Pension Scheme reforms to boost benefits and tackle inequality

16 May 2025

Changes will mean more money in the pockets of hard-working people when they reach retirement, delivering on government’s Plan for Change

Street cleaners, school cooks and other dedicated public servants are set to benefit from a package of reforms to the Local Government Pension Scheme (LGPS) that will end discrimination and lead to more money in people’s pockets.

Today’s measures build on the government’s wider Make Work Pay agenda that will back millions of workers by banning exploitative zero-hours contracts and ending ‘Fire and Rehire’ and ‘Fire and Replace’ practices.

Under measures announced today, the Local Government Pension Scheme for England and Wales will become the first public service pension scheme – of which three quarters are women – to make all maternity, shared parental and adoption leave automatically pensionable.

And issues with current regulations that saw survivors of members receiving smaller pensions on the basis of their relationship type will be fixed – ending historic inequalities.

These steps will directly benefit people working on the front line, serving school lunches, cleaning buildings, managing libraries and cleaning streets.

Loopholes that allow those guilty of serious offences to continue benefitting from the pension scheme will also be closed, as part of a crackdown to ensure public servants’ money does not go to those who do not deserve it.

Deputy Prime Minister, Angela Rayner said:

“These historic changes will give hard working street cleaners, librarians, school cooks and other public servants the security that they deserve.

“This is a critical step in ending years of discrimination, backing our dedicated public servants and helping to Make Work Pay.”

Minister of State for Local Government and English Devolution, Jim McMahon OBE MP, said:

“Having worked in local government for years, I know first-hand how much those who help keep the lights on across the country rely on the Local Government Pension Scheme.

“Through these reforms, we will make sure they are properly rewarded and able to enjoy their hard-earned retirement.”

Minister for Pensions Torsten Bell MP said:

“Today’s changes will ensure more public servants get the benefits and security they deserve.

“Our reforms to the Local Government Pension Scheme are bringing fairness and equality to workers, while boosting the potential of schemes to drive opportunity and growth in local communities.”

Latest estimates show 74 per cent of the scheme’s seven million members are women, and one of the most significant gaps in a woman’s pensionable service is often maternity leave.

Making the final 13 weeks’ leave automatically pensionable will be a significant improvement and help close the gender pensions gap women face.

Another issue the reforms aim to address is a disparity in survivor benefits – which are paid to the scheme’s members’ partners upon their death.

Due to issues with the existing regulations, there have been instances where those in same-sex marriages and civil partnerships receive a more generous pension entitlement than those in opposite-sex marriages and partnerships. But under proposed reforms, all discrimination on the basis of the sex of those affected will be removed.

In addition, an age cap currently in place that requires an LGPS member to have died before the age of 75 for their survivor to receive a lump sum payment will also be abolished.

The government is also taking steps to keep people in the scheme by enhancing data collection on why people opt out, in a bid to ensure as many people as possible benefit.

A consultation on the proposed reforms to LGPS members’ benefits is now open for 12 weeks, and those affected are encouraged to register their views

Other measures the government is taking to make work pay include: