Flexibility to pay more
There are two ways you can increase your retirement benefits within the Local Government Pension Scheme (LGPS):
- Additional Pension Contributions (APCs) – Regular contributions or lump sum payments to buy extra amounts of pension (limited to £7,026 additional pension, from April 2019).
- Additional Voluntary Contributions (AVCs) – Pay additional contributions to buy an annuity, increase your tax-free lump sum or both making contributions into pension saving can be a cost effective way of increasing your retirement benefits as they qualify for immediate tax-relief through your employer's PAYE system
- Additional Pensions Contributions (APCs)
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 2019 is £7,026 (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
In the new scheme you can only buy extra pension for yourself and not for additional dependants benefits.
You can use the attached modeller to calculate the cost of buying additional pension over a chosen period depending on your age; at the date contributions would begin. If you decide to proceed, the modeller will also provide a link to the application form, which should be passed to your employer.
APC payments are deducted from your pay in the same way as your normal LGPS contributions.
- Shared cost APCs
In some cases, your employer may share the cost of APCs with you, within the overall £7,026 limit. This includes some types of absences. Your employer will cover 2/3 of the APCs and you will pay 1/3.
Unpaid additional new parent leave (additional maternity, adoption or paternity leave)
You will not build up pension during unpaid additional new parent leave. 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
Your employer may also offer shared cost APCs in line with their published policy, and pay a different proportion of the APCs.
- Starting APCs or shared cost APCs
Use the APC modeller on the LGPS2014 website to decide how much pension to buy. If you are starting a shared cost APC, 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.
When you are ready, click the 'Get application' button to produce an application for you to read, print and sign.
If you want to make regular contributions from pay, send it to your employer and Pensions Services. Both your employer and Pensions Services will check your application before accepting. If you are making regular contributions, your employer will deduct them from your pay.
If you want to pay a one off lump sum, please send your application just to Pensions Services, but do not send payment. Once we have checked and accepted your application, we will write to you to request payment.
Notify your employer if you want to start a shared cost APC contract. They should inform you of your right to shared cost APCs following the types of absences listed above.
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.
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, or notify your employer if you wish to stop the contract early.
- Additional Voluntary Contributions (AVCs)
You can pay additional contributions into an in-house 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.
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.
For further detail on how AVCs work and how you can use your AVC to provide extra pension or lump sum in retirement please see the LGPS guide.
AVCs are managed by external providers. For more information select the appropriate link below.