How a CARE scheme works

From 1st April 2014 the LGPS became a Career Average Revalued Earnings (or CARE) scheme.  A CARE scheme calculates pension using the formula:

Pension = Membership x Accrual Rate x Pensionable Pay

In a CARE scheme the pensionable pay for each year of membership is used, in order to calculate a pension amount for that particular year. That pension amount is then increased (revalued) each year in line with inflation (it should remembered that, while your CARE pension might be expected to increase each year, the pension amount could be reduced should there be negative inflation). These individual pension amounts are then added together to arrive at the total pension payable from the scheme.

You may find the following diagram useful in explaining this to you.

  • Pig 1
  • Pig 2
  • Pig 3
  • Pig 4
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