LGPS pensions explained: benefits, early retirement and transferring out

The Local Government Pension Scheme (LGPS) is a defined benefit pension for people working for councils and other participating employers. It has built up pension on a career average basis since April 2014 in England and Wales, and April 2015 in Scotland and Northern Ireland. Unlike most public-sector schemes it is funded, so deferred members can usually transfer out.

What is the LGPS?

The LGPS is a statutory, defined benefit pension scheme. Your pension is worked out from your pay and your membership, not from how investments perform, and it is paid for the rest of your life.

What makes the LGPS different from most other public-sector schemes is that it is funded. In England and Wales, each administering authority must maintain a pension fund for the Scheme. Contributions from members and employers are invested in that fund, which keeps your records and pays your pension. Most other public-sector schemes are unfunded and can't transfer to a defined contribution pension, as our public-sector pensions guide explains.

There are separate regulations for England and Wales, Scotland and Northern Ireland. The main features are similar, but the details differ. Where a rule below comes from the England and Wales scheme (member site lgpsmember.org, regulations at lgpsregs.org), this guide says so. If you are in Scotland or Northern Ireland, check the detail with your own fund.

How LGPS benefits build up

Career average from 2014 (or 2015)

The LGPS changed from a final salary scheme to a career average scheme on 1 April 2014 in England and Wales. In Scotland the career average scheme came into force on 1 April 2015, and the same date applies in Northern Ireland.

Each year you are in the main section, 1/49th of your pensionable pay is added to your pension account. This accrual rate is set out in the regulations for England and Wales, Scotland and Northern Ireland. In England and Wales, the balance in your pension account is adjusted each April in line with the cost of living.

England and Wales also has a 50/50 section. You pay half your normal contributions and build up half the pension, so 1/98th of your pay is added each year instead of 1/49th.

Illustrative example: Sam earns £30,000 a year in the main section. That year adds £30,000 ÷ 49, or about £612, to Sam's pension account. The account is then adjusted for the cost of living the following April, and the next year's pension is added on top. These are round, hypothetical figures, not a forecast.

Final salary membership before 2014

If you were a member before the career average scheme started, your earlier membership is still worked out on a final salary basis. In England and Wales, lgpsmember.org explains that:

• membership from 1 April 2008 to 31 March 2014 gives a pension of 1/60th of final pay for each year
• membership before 1 April 2008 gives a pension of 1/80th of final pay for each year, plus an automatic tax-free lump sum of three times that pension

Scotland and Northern Ireland have their own final salary rules for earlier membership. Your annual benefit statement shows both parts.

Tax-free cash

In England and Wales, most members can give up some of their annual pension for a tax-free lump sum. For every £1 of pension you give up, you get £12 of lump sum, within HMRC limits.

Normal pension age

Your normal pension age (NPA) is the age at which your pension is paid in full, with no reduction for early payment.

For career average benefits, NPA is your State Pension age, or 65 if that is later. The same definition appears in the regulations for England and Wales, Scotland and Northern Ireland. Because it follows State Pension age, it can change if State Pension age changes. You can check yours on gov.uk.

Final salary benefits keep a protected NPA, which for most people is 65.

In England and Wales you can take your LGPS pension at any time from 55 to 75, as long as you have met the two-year qualifying period. If you take it before your NPA, it will normally be reduced, and the earlier you take it, the bigger the reduction. Your employer can choose not to apply all or part of the reduction. The reduction factors are set nationally and were last changed in July 2026, so ask your fund for a current estimate rather than relying on an old one.

The earliest age is due to rise from 55 to 57 from 6 April 2028, in line with the change to the normal minimum pension age. This does not apply to ill-health retirement. Our guide Can I retire at 55? explains the change in more detail.

If you lose your job through redundancy or business efficiency at 55 or over, your main LGPS benefits must be paid straight away, without a reduction.

The 85-year rule

The 85-year rule is a protection from the old scheme. In England and Wales, you may be protected if you were a member of the LGPS at any time between 1 April 1998 and 30 September 2006.

You meet the rule when your age and your LGPS membership, both in whole years, add up to 85. Part-time membership counts at its full calendar length for this purpose.

How it works in practice:

• If you retire after 60, the rule applies automatically. Some or all of your benefits can be paid without reduction if you have met it.
• If you retire between 55 and 60, it does not apply automatically and your benefits will be reduced, unless your employer uses its discretion to apply it.
• If you take benefits before you meet the rule, they are still reduced, but by less than for someone who isn't protected.
• If you take flexible retirement, the rule applies to the benefits built up to the date you first take it, even if you are under 60.

The rules are complex, so ask your fund for an estimate before you decide anything. Scotland and Northern Ireland have their own transitional protections, so if you are a member there, ask your fund how they apply to you.

Early, flexible and ill-health retirement

Flexible retirement

Flexible retirement lets you ease into retirement. In England and Wales you can take it from 55, once you have met the two-year qualifying period, and only if your employer agrees. You reduce your hours or move to a less senior job and take some or all of your pension while you keep working. Employers set their own policies, so ask yours.

Ill-health retirement

If you have to leave work because of illness, ill-health benefits can be paid at any age and are not reduced for early payment. In England and Wales your employer must be satisfied, on the opinion of an independent occupational health physician, that you are permanently unable to do your job until your NPA and that you are not immediately capable of gainful employment. Gainful employment means paid work of at least 30 hours a week for at least a year.

There are three tiers. Your employer decides which applies:

Tier	When it applies	What you receive
Tier 1	You are unlikely to be capable of gainful employment before your NPA	Your pension built up so far, unreduced, plus the pension you would have built up from leaving to your NPA
Tier 2	You are unlikely to be capable of gainful employment within three years, but likely to be before your NPA	Your pension built up so far, unreduced, plus 25% of the pension you would have built up to your NPA
Tier 3	You are likely to be capable of gainful employment within three years	Your pension built up so far, unreduced, paid for up to three years or until you start, or become capable of, gainful employment

If you have already left and have deferred benefits, you can ask for them to be paid early if you become too ill to work.

The McCloud remedy, briefly

The McCloud case found that protections given to older members when the public service schemes were reformed were age discrimination. In England and Wales the LGPS remedy is an underpin: if you are protected, your fund checks whether you would have had more pension under the final salary rules between 1 April 2014 and 31 March 2022, and increases your pension if so. Broadly, you are protected if you built up public service pension before 1 April 2012, were in the LGPS during that period while under 65, and had no break of more than five years. The regulations also require a transfer value for an eligible member to take the underpin into account. In Scotland or Northern Ireland, ask your fund how the remedy applies.

Can you transfer out of the LGPS?

Yes, in most cases. Since 6 April 2015 the law has stopped members of unfunded public service schemes transferring to a defined contribution pension (Pension Schemes Act 1993, section 95, as amended by the Pension Schemes Act 2015). Because the LGPS is funded, that restriction doesn't apply to it.

There are still conditions. In England and Wales, lgpsmember.org sets out the basics:

• You must have stopped paying into the LGPS. You can't transfer while you are still building up benefits in it.
• You can't transfer if you have already taken an LGPS pension.
• You must elect to transfer at least one year before your NPA. You can't transfer if you left less than a year before it.
• You will generally need more than three months' membership.
• If you have more than one deferred LGPS benefit in England and Wales, you must transfer all of them or none of them.
• You don't have to transfer any additional voluntary contributions (AVCs) along with your main benefits.

The advice requirement and the FCA's starting assumption

If your LGPS benefits are worth more than £30,000, the law requires you to take regulated advice before you can transfer to a defined contribution pension. The value of any in-house AVC fund is not counted. The advice must come from an FCA-authorised adviser whose firm holds the pension transfer permission, and you pay for it yourself. You can read more about the role in what is a pension transfer specialist? and about the wider category of protected benefits in safeguarded benefits.

The FCA's starting assumption is that a transfer from a defined benefit pension is unlikely to be suitable for most people. An adviser has to begin from that position and can only recommend a transfer if they can show it is clearly in your best interests. The FCA explains this on its pension transfer page.

If you join another public service scheme, a different route may apply. Under the Club transfer rules you normally get broadly equivalent benefits in the new scheme, as long as you join within five years of leaving the LGPS and apply within a year of joining.

Scams

Your fund must take reasonable steps to protect you from pension scams, and may ask you questions about the receiving scheme before it pays a transfer. Be wary of anyone who contacts you out of the blue about your LGPS pension, and check firms on the FCA ScamSmart site. Our guide to pension scams explains the warning signs.

What you would give up

A transfer cannot usually be reversed. If you transfer all your LGPS benefits to a defined contribution pension, you give up:

• A guaranteed income for life that doesn't depend on investment returns or on how long you live.
• Cost-of-living increases, both on your pension account before retirement and on your pension once it is paid.
• Family benefits. After a full transfer, the LGPS pays no death grant and no survivor pensions.
• Ill-health protection, including the right to an unreduced, and possibly enhanced, pension if you become too ill to work.
• Protections from the old scheme, such as the 85-year rule and the McCloud underpin, where they apply to you.

In a defined contribution pension, you carry the investment risk and the risk of running out of money, and the normal minimum pension age applies. Our defined benefit pension guide explains these trade-offs in more detail.

How to get a transfer value from your LGPS fund

A cash equivalent transfer value (CETV) is the amount your fund would pay to another pension if you transferred. Our guide to pension transfer values explains how they are worked out.

1. Find your fund. Your annual benefit statement names it, and lgpsmember.org lists contact details for funds in England and Wales. If you have lost track of an old pension, the government's Pension Tracing Service can help.
2. Ask for a transfer value in writing. You are usually entitled to one free statement every 12 months.
3. Note the guarantee date. The quotation is generally guaranteed for three months from that date. It may be guaranteed for a shorter time if you are close to a year before your NPA.
4. Take advice in good time if your benefits are worth more than £30,000. Starting early means you aren't rushed when the guarantee period is running.
5. Complete the fund's option form within the guarantee period if, after advice, you decide to go ahead. Our guide to how long a pension transfer takes covers the timeline.

Questions you may want to ask your fund:

• What is my normal pension age for each part of my pension?
• Am I protected by the 85-year rule or the McCloud underpin?
• What would my pension and lump sum be at 55, 60 and my NPA?
• What death and survivor benefits would be paid if I stayed?
• How long is my transfer value guaranteed for, and when is the deadline to transfer?

Where to get help

Your LGPS fund can give you estimates and explain your options. MoneyHelper offers free, impartial guidance on pensions, including defined benefit schemes. If you also have defined contribution pensions and you are 50 or over, you can book a free Pension Wise appointment.

If you are thinking about a transfer and want to understand how the process works, our how it works page explains what we do and don't do. We don't give defined benefit transfer advice, and we won't tell you whether a transfer is right for you. Our free chat and introductions are for people living in the UK with a transfer value of £50,000 or more. Below that, MoneyHelper is the best place to start.

Frequently asked questions

What is the LGPS?

The Local Government Pension Scheme is a defined benefit pension for people working for councils and other participating employers. It is funded, which means contributions are invested in local pension funds. There are separate schemes for England and Wales, Scotland and Northern Ireland.

Is the LGPS a final salary scheme?

Not any more. It became a career average scheme on 1 April 2014 in England and Wales, and on 1 April 2015 in Scotland and Northern Ireland. Membership before those dates is still worked out on a final salary basis.

What is the LGPS 85-year rule?

In England and Wales, if you were a member at any time between 1 April 1998 and 30 September 2006, some or all of your benefits may be paid without reduction before 65 once your age and membership add up to 85. It only applies automatically from 60. Between 55 and 60, it depends on your employer.

Can I take my LGPS pension at 55?

Yes, at the moment, but it will normally be reduced if you take it before your normal pension age. The earliest age is due to rise to 57 from 6 April 2028, except for ill-health retirement.

Can I transfer my LGPS pension to a personal pension?

Usually yes, if you have left the scheme, haven't taken any LGPS pension and are more than a year away from your normal pension age. If your benefits are worth more than £30,000, you must take regulated advice first. The FCA's starting assumption is that a transfer is unlikely to be suitable for most people.

If you have an LGPS pension and would like to understand how transfers and the advice process work, you can book a free chat about how the process works. It is general information, not advice, and there is no obligation.