Joining
The Local Government Pension Scheme (LGPS) allows you to save while you are working in order to enjoy a pension once you retire.
What’s more the LGPS is provided by your employer who pay a large part of the cost of providing the excellent range of benefits, so it’s an extremely valuable part of your employment package.
To find out more about joining Cheshire Pension Fund click on the links in our Joining section.
Scheme guide
The Cheshire Pension Fund is part of the National Local Government Pension Scheme (LGPS). The LGPS is administered locally by about 100 local authorities on behalf of thousands of local councils and associated bodies across the UK.
The LGPS is a secure, flexible and tax efficient way of making sure you have a decent pension to look forward to in retirement.
The LGPS is provided by your employer who pay a large part of the cost for providing the excellent range of benefits. It is a valuable part of the pay and reward package for employees working in local government or working for other employers participating in the scheme.
The LGPS provides:
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Tax relief on your contributions, with option for tax free cash on retirement.
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A secure future retirement income, independent of share prices and stock market fluctuations.
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Your family enjoys financial security, with immediate life cover and a pension for your spouse, civil partner or eligible cohabiting partner and eligible children in the event of your death.
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Freedom to choose when to retire; you can retire at any age between 55 and 75. If you do choose to take your pension before your normal pension age it will normally be reduced, as it’s being paid earlier.
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Cover in the event of your early retirement on the grounds of permanent ill-health, redundancy or business efficiency.
If these things are of value to you, it’s worth considering paying into the LGPS. As a member of the LGPS you have the security of these benefits at a relatively low cost.
For more information the following guides have been taken from the LGPS Regulations & Guidance website.
Secure benefits
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The fund provides you with a guaranteed future income. Unlike some schemes your pension is not affected by share prices and stock market fluctuations.
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Once you take your pension it will go up in line with inflation, protecting you from rising prices.
At a low cost
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Your employer pays significant amounts of money into the fund.
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You can get tax relief on your contributions – including extra amounts you pay to top up your benefits.
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You can take a lump sum when you retire, which in most cases will be tax free.
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There are no hidden fees or charges – you simply pay a percentage of your pay.
Benefits for you and your loved ones
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Protection for you in case you have to take your benefits early through ill health.
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Pensions for surviving dependents if you die.
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Life cover of three years pay – from the moment you join.
If you are not already a member and you want to join please complete the following form I wish to Join/ Rejoin and return to your employer.
How do I join?
You will be brought in to the scheme, if you:
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Work for an employer that offers membership of the scheme and
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Are under age 75 and
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Have a contract of employment for three months or more (if it’s less than a 3 month contract you can choose to opt in to the scheme).
Please note that if you are working for a town or parish council, or for a non-local government organisation which participates in the LGPS as an admission body, you can only join if your employer nominates you for membership of the scheme.
How do I join?
If you are not already a member and you want to join please complete the following form I wish to Join/ Rejoin and return to your employer.
If you are not already a member and you subsequently meet the auto enrolment criteria then you will automatically join the LGPS from the pay period in which this occurs.
Alternatively, if you have opted-out of the LGPS in the past you may be re-enrolled back into the scheme again in the future.
Check your payslip to see if you are paying in and if not, contact your employer to see if you can join.
You can also be a member of the scheme if you are already contributing to a personal pension or stakeholder arrangement.
If you are considering opting out because you feel that the contributions are too expensive, you may wish to consider joining the 50/50 scheme. The 50/50 scheme allows you to pay half your normal contributions in return for half your normal pension build up and, the following benefits remain at 100%:
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Ill-health benefits
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Death benefits
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Survivors’ benefits
You can choose to opt back in to the main scheme at any time. There is no limit on the number of times you can opt between the 50/50 scheme and main scheme. Further details of the 50/50 scheme can be found below.
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How much does it cost?
Joining the scheme will not cost as much as you might think
Your pension will be based on the actual pensionable pay you earn in each financial year i.e. the period between 1 April – 31 March. Each April your employer will decide your appropriate rate of contributions for each employment by matching your actual pensionable pay to the appropriate band in the contributions table below. However, if your pay exceeds the threshold for the contribution banding you have initially been allocated you may find your employer adjusts your contribution rate to reflect the higher pay.
This is the contribution banding rate applicable at 1 April 2024, and these rates will be revalued in line with the Price Index each April.
Pensionable pay banding | Main scheme | 50/50 scheme |
|---|---|---|
Up to £17,800 | 5.50% | 2.75% |
£17,801 to £28,000 | 5.80% | 2.90% |
£28,001 to £45,600 | 6.50% | 3.25% |
£45,601 to £57,700 | 6.80% | 3.40% |
£57,701 to £81,000 | 8.50% | 4.25% |
£81,001 to £114,800 | 9.90% | 4.95% |
£114,801 to £135,300 | 10.50% | 5.25% |
£135,301 to £203,000 | 11.40% | 5.70% |
£203,001 or more | 12.50% | 6.25% |
Important
Tax Benefits – your contributions are taken from your pay before it is taxed which means you have less tax to pay.
A Contribution Calculator is available on the LGPS website. The calculator requires you to input information including your annual pensionable pay, pay frequency, section of the scheme you are in/wish to join and whether you are over State Pension Age. The results include both the gross and net contribution amount for the scheme.
One of the key features of the LGPS is the 50/50 scheme, which enables members to pay half rate contributions in exchange for half of their pension accrual. This may help some members who are temporarily unable or have difficulty in paying the full amount of contributions if your financial circumstances change e.g. moving house, childcare costs, getting married.
The 50/50 scheme will allow you to remain as an active member of the scheme and pay lower contributions rather than opting out altogether. You would then still be able to take advantage of the benefits of being an LGPS member but contribute a lower, more manageable amount.
Main features of the 50/50 scheme:
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A reduction to your pension contributions by 50% and build up half of the pension (1/98th) you would have built up in the main scheme (1/49th)
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Full main scheme death benefits should anything happen to you while you are in the 50/50 scheme so your family is fully protected
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Automatic protection by being returned into the main scheme should you go out of pay due to sickness or injury so you are not disadvantaged
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Ill health protections should you become unable to work and have to retire because of ill health.
If you wish to sign up to the 50/50 scheme you will need to complete the following form I wish to sign up to the 50/50 scheme and return to your employer.
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Can I transfer in other pensions?
You may be able to transfer pension rights into the LGPS from:
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Another LGPS fund
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A previous employer’s pension scheme
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A self employed pension plan
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A personal pension plan
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A stakeholder pension scheme within the first 12 months of employment.
If you wish to transfer pension rights from a previous pension arrangement you must request it in writing within the first 12 months of employment. Your employer may decide to extend this period, but you should check their policy on this. If you wish to request a transfer value from you previous scheme/s, please complete a Transfer Value Authority form.
Please note that this form only authorises Cheshire Pension Fund to request information from your previous pension providers. It does not commit you to the transfer. You will only be committed to the transfer after you have received a transfer quotation from Cheshire Pension Fund and confirmed back in writing that you wish to proceed with the transfer.
NB. You are advised to apply for a transfer quotation in good time to satisfy the 12 month time limit.
If you wish to transfer pension rights from a previous pension arrangement but have been employed in your current role for more than 12 months you will need approval from your employer before the Cheshire Pension Fund can investigate a transfer. You should contact your employer’s HR department and they will notify you of their decision. If your employer is happy to extend the transfer deadline they will notify the Cheshire Pension Fund directly.
If you wish to transfer pension rights from a former LGPS fund you must request it in writing within the first 12 months of employment. You will then receive a letter and election form from the Cheshire Pension Fund providing you with the option to transfer. However please note if you left your previous fund after the 31 March 2014, these benefits will automatically be combined with the Cheshire Pension Fund after 12 months unless you have notified us in writing that you do not want to do this.
If you left your former fund before 31 March 2014 you have the option to transfer your benefits into the CARE scheme with the Cheshire Pension Fund or to transfer them as final salary benefits. Transfers in this scenario are not automatic so you will need to let us know if you want to go ahead within the first 12 months of employment.
Auto enrolment and opt outs
To help people save for their retirement the Government requires all employers in the UK to automatically enrol their workers into a workplace pension if they meet certain requirements. This is known as automatic enrolment and already happens in the LGPS, with most new employees automatically joining the scheme when they commence employment.
Under automatic enrolment if you are not already a member of the LGPS, you will automatically join the scheme at the point in the future that you:
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have a contract of employment of three months or more
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earn over £10,000 a year (or pro-rata pay period)
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are age 22 or over, and
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are under State Pension age.
If you are automatically enrolled, you can choose to leave the LGPS by opting out at any time.
What if my contract of employment is for less than three months?
If you are under age 75, you can choose to join the scheme by completing our form I wish to Join/ Rejoin. You will need to complete the form and send it to your payroll department to opt into the scheme and start paying contributions. You will become a member from the beginning of your next pay period.
Opting Out
If you no longer wish to contribute to the LGPS, you can opt out but will be automatically re-enrolled as and when required under your employers’ auto enrolment responsibilities, although you can then choose to opt out again.
You can opt out of the LGPS at any time but you must have already started that job to do so.
If you opt out you can, provided you are still eligible to join, opt back into the scheme at any time before age 75.
You might be thinking of opting out of the LGPS for a variety of reasons. Whatever the reason, opting out won’t save you as much in take home pay as you may think. In most cases, you will pay more tax if you opt out of the LGPS. If you are thinking of opting out you really need to consider that the LGPS is one of the best and most highly valued of occupational pension schemes. Being a member means you can enjoy a complete range of secure benefits including:
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Index linked pension payable for life
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Tax free lump sum option
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Death in service cover
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Survivors benefits for spouses, civil partners and co-habiting partner
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Children’s Benefits
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Ill Health Pension payable at any age
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Early retirement options
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Redundancy benefits paid early if over age 55
If you do wish to opt out please complete the following form I wish to opt out and return to your employer.
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If you opt out of the LGPS before completing 3 months’ membership you will be treated as never having been a member and your employer will refund to you, through your pay, any contributions you have paid during that time.
If you opt out of the LGPS when you have been a member for 3 months or more but you have not completed the 2 year qualifying period (known as the vesting period) – you can take a refund of your contributions (less any statutory deductions) or transfer your pension to another qualifying pension scheme. If you were in the scheme before 1 April 2014 and opt out on or after that date with 3 or more months’ membership and before completing the 2 years vesting period you will also have the option of having deferred benefits in the scheme instead of taking a refund of your contributions (less any statutory deductions).
If you opt out after meeting the 2 year vesting period you will have deferred benefits in the scheme and will generally have the same options as anyone leaving their job before retirement, except you cannot draw your deferred benefits unless you have left your job. Also, if you re-join the scheme, you will not be permitted to join the two periods of membership together. Instead, you will have two separate sets of pension benefits in the scheme.
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Have been a member of the LGPS in England and Wales for two years (this includes previous membership with the Cheshire Pension Fund or other LGPS funds)
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Transferred a pension into the LGPS from a different occupational pension scheme or from a European pensions institution and the length of service you had in that scheme plus your period of LGPS membership is more than two years
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Have transferred pension rights into the LGPS from a pension scheme or arrangement in which you were not allowed to have a refund of contributions
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Have previously transferred pension rights out of the LGPS to a pension scheme abroad – to a qualifying recognised overseas pension scheme
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Already hold a deferred benefit or you are receiving a pension from the LGPS in England and Wales, other than a survivor’s pension or a pension credit member’s pension
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Paid National Insurance contributions as a member of the LGPS and you stop paying into the LGPS in the tax year that you attain State Pension age
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Reach age 75 as an active member of the scheme
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