New pension reform to help millions of public sector workers

The changes, introduced by the government for members of the Local Government Pension Scheme (LGPS), target one of the most persistent drivers of pension inequality: time taken out of paid work for caring responsibilities, particularly maternity leave.

For millions of women working across local government – from school kitchens and libraries to housing services and street cleaning – the reforms represent a meaningful shift towards a fairer pension system.

What is the gender pension gap?

Women make up around three-quarters of the LGPS’s nearly seven million members, yet still retire with lower pensions on average than men.

One of the main reasons is maternity leave. Periods of unpaid additional maternity leave have historically not counted towards pension savings, permanently reducing retirement income for women who take time out to care for children.

As Pensions Minister Torsten Bell put it: “For too long, women have been penalised in retirement simply for having children.”

Maternity, adoption and shared parental leave made pensionable

At the heart of the pension scheme reforms is a change that directly tackles this structural problem. Unpaid additional maternity leave, shared parental leave and adoption leave will now be automatically pensionable.

This means women will no longer see their pension pots shrink simply because they stepped away from work to care for a new baby or child.

Torsten Bell said the change marks a fundamental shift in how the pension system treats families: “These reforms mean that for millions of women working in local government, taking time out to care for a new baby will no longer cost them their pension security.”

“This is about a pension system that works for modern families and properly values the vital contribution of working women across our public services.”

Frontline workers see real financial gains

These reforms are designed to benefit everyday workers, not just higher earners. Women serving school lunches, cleaning public buildings, managing libraries and maintaining local services are among those set to benefit most.

Local Government and Homelessness Minister Alison McGovern described the changes as a long-overdue correction: “It is shocking that this gender imbalance in our pension system has persisted for so long, and I am proud that these reforms will help correct this historic inequality.

“These crucial changes will give hard-working cleaners, librarians, school cooks and other public servants the security in retirement they deserve.”

Changes to survivor pensions

The pension scheme reforms to tackle the gender pension gap also address inequalities in survivor benefits.

Due to flaws in previous regulations, some surviving partners – particularly those in opposite-sex marriages and partnerships – could receive lower pension payments than others, while some same-sex couples received more generous entitlements.

Under the new rules, all discrimination based on sex or relationship type will be removed, with backdated payments and higher future pensions ensuring equal treatment for all survivors.

Another key reform removes the age cap that required an LGPS member to have died before age 75 for their survivor to receive a lump sum payment, a rule that could unfairly deny families vital financial support.

Keeping more women enrolled in pensions

Recognising that women are more likely to opt out of workplace pensions due to affordability pressures or career breaks, the government is also enhancing data collection to better understand why members leave the scheme.

The aim is to keep more people, particularly women, saving for retirement and benefiting from long-term pension growth.

Trade unions have welcomed the reforms while urging further action across the wider workforce.

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TUC General Secretary Paul Nowak says: “Everyone deserves a decent quality of life in retirement, but the gender pension gap means that too many women are pushed into hardship.

“That’s why these measures are an important step forward — they will make a meaningful difference for millions of women working in local government.

“It’s now vital we see more action to close the gender pensions pay gap across the whole workforce.”