Paying less or more

There are two tax efficient ways to pay more into your pension. You can also reduce your contributions via the 50/50 option. Find out more about these options below.

Option 1 - Buying extra pension - additional pension contributions (APCs)

You can buy extra pension by paying APCs regularly, over a period of time, or as a one-off lump sum. The maximum amount of additional pension you can buy currently is £7316 (2021/22 rates).

The amount it costs (a cash amount NOT a percentage of pay) depends on how much extra pension you want to buy, the age you start paying the extra contributions and the length of time you want to pay them for. You cannot start an APC contract whilst in the 50/50 section of the scheme.
APCs only allow you to buy extra pension for yourself and not for additional dependants’ benefits. Please note you will have to submit a medical certificate, obtained at your own expense, to apply for APCs.

APCs are based on working to your Normal Pension Age which is linked to your State Pension Age.  If you take your benefits before this age, your APCs will be reduced.

Visit LGPS 2015 APC Modeller and read the section on "Buying extra pension" then complete the form.  Monthly contributions are subject to review by the scheme actuary and may change in the future.

 

Option 2 - Additional Voluntary Contributions (AVCs)

The second option is choosing to make Additional Voluntary Contributions (AVCs) to a separate investment pot out with Lothian Pension Fund. Your AVCs can be taken from age 55 onwards separately from your main LGPS benefits but these may be subject to tax. They can also be taken at retirement in a number of ways including as part of your lump sum. Read our guide on AVCs below. We currently have one company that accepts new members for AVCs. Click on the links below for more information.

 

Prudential 

  • Prudential website - further information and apply online (complete form under Getting started section on their website)
  • Prudential: 0800 032 6674 - 9am to 6pm weekdays

 

Standard Life  

  • Standard Life website - further information only (closed to new entrants)
  • Standard Life: 0345 279 8831 or 0345 60 60 047

 

You can only make additional contributions from your regular pay.  When you retire you must stop your AVCs at least one month before your retirement date. 

Though pension saving is often tax-efficient, you should always consult an independent financial adviser as Annual and Lifetime Allowance limits apply to the amount of pension you can build up before you may have to pay tax. 

The 50/50 section

As an alternative to opting out, or at times when money is tight, there is an option to stay in the Scheme but pay a reduced contribution. This option is commonly called the "50/50 option".

You can elect for this at any time and it means you pay half of the contributions you would normally pay but you only build up half of the pension during the period you pay the reduced contribution.

If you have more than one job in which you are a member of the Scheme you can pay the reduced contribution in one, some or all of those jobs.

By paying the reduced contribution you do not affect the survivor's benefits or death in service cover you have in the Scheme.

The 50/50 option is designed to be a short term solution only. You will be auto enrolled back into the main section of the Scheme in line with your employer's automatic re-enrolment date, at least after three years. You will also be put back into the main section of the Scheme during any period of absence due to sickness or injury where you are receiving no pay. If you wish to continue to use the 50/50 option you must make a further election to your employer.

You can of course choose at any time yourself to move back to the main section of the Scheme and your employer will do that from the pay period following your written option.

If you are paying additional pension contributions then these will cease at the point you elect to take up the 50/50 option, unless they were to cover a period of absence from work.

Publications

  • A Guide to AVCs

Forms

  • Join 50/50 Section Form

My Pension Online