One of the benefits of the Local Government Pension Scheme (LGPS) is that there is tax relief on the contributions you pay into the scheme.
There is no limit on the amount of pension contributions you can pay. You will only get tax relief on:
- contributions up to 100% of your UK taxable earnings
- up to £3,600 if your earnings are below £3,600
HM Revenue and Customs (HMRC) imposes two controls on the amount of pension savings you can make without having to pay extra tax. These controls are known as the Annual Allowance and Lifetime Allowance. This is in addition to any income tax you pay on your pension once it is being paid to you.
Most people will not be affected by these limits but if you are considering paying additional contributions you should be aware of them. You are more likely to be affected if you are a higher earner or if you pay a large amount of extra contributions in a year.
There is no overall limit on the amount of pension contributions you can pay, but there is a limit of £8,344 of extra yearly LGPS pension you can buy using Additional Pension Contributions (APCs).
If you have an Additional Voluntary Contribution (AVC) contract which started before 1 April 2014, you are limited to paying 50% of your pay each pay period into your AVC. That limit does not apply if you have an Additional Voluntary Contribution (AVC) contract which started on or after 1 April 2014.