Additional contributions - information for employers

How members of the Local Government Pension Scheme can increase their benefits.

Members actively contributing to the  LGPS can pay additional contributions to increase their pension benefits. There are a number of options available for member-only contributions and also opportunities for employers to assist with the employee cost to buy additional pension.  

Additional contribution types

If a member wants information about paying additional contributions, they should contact Pension Services. 

Additional pension contributions (APC)

From 1 April  2014, members paying into the main section of the LGPS can pay additional contributions over a period they choose to buy additional pension, or by a single lump sum.  

For more details and a formal quote, a member should use the national members' LGPS website.

Please be ready to assist employees who do not have access to the website or a printer or ask them to contact Pension Services.

The www.lgpsmember.org site will supply a quote, a formal letter and has details of the terms and conditions.

The member should print out at least two copies of the quote and letter, and send one copy to Pension Services, to check and provide further information to the member and the employer.  

When a member wants to buy extra pension by instalments

A GP must supply a note about the member’s general health. Pension Services will confirm the deduction and contract period of the additional contributions to both the employer and the member - employers must supply deduction and payment confirmation monthly to:

  • Pension Services using the APC tab on the MARS return and
  • Pensions Investments noting the monthly contribution return     

When a member wants to buy extra pension by lump sum

Pension services receives a correct request from the member  

- we will send payment request, timetable and bank details to member 

On receipt of payment, we will acknowledge and note pension record. The next year’s annual statement should confirm the addition to the member’s pension account.

Some general features of APCs include :

  • the contract is at a fixed rate of deduction amount and not a percentage rate of pay
  • there are no employer contributions payable
  • a contract to buy additional pension cannot be started while the member contributes to the 50/50 section of the scheme and stops if the member moves from the full section to the 50/50 section  
  • the contract stops if the members takes flexible retirement 
  • the Government Actuaries Department (GAD) may, at any time, amend the APC cost   When this happens, Pension Services will contact each employing authority and the member to change the instalment rate which would apply from the following 1 April. At the end of the contract, the employing authority should inform Pension Services of the date of the last contribution payment.

What happens if the member's pay does not cover this contractual contribution?  

Please get in touch with Pension Services

If the member is on certified sick leave with no pay- you should treat the contract as if the member has been paid. Note the MARS report. 

Shared cost additional pension contribution (SCAPC)

All employers in the LGPS are required to have a policy on how they may exercise the option to assist employees with the purchase of additional pension.

There is also the compulsory application of SCAPC when an employee elects within 30 days to restore lost pension following an approved absence with no pay.

Employers may wish to consider using the discretionary powers where the member cannot use the regular APC facility mainly due the inescapable delays the employer experiences in supplying the correct and required information to allow the member to take steps to restore lost pension following an absence.

Compulsory shared cost APC

There is more information on how this works within the ABSENCES tab of this toolkit   

Additional voluntary contributions (AVC)

Additional voluntary contributions are a flexible arrangement for members of the LGPS to pay an additional percentage of their pay into a money purchase arrangement.

If a member asks for contact details to start an AVC, the website is https://www.pru.co.uk/rz/localgov/

 The employee should be prepared with:

  • Current salary, and hours of employment
  • National Insurance number
  • Expected date of retirement.

If a member has elected to pay AVCs, Prudential will notify your payroll department to deduct the relevant percentage. Members can now pay up to to 100 percent of their pensionable pay into the AVC arrangement, which now includes ad hoc overtime and pay for additional hours.    

Paying over AVC contributions

Each employer will have a reference specific to them such as L622 / CZB6  If you need reminding of your specific references or new to Prudential deductions from pay, please contact Prudential - avc.admin@prudential.co.uk

It is important to include your pay point reference in the covering email when submitting your schedule.  

Please note that daily interest and bonus accrues in members' accounts from the date of payment receipt and delays should be minimised. Schedules must be received within five days of payment.

Please do not

  • send any money due to the Prudential to the Oxfordshire Pension Fund
  • list AVC values taken from pay on the MARS return

However, it is helpful for Pension Services to have a copy of your monthly return to Prudential. Send to  pension.employers@oxfordshire.gov.uk

Arrangements under previous regulations

Additional regular contributions (ARC)

From the 1 April 2008 to 31 March 2014, members of the LGPS could start to pay additional contributions to buy additional pension over a period they chose.

The Government Actuaries Department (GAD) may, at any time, amend the cost of the ARCs contract. If this happens, Pension Services will contact each employer and the member about the change to the additional contribution rate. The new rate will be effective from the following 1 April.

Although there cannot be any new ARC contracts there could still be changes to those active contracts

At the end of the contract, the employing authority should inform Pension Services of the date of the last contribution payment.

If the member's pay does not cover the monthly additional contribution payment for any reason other than being on sick pay, the contract should stop immediately. No further additional pension contributions should be deducted and employers should inform Pension Services.

Paying over the contributions to Oxfordshire County Council Pension Fund is covered on the Monthly LGPS contribution payments page.

Added years contracts

Added years contracts have now been taken out of the LGPS. This means that no new requests to pay into an added years contract should be accepted, but nothing should change for those members who already have a contract in place.

On completion of the contract, inform Pension Services that the contract has finished by email to pension.services@oxfordshire.gov.uk or making a note on the appropriate MARS return. 

Arrangements set up before April 2014

Where an arrangement began before April 2014, it will continue until the person writes to Oxfordshire County Council Pension Fund with instructions to stop or leaves their job.

A new starter could bring in a long-established additional regular contribution (ARC) or added years contract with them. Please contact Pension Services for specific advice in those cases. Additional payments to increase pension are usually deducted directly from the member's pay before taxation to ensure immediate tax relief and there are no employer contributions.

From April 2014, members have been able to choose to buy additional pension by making single payments. Where the cost cannot be recovered from the salary, it will be up to the member to declare this on their tax return. The member should always be aware of the effect their choice will have on their annual allowance – the annual maximum tax-free allowance for pension saving.