In the year you leave the LGPS, there is an adjustment to the pension you built up from 1 April 2014 onwards. It is revalued up to the date of leaving in line with the cost of living. Your pension fund will apply the adjustment applies on 1 April after you leave. If the cost of living has gone down in the scheme year that you leave, it is possible that the value of the deferred pension in your pension account could reduce.
For the period after your date of leaving, your total deferred benefits (including the benefits you built up before 1 April 2014) will be increased in line with the cost of living. However, if the cost of living goes down your deferred benefits will not be reduced. Your pension will also continue to receive cost of living increases every year once it is paid to you.
Your pension will increase in line with the cost of living (Consumer Price Index) each April if you are over the age of 55.
If you take your pension in the same year as your LGPS membership ended, there is an adjustment to the pension you built up from 1 April 2014 onwards. It is revalued up to the date of leaving in line with the cost of living. This adjustment applies on 1 April after your leaving date in line with HM Treasury Revaluation orders. If the cost of living has gone down in the scheme year that you leave, it is possible that your pension could reduce.
If you joined the LGPS before 1 April 2014 and you take your pension in the same year as your LGPS membership ended, you may not receive the full increase in the first year. Instead you will receive a proportion of increase based on how many months your pension has been paid for since the last April. The increase takes effect from the first Monday after 5th April of each year.
If you retired from your LGPS employment due to permanent ill health, you qualify for pension increases whatever your age.
If your deferred pension benefit is paid to you early because of permanent ill health, you may qualify for pension increases before age 55. These increases would be paid if an independent doctor who is qualified in occupational health medicine certifies that you are permanently incapacitated from undertaking any regular full-time employment.
If you do not qualify for pension increases, at age 55 your pension will increase to the level it would have been if it had increased every year since your date of leaving.
Your pension is increased in line with the cost of living in order to maintain its spending power. The increase is based on the September to September adjustment in the Consumer Price Index (CPI). The increase applies to your pension from the following April. If the cost of living has gone down, your pension will not be reduced – it will remain payable at the same rate.
The CPI index for the year up to September 2020 was 0.5%, therefore an increase of 0.5% applied to pensions in payment from 12 April 2021.
The first increase to your pension after retirement will normally only be a proportion of the full increase, depending on how many months your pension has been in payment during the year.
Previous years’ increases are shown below:
From State Pension Age, payment of the increases to your pension benefits may be shared between your LGPS pension fund and the Government. See the next question for more information.
The way your pension increases could change when you reach State Pension Age. This will apply if you reached State Pension Age before 6 April 2016 and you have a period of LGPS membership between 6 April 1978 and 5 April 1997.
As a member of the LGPS you would have paid a reduced rate of National Insurance and been ‘contracted out’ of the State Earnings Related Pension Scheme for any period of LGPS membership between 6 April 1978 and 5 April 1997. The LGPS guarantees to pay you a pension that is at least as much as you would have received from the State Earnings Related Pension Scheme. This is known as the Guaranteed Minimum Pension or GMP. The GMP forms part of your LGPS pension, it is not paid in addition to it.
From your State Pension Age, payment of the increases to your pension may be shared between your local pension fund and the Government. This is because the Government is responsible for paying part of the cost of living increases on your GMP. The GMP part of your pension will receive a full increase even if the rest of your pension is receiving a proportion of the increase because you took payment of your pension part way through the year.
If you built up pension in the LGPS before 1 April 2014, you must tell your local pension fund if you return to work for local government after you take your pension. This also applies if you return to work for another employer who offers membership of the LGPS. You must do this whether or not you join the LGPS in your new job. The local pension fund that pays your pension will let you know if your pension needs to be reduced to take account of your new earnings.
If you have only built up pension the LGPS from 1 April 2014, you do not need to let your local pension fund know if you return to work for local government or another employer who offers membership of the LGPS, unless you are being paid a tier three ill heath pension.
If you are being paid a tier three ill health pension, your pension may be affected if you return to work. You must tell the employer that you were working for when your ill health pension was paid about your new job. Your employer will let you know if your ill health pension should be stopped.
If you took flexible retirement, your pension will not be reduced whilst you continue to work for the employer that granted you flexible retirement. However, if you leave that employer and return to work in local government, or for another employer that offers membership of the LGPS, you must tell your local pension fund about your new job if any your pension was built up before 1 April 2014. This also applies whether or not you join the LGPS in your new job.
It is important that you let your local pension fund know when your contact details change. This will include your home address, email address and telephone number.
Your local pension fund will provide you with an annual benefit statement every year whilst you are a deferred member. They will also keep you updated with any material changes to the Scheme and contact you about taking your pension.
When you take your pension your local pension fund will contact every year to let you know about pension increases and provide you with a P60. Your local pension fund may stop your pension if they lose contact with you.
You may be able to update your contact information online – contact your pension fund to find out if you can.