In the LGPS there are a number of ways members can pay more contributions to increase their benefits. You may have had one of the following arrangements in your old employment. If so, you need to understand what happens to any payments you have already made and whether you can continue to pay these extra contributions in your new employment.
1. Buying Added Years (extra membership)
These are existing contracts to buy extra membership. The contract must have started before 1 April 2008.
If you link your deferred benefits to your current pension account and your final salary benefits continue to be treated as pre 1 April 2014 benefits, the added years you have bought will count towards benefits in the final salary scheme. Your existing contract can continue but only if:
- the break between leaving and re-joining the LGPS is less than 12 months
- within 3 months of re-joining the LGPS you choose to continue paying your extra contributions to buy added years, and
- in those 3 months you pay any extra contributions towards your added years contract that would have been due during any break between leaving and re-joining.
If you want to continue paying these extra contributions (and the above applies to you), please contact us.
If you link your deferred benefits to your current pension account and your final salary benefits are treated as career average pension (i.e. they buy an amount of CARE pension in the CARE scheme) then your existing contract can't continue. The value of the benefits from any extra membership you have already bought is included when calculating the CARE pension bought by the linking.
You can't make a new choice to buy extra membership but if you do want to pay more contributions in your new employment, the current options are:
- Additional Pension Contributions (APCs), and
- Additional Voluntary Contributions (AVCs).
You can read about these in the knowledge hub.
If you choose not to link your deferred benefits, an existing added years contract can't continue and any extra membership you already bought will be included in your deferred benefits.
2. Paying Additional Regular Contributions (ARCs)
These are contracts to buy extra pension that were taken out between 1 April 2008 and 31 March 2014.
Whether or not you choose to link your benefits to your current pension account, there are no circumstances where an existing ARC contract can continue.
If you link your benefits to your current pension account and your final salary benefits continue to be treated as pre 1 April 2014 benefits, the amount of ARCs you already bought will be added to the value of your final salary pension.
If you link your benefits to your current pension account and your final salary benefits are treated as career average pension (i.e. they buy an amount of CARE pension in the CARE scheme) the value of any extra pension you have already bought is included when calculating the CARE pension bought by the linking.
If you want to pay extra contributions in your new employment, the current options are:
- Additional Pension Contributions (APCs), and
- Additional Voluntary Contributions (AVCs).
You can read about these in the knowledge hub.
If you choose not to link your benefits, any extra pension you already bought will be included in your deferred benefits.
3. Paying Additional Pension Contributions (APCs)
These are contracts to purchase extra pension that were taken out on or after 1 April 2014.
Whether or not you elect to link your benefits to your current pension account, there are no circumstances where an existing APC contract can continue.
Any extra pension built up via an APC will be added to your current pension account if your benefits are linked.
If you want to pay extra contributions in your new employment, the current options are:
- Additional Pension Contributions (APCs), and
- Additional Voluntary Contributions (AVCs).
You can read about these in the knowledge hub.
If you choose not to link your benefits, any extra pension you already bought will be included with your deferred benefits.
4. Additional Voluntary Contributions (AVCs)
These are extra payments that have been paid into an AVC plan set up by your old LGPS pension fund with a separate provider (for example Prudential or Scottish Widows).
Usually these plans build a 'fund value' that you can use to buy pension benefits at retirement.
What happens if you link your benefits?
If you are still with the same LGPS fund in your new job
- We will note you have AVCs on your new pension account.
or
If you are with a different LGPS fund in your new job
- The AVC fund value will automatically be linked to your new fund's AVC plan unless your linking letter says you have the option not to link your AVCs; this only applies if
- Your AVCs in your former fund started on or before 31 March 2014 and
- Your Linking Type is either:
- B2 or
- D2 (A or B) - and you elect to link on a 'Final Salary benefits' basis and
- you choose to keep your AVCs separate within the deadline given.
When AVCs are linked to your new LGPS fund’s AVC plan you will usually have to
- choose a new investment fund for the AVCs (as different LGPS funds usually have a different range of investment funds available - even when the AVC provider is the same)
- complete an AVC application for the AVC transfer (You don't have to start paying again but you can if you want to).
AVCs linked to your new fund’s AVC plan will be treated as AVCs paid under the 2014 LGPS scheme.
For more details about the AVC plans available to your pension fund read our information in the knowledge hub.
If you choose not to link your benefits, your AVCs will remain attached to your deferred benefits and be included in the options available when they are paid (they can't be attached to your new pension account in your new employment).
If you want to pay extra contributions in your new employment, the current options are:
- Additional Pension Contributions (APCs), and
- Additional Voluntary Contributions (AVCs)
For more details about the AVC plans available to your pension fund read our information in the knowledge hub.
