Additional contributions made whilst you are still working will boost your benefits package and increase the amount of money you have for your retirement. You can pay extra contributions as a tax-efficient way of topping up your benefits, although there are controls on the amount you can pay and there are HM Revenue and Customs rules on the amount of pension savings you can have before you become subject to a tax charge. More details of HM Revenue & Customs rules can be found at www.lgps.org.uk/glossary/inland-revenue-maximum-limits.html

Why should I consider increasing my pension benefits?

Most of us look forward to a comfortable retirement and in order to boost our pension it is worth considering paying extra contributions, which is one way of increasing your income in retirement.

How can I increase my benefits?

There are a number of ways in which you can increase your pension benefits by paying additional contributions:

• In-house additional voluntary contributions
• Contribute to a concurrent personal pension plan or stakeholder pension scheme

Are there any limits?

There is no limit on the amount of contributions you can pay, however, you can only receive tax relief on contributions up to 100% of your taxable earnings. Additionally, unless you have enhanced protection, there will be a tax charge if in any year, other than the year in which all your pension benefits have become payable, the value of your pension savings has increased in excess of the annual allowance or if, when you draw your benefits, the value of all your pension savings exceeds the lifetime allowance. Tax will be payable on any excess amount.

As your normal LGPS contributions are 6%, this leaves a significant proportion of your taxable earnings that you can invest in AVCs.

Ways of increasing my benefits

In-house additional voluntary contributions (AVCs)
All local government pension funds have an in-house AVC scheme where you can invest money, deducted directly from your salary (or from councillors' allowances), through an AVC provider (often an insurance company or building society).

Your AVC fund should grow as it is invested and will be available later in your life to convert into an additional pension of your choice.

You decide how much you can afford to pay, up to 100% of your taxable earnings, including your normal contributions. Your contributions will qualify for full tax relief.

You may be able to take all or part of your AVC fund as a lump sum.

Additional life cover
You can also pay in-house AVCs to provide additional life cover. Your LGPS membership already gives you cover of twice your career average pay if you die in service, but you can increase this or use it to provide additional benefits for your dependants in the event of your death in service. This may be subject to satisfactory completion of a medical questionnaire.

For more details about in-house AVCs, please contact the pensions office. Contact details can be found on the Contacting us page.

Shared cost AVC scheme
The Shared Cost AVC facility is not available to councillors.

Contribute to a concurrent personal pension plan or stakeholder pension scheme

You may, if you wish, be a member of the LGPS and make your own arrangements to pay contributions from the same earnings to a personal pension plan or stakeholder pension scheme.

If you choose also to pay into a personal pension plan or stakeholder pensions scheme, the contributions you make to it are invested in funds managed by an insurance company. The contributions made and any returns on their investment will, over time, accumulate in your own personal account.

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