.50%||4.25%|
|6||£65,901 to £93,400||9.90%||4.95%|
|7||£93,401 to £110,000||10.50%||5.25%|
|8||£110,001 to £165,000||11.40%||5.70%|
|9||£165,001 or more||12.50%||6.25%|
LGPS Pension Account Modeller
By clicking on the LGPS 2014 link below, you shall be forwarded to a pension account modeller. This will provide you with an estimate of how much pension you may build in the future and a detailed outline of how they are accrued over time.
The modeller allows you to play around with various figures to see what pension benefits you would be building over the years by inputting various pay details and retirement dates.
LGPS Contribution Calculator
By clicking the below, you will be directed to the LGPS website where you are able to calculate what contributions you will pay on a monthly basis by inputting your annual pensionable pay, pay frequency and whether you are in the MAIN or 50/50 scheme.