My pension
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 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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How is my pension calculated?
Whether you’ve been in the Local Government Pension Scheme (LGPS) for just a short time or for a number of years, understanding how we work out your pension can be complicated.
Changes to the LGPS in 2008 and 2014 mean that if you joined the scheme before 2008, you’ll have membership under 3 different sets of rules.
When you draw your pension, our job is to make sure that you get the right amount based on when you’ve been a member of the scheme.
We break down your membership into three different blocks. Your pension for each period is worked out using different rules.
Benefits built up from 1 April 2014 are calculated on an annual basis and added to your pension account. Each pension year runs from 1 April to 31 March.
The benefits are calculated as follows:
Annual Pension = Actual salary / 49
When the pension is calculated at 31 March, it is stored in your pension account and revalued every year in line with inflation. You will then start a new pension year which will be calculated based on the pay you receive up to the following 31 March.
At retirement all the yearly pensions you have accrued (including the pensions increase) are added together and paid to you as a pension, which continues to increase in line with inflation for as long as it is payable.
Benefits built up from 1 April 2008 consist of an annual pension with no automatic lump sum and are built up as follows:
Annual Pension = Final Pensionable Pay x Scheme Membership / 60
Benefits built up before 1 April 2008 are calculated as follows:
Annual Pension = Final Pensionable Pay x Scheme Membership / 80
Plus a lump sum equal to three times the annual pension.
This ensures that all benefits earned in the old scheme will maintain their value in the new scheme.
How do I increase my pension?
Most of us look forward to a happy and comfortable retirement and in order to have that little bit extra during your retirement years you may wish to consider paying extra contributions. As a member of the LGPS you have access to two tax efficient ways of increasing your pension benefits in addition to the benefits you are already building up.
These are:
You can pay APCs to buy an additional annual pension up to the maximum allowable in accordance with the latest regulations. This can be by regular payment or by a lump sum. The additional contributions attract tax relief and the cost of the pension amount being purchased depends on your age, sex and the length of your payment period (if purchasing through a regular payment). You can specify how long in years you wish to make your purchase over, but you can only pay up to the end of the year before your Normal Pension Age (State Pension Age or 65 if this is later).
How do I pay the contributions?
Your employer will deduct your contribution directly from your pay and, if you are a taxpayer you will automatically receive tax relief on your contributions. You may be able to make a lump sum payment directly from your pay but if you make it by alternative means you will have to apply directly to HMRC to claim tax relief. The contribution will be taken on the next available pay day following the date of election, and you will be asked to certify that you are in good health, with no pre-existing medical conditions.
If your pay reduces below the level of your chosen contribution amount, the contract will automatically cease.
What happens if I go on approved leave of absence?
You must continue to pay the additional contributions during your leave of absence regardless of whether it is paid or unpaid leave.
What happens if I reduce my hours?
You will continue to pay the same monthly contribution as you did when your contribution started.
Can I stop paying?
You can stop the additional contributions at any time; however the additional pension you agreed to buy will be reduced from the original contract amount. If you do want to stop paying for any reason you must notify both your employer and Cheshire Pension Fund in writing. The pension you have purchased that scheme year will be added to your total.
What if I leave or retire before the contract ends?
If you retire on ill-health grounds with a Tier 1 or 2 pension you will be credited with the full amount of pension you have elected to purchase as if the contract had been completed. If you leave for any other reason and you have not finished the contract you will be credited with the additional pension you have actually paid for at the date you leave. This will, clearly, be less than the original contract amount. If you leave the scheme with less than two years service and take payment of a refund the contributions paid to allow additional pension to count will be refunded to you also.
The additional contribution contract must end at the point your employment ceases, this is regardless of any additional payment (i.e. Arrears of pay) made by your employer after that date.
If you take flexible retirement then your additional contract ceases at the retirement date, however you can then take out a new contract via your new post.
How is the additional pension purchased increased?
At the beginning of each scheme year the pension credited into your account from your APC will be increased together with the main pension accrued.
When you retire and receive your additional pension, it is increased each April, with your main scheme pension. These increases are set by the Pension Increase Orders (PI), which are in line with the Consumer Price Index.Other points to note
Generally, the cost of an APC is set at the beginning of the contract and the contributions are deducted at the same amount each month. The cost can be changed under certain circumstances, as the rates are reviewed periodically by the Government Actuaries Department and are subject to change. Any future changes to the rates will apply from the 1st April following the amendment, and will apply to all APC contracts that still have contributions outstanding at the time of change which continue past that date.
Additional pension purchased can count towards your death grant as follows:
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If you die with a deferred benefit, a death grant of 5 times the value of the additional pension you paid is payable.
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If you die on pension, have received less than 10 years pension and you are under age 75 at the date of death, a death grant of 10 times the rate of pension (adjusted if you have increased your lump sum) less any pension already paid.
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If you die as an active member of the scheme, a death grant of 3 times pay is payable.
You can visit the LGPS website for an APC quote APC Modeller
If you want to go ahead with a purchase
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Enter your details and calculate a quote on the external modeller
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Print off 1 copy of the Application for Additional Pension Contribution (APC) Form you have completed using the external modeller
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Print off 1 copy of the Cheshire Pension Fund’s Election to Purchase Additional Pension Form (PDF Version) or (online version)
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Make sure you have read the Buying Extra Pension Terms and Conditions Factsheet
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Read and sign both Election forms
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Return both forms to the pension section at:
Cheshire Pension Fund
Cheshire West and Chester Council
The Portal
Wellington Road
Ellesmere Port
CH65 0BA
We will make any necessary checks and once satisfied arrange deductions with your employer.
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What are AVCs?
Additional Voluntary Contributions (AVCs) are a tax efficient and flexible method to build up a separate pension pot of money. Presently you can take 100% of your AVC pot as a tax-free cash lump sum when the benefits are taken at the same time as the LGPS pension (as long as this isn’t more than 25% of the total value of the LGPS pension benefits taken) or use the fund to purchase a pension from the LGPS or an annuity provider. We are required to provide an AVC through an outside provider and Cheshire Pension Fund has a nominated provider Standard Life.
How does an AVC plan work?
You elect how much you wish to pay each month into your AVC and your contributions are deducted from your pay and forwarded to your AVC provider to be invested. When you retire you can elect to use your AVC to improve your benefits.
How much can I pay into an AVC?
AVC contributions are paid in addition to your main LGPS standard contribution rate. Currently you can elect to pay up to 100% of your pensionable pay in any month into your AVC. You can elect to pay a set percentage or a fixed monthly amount of your earnings. You however cannot back date contributions into your AVC.
Can I change my monthly contributions?
You can increase or decrease the amount you are paying into the AVC as well as stop paying or restart at any point. The maximum contribution is 100% of pensionable pay, less statutory National Insurance contributions and your main scheme contributions.
How are my contributions invested?
Standard Life offer a wide range of funds to invest in – details of which can be found on their website. You can change your fund at any time without incurring a penalty, unless you have invested in Standard Life’s ‘With Profits’ fund.
Do my contributions attract tax relief?
Yes, if you pay tax your contributions will attract tax relief making an AVC an efficient method of saving.
What charges are made on my fund?
Standard Life make administration charges to run your AVC. The base charges are set out on the fund choice documents held on the website, however since the AVC will be taken out through the Cheshire Pension Fund there is a discount of 0.375% on all charges for Standard Life AVCs.
Is there any help available to make a decision on which fund to invest in?
Cheshire Pension Fund are not able to provide any financial advice, however Standard Life provide a tool on their website which can assess your attitude to risk and provide a recommended investment fund based on this. Any AVC investment is made at your own risk and Cheshire Pension Fund cannot make any recommendation on the suitability of investments and cannot be held liable for any investment decision made.
What benefits will I get from my AVC at retirement?
At retirement you can choose to use the value of your AVC fund to increase your retirement pension. You can do this by buying additional pension in the LGPS, by buying an annuity from either your AVC provider or from any other pension provider of your choice.
If you buy an additional pension through the LGPS it will be inflation proofed and will provide additional dependant’s benefits. If you purchase an annuity from another pension provider you will need to make a decision at the time about what sort of inflation proofing or dependant’s benefits you wish to provide.
You can also elect to take up to 100% of your AVC fund as a tax free cash lump sum when the benefits are taken at the same time as the LGPS pension (so long as this isn’t more than 25% of the total value of the LGPS pension benefits taken). Your maximum tax-free lump sum cannot exceed 25% of your lifetime allowance.
What happens if I leave the Cheshire Pension Fund before I reach retirement age?
If you leave before retirement your AVC fund will accompany your main Scheme benefits. So if you transfer your main Scheme benefits to another pension scheme your AVC fund will transfer to that scheme’s AVC fund.
If you leave your LGPS benefits deferred and draw them at a later date then you will still have the option to draw up to 100% of your fund as tax free cash and purchase an annuity from another pension provider. You will not, however, be able to buy additional LGPS pension.
What happens if I die before taking my benefits?
The value of your accumulated AVC Fund to the date of death is paid to your nominated beneficiary or your estate.
What is a Free Standing AVC (FSAVC)?
FSAVCs are policies offered by banks and other financial institutions on an individual basis. You must make your own arrangements with the provider of your choice. Your Independent Financial Advisor will be able to guide you.
How do I stop making AVC contributions?
You can stop deductions at any time. You must make your request in writing and forward it to the Pensions Section.
I have an AVC elsewhere can I transfer this to an in-house AVC with Standard Life?
You must make an election to ‘transfer in’ your AVC benefits within 12 months of joining the Local Government Pension Scheme. Current regulations permit the transfer of AVCs from other Local Authorities into an in-house AVC such as Standard Life. However, if your previous AVC was with a company or private pension scheme, it can only be transferred into the main scheme to purchase additional Local Government Pension Scheme pension in the first year of your scheme membership.
Can I transfer my AVC to a personal pension scheme to access my benefits flexibly?
Yes, you can transfer your AVC to a defined contribution scheme and access the benefits flexibly under ‘Freedom and Choice’ legislation. For more information please read the LGPS Freedom and Choice factsheet.
Employer Discretions
Shared Cost AVCs – Your employer has the discretion to set up a Shared Cost AVC and if you join, your employer will also make contributions into your personal fund. You should ask your employer for more details.
For further information on the AVC funds offered by Standard Life please visit:
Standard Life – Your Local Government AVC Plans (External Website)
If you want to go ahead with a purchase please complete the following form:
AVC option form – New Customer
Existing Standard Life AVC members
If you wish to make any amendments or cease payment to your existing AVC plan please use the following form:
Pre 1 April 2008 Added Years
This option was removed from the scheme with effect from 1 April 2008 however members who had elected to purchase additional service prior to 31 March 2008 can continue to purchase their contract until they reach their retirement date. If you hold an added years contract and have any queries please contact the Cheshire Pension Fund.
Other Pension Schemes
You can make your own arrangements to pay into a personal pension plan or stakeholder pension scheme whilst also contributing to the LGPS. This is known as a concurrent pension.
Cheshire West and Chester Council as Administering Authority for the scheme is not permitted to offer nominated concurrent pension arrangements as it does with AVCs. Scheme members must make their own arrangements. Your employer is not required to make any contributions to concurrent pensions.
Contributions to concurrent pensions are invested outside of the main scheme, generally in stock and shares. There are restrictions on when you can drawdown your investment but you can use these funds to generate additional lump sum and annual pension benefit (subject to HMRC maximum limits). The pension benefits derived from concurrent schemes are in addition to your LGPS benefits.
Can I transfer in other pensions?
You may be able to transfer pension rights into the LGPS from:
- 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
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 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.
Tax – Annual Allowance
The Annual Allowance, which is set by HM Revenue and Customs (HMRC), is the amount by which the value of your pension benefits may increase in any one year without you having to pay a tax charge.
The assessment covers any pension benefits you may have in any tax registered pension arrangement, where you have been an active member of the scheme during the tax year.
You are usually only subject to an annual allowance tax charge if the value of the pension growth in a tax year is more than £60,000, although for high earners the allowance may be lower. Please contact Cheshire Pension Fund if you think you may be affected by this.
There is also a three year carry forward which allows you to carry forward unused annual allowance from the last three years. The gov.uk website has more information on tax and your pension.
Annual benefit statement (ABS) – Members paying in (active)
If you are an eligible Active Member, (someone who is currently paying contributions to the Cheshire Pension Fund), you will receive an (ABS) each year by 31 August.
If you have Additional Voluntary Contributions (AVCs), they are not shown on the Cheshire Pension Fund ABS as your AVC provider sends a separate statement annually.
Your Annual Benefit Statement will be available via the Pensions Portal. We wrote to all eligible members in 2023 to advise that all future ABS’s will be available online going forward.
This means that you will no longer receive a paper ABS from us, unless you chose to receive a paper copy.
If you wish to opt out of receiving your ABS electronically, please email us at paperpensions@cheshirewestandchester.gov.uk including your: Full name, Date of Birth, National Insurance number, and your Address.
From 31 August 2024 you will be able to view and download your ABS via My Cheshire Pension.
Your ABS is a key document that allows you to make informed decisions about your pension, and plan for your retirement.
Key Documents:
An ABS, is a statement which provides information on your LGPS pension, in this case, your Cheshire Pension Fund Pension.
It provides you with details of:
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Your total Local Government Pension Scheme (LGPS) pension accrued to the 31 March 2025, with the Cheshire Pension Fund, including any cost-of-living adjustments.
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The current value of your Death Grant Nomination (DGN), should you die whilst in service.
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The predicted pension benefits you would receive if you carried on paying into the scheme until your retirement age.
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Your ABS provides you with details about how much pension you have accrued to date. It allows you to think about what you need for your retirement, whether that is next year, 10, 20 or even 40 years away. It’s never too soon to start thinking about the type of lifestyle you’d like to lead, when you retire.
Your ABS also provides you with details about your pay, it’s important to check these and ensure that they are correct. If you think they are not, you should contact your employer in the first instance.
Check the details on the statement are correct. For example, your pay figures– do they look right? Also, your address and personal details, are they up to date? Is your death grant nomination correct? Ensure that these are all correct.
You can also start to build a picture of what your retirement will be like, based on your pension income, if it’s not what you would like, you can start to plan now for how you can increase this amount.
If you have any questions about your ABS, you should contact your employer in the first instance – if it is about your personal information (address, name etc), your pay, or your employment details.
If your query is about your Death Grant Nomination you can update this using the online ‘Death grant nomination form’.
If you have a question about your pension build up you should review the FAQs below to see whether this answers your question, if not you can contact us using the details at the bottom of our website or via our ‘Online enquiry form’.
You can also sign up for our brand new pension portal, My Cheshire Pension, at www.mycheshirepension.org and change your details online.
As a Defined Benefit scheme, your LGPS pension is calculated based on your salary and how long you’ve paid in. The annual pension is not a one-off amount. It will be paid to you each year in retirement for the rest of your life. Currently the average length that a pension is paid, is 20 years.
Your contributions, your employer’s contributions and money made from investments the Fund makes on your behalf are used to fund the pension benefits paid to you at retirement.
As with your contributions, employer’s contributions are used to help fund the pension benefit package you will receive at retirement and are not used to calculate your pension.
The scheme changed in April 2014 from a final salary pension scheme to a CARE scheme.
The final salary element of your pension requires us to use your membership and pay to calculate that part of your pension – details of this membership is shown. Remember that for part time, term time or seasonal workers the membership shown here is pro rata accordingly.
Since the introduction of the CARE scheme in April 2014 the pension calculation does not use membership to calculate your pension but is based purely on the amount of pay received.
If you’ve transferred in previous membership, from another LGPS, or your transfer purchased membership before 1 April 2014, then this will be included in the membership shown.
If your transfer in purchased extra pension since 1 April 2014 it will be included in the total pension at 31 March 2025.
No. If you pay AVCs you will receive a separate statement from your chosen in-house AVC provider.
Yes, APCs, and any historic Additional Regular Contributions purchased by 31 March 2025 will be included in the total pension as at 31 March 2025.
Yes, any added years purchased up until 31 March 2025 are included in the membership used to calculate your benefits.
No, you will receive an ABS for each separate employment you hold. The pension reference will be different on each statement.
If you have a previous membership record, for an employment that you no longer pay into the pension scheme with, the ABS for this would be sent separately in July each year.
In most cases, your previous LGPS pension(s) will not automatically transfer over without us writing to you first. If we have not been told about your previous membership, you can complete a Declaration of Previous Pension Rights form to let us know.
Please note: If you have been in your employment for longer than 12 months, you will need permission from your employer to transfer in any previous LGPS pension(s) in respect of service ending before 1 April 2014.
You can request a transfer into the LGPS if you are within 12 months of joining the LGPS. To begin the process, complete a Transfer Value Authority Form.
If you are outside of the 12 months, you will need your employer’s permission first, this will also need your employers Human Resources (HR dept) explicit permission as well. Each employer will have their own published policy on whether they allow this. You will need to talk to your employer in the first instance.
The figures provided detail the present value of your benefits, as at 31 March 2025. These figures do not take into account any reductions that may be applied to your benefits should you wish to retire early.
Members who are within a few years of retiring, can request up to 2 retirement estimates each year from the fund. If you are thinking about retiring, you can request an estimate of your benefits based on a retirement date(s) of your choosing. You can do that, using the Request an estimate of your pension form.
Yes, you can pay towards an Added Pension Contribution (APC) or an Additional Voluntary Contribution (AVC) fund to increase your pension benefits. Visit the section on How do I increase my pension.
You also have the option of paying less by opting into the 50/50 section and paying half the contributions in return for half of the benefits. You can use the Join the 50-50 scheme form to join the 50/50 option instead.
You can take your pension at any age between 55 and 75. However, if you decide to take your pension early (before your Normal Pension Age (NPA)), reductions will be applied, based on how early you are retiring.
If you’re thinking of retiring soon, you should read our Planning my retirement section, on our website.
Yes, you will have the option to increase your lump sum up to a maximum of 25% of your total pension pot, at retirement.
However, if you decide to take your pension early (before your Normal Pension Age (NPA), reductions will be applied to your lump sum as well as your pension, based on how early you are retiring.
We’re currently working on updating all active member records with their Annual Benefit Statement. You can sign up for the portal at www.mycheshirepension.org
Click here www.mycheshirepension.org
