Working out your Councillor pension

You need to pay pension contributions for three months or more to have a pension benefit in the Local Government Pension Scheme, or LGPS Councillor.

LGPS Councillor is a defined benefit pension scheme. This means that the value of your pension is not based on the pension contributions you pay.

Your pension benefits are based on:

A build-up rate of 1/80,
Your career average pay, and
Your total membership in LGPS Councillor

How your pension is worked out

In this example, the councillor has been a member of LGPS Councillor for 5 years. Their career average pay is based on all of the fees or pay they have paid pension contributions on, as well as cost of living increases, in line with an inflation measure called the Retail Price Index, or RPI.

The amount of membership is the time from when you start paying pension contributions to when you stop.

Example

Year 1 Earnings £9,400	x cost of living increase 1.12	= £10,528
Year 2 Earnings £9,600	x cost of living increase 1.08	= £10,368
Year 3 Earnings £9,900	x cost of living increase 1.05	= £10,395
Year 4 Earnings £10,400	x cost of living increase 1.02	= £10,608
Year 5 Earnings £11,000	x cost of living increase 1.00	= £11,000
	Accumulative Total	= £52,899
	Career Average Pay (£52,899 ÷ 5 Years)	= £10,579.80

Once we have figures for career average pay and membership, we can work out the pension value:

Annual pension

Years and days membership ÷ 80 x career average pay

One off tax-free lump sum

1/80 annual pension x 3

Example

Annual pension

5 years ÷ 80 x £10,579.80 = £661.24 of 1/80 annual pension

One off tax-free lump sum

£661.24 x 3 = £1,983.72

Annual allowance

Your annual allowance is the amount the value of your pension benefits can grow in a tax year without you having to pay a tax charge. If the value of your pension savings from 6th April to 5th April is more than your annual allowance, the excess will be taxed as income.

For more details about annual allowance, please click here.