Additional pension contributions (APCs) | Oxfordshire County Council

Additional pension contributions (APCs)

APCs are a tax-efficient way of making extra payments to your scheme.

Before April 2014

Any arrangement you have already set up under old terms for additional regular contributions (ARCs) or added years will continue until either your contract of employment ends or you decide to end the contract.

An ARC as a ‘flat rate’ deduction to buy extra pension would not need an adjustment with the change to the definitions of pay; an added years contribution to buy membership as a percentage of  ‘pensionable pay’ on pre 2008 terms, may need to be checked.

Please refer to your original papers for details of those terms and conditions, and if you have questions get in touch with Pension Services.

 

If you are in the main section of the pension scheme and want to buy extra annual pension, you can pay additional pension contributions (APCs).

This option is not available if you are in the 50/50 section of the pension scheme.

You can choose to buy extra pension by:

  • spreading payment over a number of complete years - the APCs are deducted from your pay each pay period and attract automatic tax relief. The extra pension you buy will be added to your pension account in equal instalments over the number of years of the agreement.  We will ask for a medical statement to confirm you are in good health when you buy additional pension this way.

 Or by

  • making a one-off lump sum payment. However, if you are a year or less from your normal pension age (NPA) under the scheme you can only pay by means of lump sum. The additional pension is added to your pension account after we receive the payment.

Employer

Your employer can choose to share the cost of the extra pension to be bought. If this is the case please ensure you have obtained written confirmation of the share to be paid by your employer before making an application for APCs.

The cost of buying the additional pension is calculated by the government’s actuary and those costs can be reviewed at any time

The extra pension you buy will increase in line with the cost of living indexes, both before and after you draw your pension.

You can choose to stop paying APCs at any time by contacting Pension Services and your employer in writing. Pension Services will calculate and notify you of the proportion of extra pension that you have secured.

Tax

Additional pension contributions are ‘tax efficient’ and your employer will deduct them from your pay, in the same way as your basic pension contributions, before your pay is assessed for income tax .

Her Majesty's Revenue and Customs (HMRC) limit a person’s  pension savings within a year before incurring a tax charge. This is called your annual allowance. From April 2014 the  annual allowance reduced to £35,000 a  year.

You will need to be mindful that buying additional pension may result in a tax charge. For more information about how this change may affect you and your pension, read the leaflet Tax controls and your LGPS benefits (pdf format, 61Kb) and for detailed personal information seek the advice of an independent financial advisor with expertise in taxation.

 Leaving or retiring

If you leave or retire before completing all the additional payments agreed in your contract, Pension Services will calculate and notify you of the proportion of extra pension that you have paid for.

However, if you retire due to permanent ill health and you qualify for a first or second tier ill health pension, you will be credited with the entire extra pension that you set out to buy, even if you have not completed the full contract period.

Your extra pension will be paid at the same time as your LGPS benefits.

Early retirement

If you choose to retire early and draw your benefits before your normal pension age, or are dismissed by your employer on redundancy or business efficiency grounds, we will reduce the extra pension you have bought.

If your employer agrees to your request for flexible retirement, you must stop this APC.   Pension Services will notify you  of how much additional pension you have bought.

Additional pension calculator

To get an idea of the costs and a formal quote to buy additional pension please use the calculator on the LGPS 2014 website.

The site will provide, based on the information you supply, the formal quote, which you print out and send to Pension Services and your employer if you want to take the next step. Be sure to read the terms and conditions on the website with the calculator.

Last reviewed
16 May 2017
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