How a pension is worked out
Printer-friendly versionFor Example:
Susan joined the LGPS on 1 April 2014. In Scheme Year 1 (1 April 2014 to 31 March 2015) Susan's pensionable pay is £24,500. Her pensionable pay increases by 1% each year.
The cost of living (revaluation adjustment) for the end of the scheme years ending on 31 March 2015, 31 March 2016, 31 March 2017 and 31 March 2018 is 1.2%, -0.1%, 1% and 3% respectively; let's assume that the cost of living (revaluation adjustment) for the following year is 2%.
| Year | Opening Balance | Pension built up in that year | Total at 31 March |
Cost of Living | Updated Total Amount |
|---|---|---|---|---|---|
|
2014/15
|
£0
|
£24,500/49 = £500
|
£500
|
£6.00 (1.2%)
|
£500 + £6 = £506
|
|
2015/16
|
£506
|
£24,745/49 = £505
|
£1,011
|
-£1.01 (-0.1%)
|
£1,011 - £1.01 = £1,009.99
|
|
2016/17
|
£1,099.99
|
£24,992.45/49 = £510.05
|
£1,520.04
|
£15.20 (1%)
|
£1,520.04 + £15.20 = £1,535.24
|
|
2017/18
|
£1,535.24
|
£25,242.37/49 = £515.15
|
£2,050.39
|
£61.51 (3%)
|
£2,050.39 + £61.51 = £2,111.90
|
| 2018/19 | £2,111.90 | £25,494.79/49 = £520.30 | £2,632.20 | £52.64 (2%) | £2,632.20 + £52.64 = £2,684.84 |
What if Susan elected to join the 50/50 section of the Scheme?
Let us assume that Susan had a period of time in the 50/50 section of the Scheme and for 6 months from 1 April 2015 to 30 September 2015 she elected to pay half her normal pension contributions in return for half her normal pension build up.
Her pension account would look like this:
| Year | Opening Balance | Pension built up in that year | Total at 31 March |
Cost of Living | Updated Total Amount |
|---|---|---|---|---|---|
|
2014/15
|
£0
|
£24,500/49 = £500
|
£500
|
£6.00 (1.2%)
|
£500 + £6 = £506
|
|
2015/16
|
£506
|
£12,372/98 = £126.25
£12,372/49 = £252.50
|
£884.75
|
-£0.88 (-0.1%)
|
£884.75 - £0.88 = £883.87
|
|
2016/17
|
£883.87
|
£24,992.45/49 = £510.05
|
£1,393.92
|
£13.94 (1%)
|
£1,393.92 + £13.94 = £1,407.86
|
|
2017/18
|
£1,407.86
|
£25,242.37/49 = £515.15
|
£1,923.01
|
£57.69 (3%)
|
£1,923.01 + £57.69 = £1,980.70
|
| 2018/19 | £1,980.70 | £25,494.79/49 = £520.30 | £2,501.00 | £50.02 (2%) | £2,501.00 + £50.02 = £2,551.02 |