Can I pay more?
If you’d like to make extra savings to increase your pension benefits, there’s two tax efficient ways you can do this:
Additional Voluntary Contributions
Additional voluntary contributions (AVC) let you invest money in the stock market, directly from your pay, through an AVC provider to give you extra savings for your retirement. Our AVC provider is Prudential. Please get in touch with them to discuss the range of funds available to you.
You can find out more information about AVCs in this LGPS booklet
Additional Pension Contributions
You can pay additional pension contributions (APCs) to boost your pension at retirement or to cover lost pension due to authorised unpaid leave or industrial action.
The key points about APCs are:
- You can pay extra contributions to buy up to £7,194 (as at 1/4/2020) of extra annual pension in the Local Government Pension Scheme (LGPS). You’ll then receive this extra pension on top of your normal LGPS benefits every year for life.
- At the end of every scheme year, the proportion of extra pension that you’ve paid for in that year is added to your pension account.
- The amount of extra pension bought provides benefits for you only. It’s not used in the calculation of any survivor's or children's pensions.
- You can’t choose to buy extra pension if you’re in the 50/50 section of the LGPS.
- The extra pension you’re buying will be paid at the same time as your main LGPS pension benefits and will increase in line with the cost of living, both before and after you take your pension.
- If you’re paying by regular instalments, you can start to buy extra pension at any time up to a year before your normal pension age (your state pension age with a minimum of age 65). You decide how long you want to pay extra contributions for, although it must be for a number of whole years and payments must be completed by normal pension age. Your normal contributions plus the APCs are taken before your tax is worked out, so, if you pay tax, you’ll get tax relief automatically through payroll.
- If you’re paying by lump sum, you can pay any time before the age of 75. If you choose to make payment directly to your pension fund, you’ll need to arrange tax relief directly with HMRC as the contributions aren’t being taken from your pay.
- Tax relief is available on all pension contributions up to 100% of your taxable earnings.
- You can choose to stop paying APCs at any time by writing to us and your employer.
To help you work out the cost of buying either extra pension or lost pension, LGPS has a calculator on their website Your employer will be able to give you your pensionable pay details for the ‘Buying lost pension calculator’. Please fill in the ‘Buying back lost pension form’ and send to your employer. Once you’ve printed out the results of the calculator, please send a copy of both forms to us.
You can find out more information about APCs and AVCs in this booklet