Increase your pension benefits

Making contributions into pension saving can be a cost-effective way of increasing your retirement benefits as pension contributions qualify for immediate tax-relief through your employer's PAYE system.

If you are currently in the 50/50 section of the scheme and would like to move back to the main section of the LGPS to increase your pension benefits, please send the following form to your employer (not to Pension Services).

Election to Opt Back into the Main Section - Form

There are two ways you can increase your retirement benefits within the LGPS:

  • Additional Pension Contributions (APCs) – Pay regular contributions or lump sum payments to buy extra amounts of pension.
  • Additional Voluntary Contributions (AVCs) – Pay additional contributions to buy an annuity, increase your tax-free lump sum

Or you can use both of these methods.

Additional Pensions Contributions (APCs)

If you are paying into the main section of the LGPS, you can buy extra pension by paying APCs regularly over a period of time, or you can pay for additional pension as a one-off lump sum. The maximum amount of additional pension you can buy from April 2024 is £8,344 (this figure will increase each year in line with the cost of living).

How much you pay will depend on:

  • your gender,
  • your age when you start paying the additional contributions,
  • how much extra pension you want to buy,
  • how long you choose to pay.

You can only buy extra pension for yourself and not for your dependants. In the event of your death, any extra pension bought through APCs cannot be passed to anyone and is not paid to the estate of the deceased.

If you are within 12 months of Normal Pension Age (NPA) or over NPA then you can only buy extra pension by making a lump sum payment. 

If you decide to claim your pension benefits before your NPA, your extra pension will be reduced unless you are retiring on Tier 1 or Tier 2 ill-health grounds.

What to consider:

  • Contributions increase: if you enter into a contract to buy APCs by regular payments, the contributions you pay are subject to periodic review and may increase in the future. If this applies, your pension provider will let you know the revised contributions payable and the new contributions will apply from the April following the review.
  • Tax: within limits, you will not pay tax on your extra contributions, but you may have to pay a tax charge if you exceed the annual allowance or lifetime allowance - see the Pensions and Tax page to find out more.

What to do?

Use the APC modeller below, to calculate the cost of buying additional pension over a chosen period depending on your age.

APC Modeller and application

If you decide to proceed, click the 'Get application' button in the modeller to produce an application for you to read, print and sign.

If you want to make regular contributions from pay, send the application to your employer and Pension Services. Both your employer and Pension Services will check your application before accepting. If you choose to make regular contributions, your employer will deduct them from your pay. If you want to pay a one-off lump sum, send your application to Pension Services (not your employer), but do not send payment. Once we have checked and accepted your application, we will write to you to request payment.

Shared cost APCs

In some cases, your employer may share the cost of APCs with you, within the overall £8,344 limit. This includes some types of absences. Your employer will cover 2/3 of the APCs and you will pay 1/3. Ask your employer if this applies to your absence.

Unpaid additional new parent leave (additional maternity, adoption or paternity leave)

You will not build up pension during unpaid additional new parent leave. However, if you notify your employer within 30 days of returning to work, you have the right to pay shared cost APCs to build up the pension that you would have otherwise accrued.

Authorised, unpaid leave

You will not build up pension during unpaid leave, for example, if your employer has allowed you extra unpaid holiday. If you notify your employer within 30 days of returning to work, you have the right to pay shared cost APCs to build up the pension you would have otherwise built up, up to three years' worth.

What to do - Shared cost APCs

If you want to start a shared cost APC contract following the types of absences listed above, you must contact your employer for details. Your employer can give you a statement to show how much pay you lost during the absence, confirm your date of returning to work and which section of the LGPS you are in.

Your employer may also offer shared cost APCs in line with their published policy, and pay a different proportion of the APCs. Contact your employer for details.

Existing added years and ARCs contracts

Added years and additional regular contributions (ARCs) are no longer available, but if you already have a contract it can continue.

You should continue to pay added years or ARCs during any absences.

Notify your employer if you wish to stop the contact early.

Additional Voluntary Contributions (AVCs)

If you are paying contributions to the LGPS, you can choose to pay additional contributions into an in-house AVC scheme by deduction from your pay. Following regulation changes made on 14 May 2018, all members may pay up to 100% of their pay towards an AVC, after allowing for any tax and National Insurance liability or any other existing deductions.

An AVC plan is an investment. You have your own personal account that, over time, builds up with the contributions you pay in. The amount in your account depends on how long you pay AVC's for, the impact of charges and how well the fund(s) you invest in perform.  You choose how the money in your AVC plan is invested. Note that the value of an AVC can go down as well as up. You may not get back what you put in.

When you retire, you can use your AVC fund to:

  • buy an annuity on the open market,
  • buy a top up LGPS pension,
  • take a tax free cash lump sum, subject to HM Revenue and Customs limit,

Or a combination of these options.

What to do:

  1. See the LGPS AVC Guide for further details on how AVCs work and how you can use your AVC to provide extra pension or lump sum in retirement.
    Note: this guide explains the HMRC limits on taking a tax-free lump sum. If you further information on the tax implications, please contact us. 
  2. AVCs are managed by external providers. For information on setting up an AVC and details of investment funds available, select the link below.

Further AVC information for your pension fund

To change or stop contributions:

If you are paying AVCs and wish to cease or change contributions you will need to contact your employer, as your contributions are being deducted from your pay.

Further guidance