LGPS 2015 Examples - Assumptions

In all of the following examples it is assumed that each member is either already in service or joins on 1 April 2015. Pensions are calculated to the date of leaving service.
 
The current Normal Pension Age (NPA) is assumed as age 65 in all cases and State Pension Ages have been calculated on the basis of existing government plans. The examples assume that CPI inflation is 2.5% each year and three different pay growth assumptions are shown:
 
  • Pay growth will be 1% a year (that is, 1.5% below the assumed rate of inflation)
  • Pay growth will be 2.5% a year (that is the same as the assumed rate of inflation)
  • Pay growth will be 4% a year (that is, 1.5% above the assumed rate of inflation)
In some cases increases over and above assumed pay growth due to promotions are included.
 
The examples compare the total pension of the LGPS 2015, added to the protected pensions for service before 2015, with the total pension if the LGPS carried on as a final salary scheme after 2015.
 
The pension in the LGPS 2015 is based on a 1/49th accrual rate for membership after 31 March 2015.
 
Both the protected and comparator final salary pensions in the examples use the current Normal Pension Age of 65 as well as the current 1/80th accrual rate for pre-April 2009 membership and 1/60th accrual rate for membership after 31 March 2009 and before 1 April 2015. They are calculated using the final year’s pensionable pay on leaving and this is derived by applying the annual pay growth assumption and any assumed promotion increases shown in the example to the pensionable pay figure at 1 April 2015 shown in the example. Any LGPS 1998 benefits would also include a lump sum (not shown).
 
In a number of the examples the pension at different ages is shown to give an indication of the effect of taking the benefits at those ages using the current LGPS early/late retirement factors. These are likely to be reviewed ahead of the new scheme starting. Members should note that on leaving pensionable service their pension will increase in line with CPI both during any period before the pension is brought into payment and when in payment.