Additional Pension Contributions (APCs)
If a member is in the main section of the LGPS, they can pay additional contributions to buy extra pension.
The maximum amount of additional annual pension a member can purchase is currently £8,903.
Members can pay for the extra pension by paying APCs over a number of complete years or by paying a one off lump sum.
The cost of buying extra pension depends on the member's age, how much yearly pension they wish to buy and how they choose to spread the payments. The cost of buying extra pension is reviewed every few years. If a member buys extra pension by paying regular contributions, the amount they pay each pay period may change in the future.
Please note a member cannot pay APCs if they are in the '50/50 section' of the LGPS.
If a member wishes to buy extra pension by paying a lump sum, there are two ways they can do this:
- One-off payment through salary - if the member pays tax, they receive tax relief through payroll
- One-off payment directly to Pension Fund - a member will need to arrange tax relief with HMRC. They can do this via a self assessment tax return or by contacting HM Revenue and Customs.
If a member elects to pay APCs over a number of years, the regular contributions would be taken from their Gross monthly salary.
The shortest period a member can pay APCs for is 12 months. The maximum is the number of years to the member's Normal Pension Age (NPA). The member's NPA is linked to their State Pension Age (SPA). If the member is one year or less away from their NPA they can only purchase additional pension via a lump sum.
An Additional Pension Contribution calculator is available for members to use to calculate the cost of purchasing additional pension income.
Employer awards of extra pension
You can award additional pension for your scheme members of up to £8,903. You can award this to members whilst they are active within your employment, or within six months of leaving their job if they are made redundant.
The award of additional pension through APCs is at your discretion and forms part of your policy statement.
You can review your policy statement at any time. To find out more please visit the Policy Statement section of our website.
Additonal Voluntary Contributions (AVCs)
LGPS members can pay additional pension contributions to the in-house AVC scheme as run by The Prudential.
Member's can pay a monthly contribution and choose how you would like their contribution to be invested.
AVCs are invested separately from the main LGPS Fund and a number of investment opportunities are available.
AVCs are deducted through payroll so the member receives tax relief automatically on the contributions they pay at their marginal rate.
Deductions commence from the next available payday following the member's election to pay AVCs. Member can vary or cease payment at any time whilst they are contributing to the LGPS.
AVCs are deducted from the member's monthly pensionable pay either as a percentage or a monetary amount. If the member pays contributions as a percentage the deduction will also be based on any voluntary overtime that they work.
Shared Cost Additional Voluntary Contributions (SCAVCs)
Prudential, support the payment of Additional Voluntary Contributions (AVCs) through a Shared Cost AVC arrangement.
Regulation 17 of the LGPS Regulations 2013 allows an active member to contribute to an Additional Voluntary Contribution (AVC) scheme. Paragraph 1 of Regulation 17 of the LGPS Regulations 2013 states that an active member can also contribute to a Shared Cost Additional Voluntary Contribution Scheme (SCAVC). By its very definition, a SCAVC Scheme means that the cost of contributing to an AVC scheme is shared between the employee and the employer.
LGPS members already benefit from tax relief on the AVC payments they make, but by establishing an AVC shared cost arrangement both the employer and the employee will make a saving on the National Insurance contribution paid every month.
Shared Cost AVC Employer Guide
Submission of AVC Payments and Payroll Files
Prudential has put together a payroll guide to help employers successfully submit payroll information. The guide covers how to format and send payroll information to Prudential and when payments should be made: Guide to administering your payroll
