Thinking about joining Local Government Pension Scheme for councillors, or ‘LGPS Councillor’

1. You will get an annual pension payable for life when you retire and it increases every April in line with the cost of living.
2. You make contributions towards your pension. The contributions come out of your pay before tax so the real cost to you is less (this is called tax relief).
3. Your council makes contributions as well.
4. You can pay extra contributions if you want to increase your annual pension or lump sum amount at retirement.
5. There are no hidden charges or administration fees.
6. You can currently retire between ages 50 and 75. Your council must agree to your retiring before age 55. The lower age will go up to 57 from 6th April 2028.
7. When you retire, you can exchange some of your pension for a one-off lump sum. The lump sum will usually be tax-free and will be based on HM Revenue & Customs lump sum allowance limits. For every £1 of annual pension you give up you will get a lump sum of £12.
8. You will receive benefits if you have to stop work because of ill health at any age.
9. Your loved ones will receive a grant following your death.
10. Your partner and and children (if they qualify) would also receive pensions after you die.

Pension contributions come out of your fees before any tax is taken. Your contribution is 6% of the fees you receive.

Your council also contributes to make sure there is enough money at the time you retire to pay your pension.

Every three years, our Actuary works out what your council’s contribution percentage should be.

Your pension benefits are based on:

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

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

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

Example

At retirement, you will have an option to turn some of this pension into a one-off lump sum. For every £1 of annual pension you give up you will get a lump sum of £12.

HM Revenue & Customs limits the amount of tax-free lump sum you can take when your pension is paid to you. This limit is called a lump sum allowance (LSA). Currently, the maximum lump sum is the lowest of:

• 25% of the capital value of your benefits
• £268,275*
• £268,275* less the total lump sums you have already taken

*If you hold a valid Lifetime Allowance protection, you may be able to take a lump sum that is larger than £268,275.

The lump sum will usually be tax-free, but if you go over the lump sum allowance, you will have to pay tax on the excess at your marginal rate.

You can join LGPS Councillor if you are under the age of 75 and you are a councillor for any of:

• Flintshire County Council
• Denbighshire County Council
• Wrexham County Borough Council

Please complete an opt in form and send it to your council’s payroll department. They will then start to take pension contributions from your fees.

LGPS Councillor is a defined benefit pension scheme. This means that the value of your LGPS pension at retirement is based on your fees over the length of time you are a member. You can keep track of the amount of pension you are building up.

(You may also have come across defined contribution schemes , for example personal pensions, where your benefits depend on the contributions you have paid in, and how your investments perform).

LGPS Councillor is available to councillors of a Welsh County Council or County Borough Council. The Clwyd Pension Fund administers LGPS Councillor for:

• Flintshire County Council
• Denbighshire County Council
• Wrexham County Borough Council

For more in-depth information about LGPS Councillor, please look at our currently paying pension contributions tab or download our short scheme Councillor guide.