You can use Additional Pension Contributions (APCs) to buy extra pension for your retirement, you can also use APCs to buy any lost pension if you were away from work with no pay.
Buying extra pension
If you are in the main section of the LGPS, you can pay additional contributions to buy extra pension. The most that you can buy is £8,344 of extra yearly pension. You can pay for the extra pension by paying Additional Pension Contributions (APCs) over a number of complete years, or by paying a lump sum.
The cost of buying extra pension depends on your age, how much yearly pension you buy and how you choose to spread the payments. The cost of buying extra pension is reviewed every few years. If you buy extra pension by paying regular contributions, the amount you pay each pay period may change.
You cannot buy extra pension if you are in the 50/50 section of the LGPS.
Regular Payments
If you pay Additional Pension Contributions, your regular contributions would be taken from your pay, like your normal pension contributions. Your normal contributions and additional contributions are deducted before your tax is worked out.
The option of making regular payments is not available if:
- you are within 12 months of your Normal Pension Age (NPA)
- you are over your NPA
If any of the above apply you can only buy extra pension by making a lump sum payment.
Lump sum payments
If you wish to buy extra pension by paying a lump sum, there are two ways that you can do this:
- through your pay – if you pay tax, you will receive tax relief through payroll
- pay the Fund directly – you will need to arrange tax relief with HMRC. You can do this via your self assessment tax return or by contacting HM Revenue and Customs.
Find out more about buying extra pension using an APC at the LGPS member website.
Employer funded APCs
Your employer can choose to contribute towards the cost of buying extra pension. You can check with your employer what their policy is on this.
Buying lost pension
You can pay additional pension contributions to buy back lost pension if you are away from work with no pay.
You can do this if you are in the main or 50/50 section of the LGPS.
You do not need to buy back lost pension if you are away from work with no pay because of sickness, ordinary maternity leave or ordinary adoption leave (the first 26 weeks), or paternity leave. In these circumstances, you will already be building up pension as if you were at work receiving your normal pay.
If you elect to buy back lost pension for authorised unpaid leave of absence within 30 days of returning to work, your employer will meet two thirds of the cost (unless you were on strike, or your leave was unauthorised). Your employer is only obliged to meet two thirds of the cost for periods of absence up to 36 months. Authorised unpaid leave of absence includes any period of unpaid additional maternity or adoption leave, unpaid parental bereavement leave, and unpaid shared parental leave.
If you elect to buy back lost pension after 30 days of returning to work, you will be responsible for the whole cost. Your employer can choose to extend the 30-day period and still contribute two thirds of the cost, but this is at your employer’s discretion .
You can spread the cost of buying lost pension by making regular payments from your salary, or you can pay by lump sum. Paying for lost pension follows the same eligibility rules as buying extra pension. Find out more about buying lost pension using an APC at the LGPS member website.
The extra or lost pension you buy is for your benefit only. No extra or lost pension is paid to your dependents when you die.
Find out how much it would cost to buy an APC
You can find out the cost of buying APCs for both extra and lost pension at the LGPS member website. The calculators also provide quotations which are a requirement to apply to buy extra or lost pension APCs.
Before you apply to buy extra pension please read the terms and conditions.
Before you apply to buy lost pension please read the terms and conditions.