Any pension you get over and above the basic flat-rate State Pension will come from one or more of three sources - the State Second Pension (S2P), a personal pension plan or a stakeholder pension scheme or the Local Government Pension Scheme (LGPS).
You can choose which option is most appropriate for you. Remember that, if you’re a member of the Local Government Pension Scheme, you can get free independent financial advice.
State Second Pension (S2P)
The State Second Pension is paid by the Department for Work and Pensions (the old DSS) and is added to the flat-rate basic old age pension. You cannot claim the State Second Pension before you reach State Pension Age.
Currently, the amount of S2P you can get is related to how much you earn, but in the future it will be changed to a flat rate. Anyone under 45 when the change happens will be affected by this.
This additional pension will build up if you are not a member of the LGPS or another contracted-out pension scheme.
Personal pension plans and stakeholder pension schemes.
You can choose to pay into a pension scheme offered by a bank, building society or life assurance company. They will invest your money, and when you retire your investments are cashed in.
What you get out of a personal pension plan or stakeholder pension depends on how much you put in, annuity rates at the time you take the benefits and how well your investments perform - there’s no guarantee or link to your earnings.
The age you can start taking your benefits varies from scheme to scheme, but when you choose to start taking them will affect how much you get each year.
Local Government Pension Scheme
The Local Government Pension Scheme (LGPS) is a very secure scheme - the benefits are defined and set out in law. This means that, in general, it must provide benefits at least as good as most members would have received if they’d been members of the State Second Pension.
As a member of the LGPS your contributions get tax relief when they are deducted from your pay. You’ll also pay lower National Insurance contributions in most circumstances.
The Local Government Pension Scheme is open to people who work in local government and admitted bodies to the scheme. If you’d like to know what happens to your pension if you change jobs, please visit the deferred members section of the site.
Local Government Pension Scheme payments are taken into account in means tested state benefits, so some low paid or part-time workers might not benefit as much. If you think this might be you, contact us for more details.
Some benefits of the Local Government Pension Scheme
- a tax-free lump sum when you retire
- a pension based on your final year's pay
- you can increase your pension with extra contributions
- voluntary retirement from age 60
- retirement with your employer’s consent from age 50
- ill health pension from any age with over 2 years service
- immediate payment of benefits if redundant from age 50
- death in service lump sum
- widow’s, widower’s or civil partner’s pension
More information
You can download A Guide to the Local Government Pension Scheme with full details of all the features and how to take advantage of them to print out and read when you want. If you would rather receive a copy by post, contact us.
If you’ve got further questions, visit the employee member frequently asked questions page of this site.