Frequently Asked Questions about contributions

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What does my employer pay?

Your employer pays the balance of the cost of providing your benefits after taking into account investment returns. Every three years, an independent actuary calculates how much your employer should contribute to the Scheme.

The amount will vary, but generally the present underlying assumption is that employees contribute approximately one third of the Scheme's costs and the employer contributes the remainder.

Do I receive tax relief on my contributions?

The LGPS is fully approved by HM Revenue and Customs, which means that you receive tax relief on your contributions.

To achieve this, your contributions are deducted from your salary before you pay tax. So, for example, if you pay tax at the rate of 20%, every £1 that you contribute to the Scheme only costs you 80p net.

There are restrictions on the amount of tax relief available on pension contributions. If the value of your pension savings increase in any one year by more than the Annual Allowance you may have to pay a tax charge.

Most people will not be affected by the AA.

Is there a limit to how much I can contribute?

At the present time there is no overall limit on the amount of contributions you can pay (although, there is a limit on the extra LGPS pension you can buy and on the amount you can pay into the Scheme’s AVC arrangement).

However, tax relief will only be given on contributions up to 100% of your UK taxable earnings (or, if greater, £3,600 to a “tax relief at source” arrangement, such as a personal pension or stakeholder pension scheme).

Additionally, under HM Revenue and Customs rules there are controls on the pension savings you can have before you become subject to a tax charge – most people will not be affected by these controls.

I’m already paying into the LGPS in another job. Can I also join in this job?

If you are already paying into the LGPS and you get another job where your employer offers you membership of the Scheme, you can be a member of the scheme in all positions, provided you are eligible to join.

You will have a separate pension account for each job and receive a separate pension at retirement.

If you leave one job before leaving the other(s), the pension from the pension account of the job that has ended will be joined to the pension account for the ongoing job (or, if there is more than one ongoing job, the one you choose) unless you have met the 2 years vesting period, in which case you will, if you wish, be able to choose, within 12 months of ceasing the job that has ended (or such longer period as your employer may allow), to keep the pension accounts separate.

The Fund will provide you with information about your options at the time.

Pension rights built up as a councillor or mayor in England or Wales cannot be joined with rights built up as an employee in England or Wales and vice versa.

What about my other non-LGPS pensions?

If you have paid into another non-LGPS pension arrangement, you may be able to transfer your previous pension rights into the LGPS (provided you are not already drawing them as a pension).

You only have 12 months from joining the LGPS to opt to transfer your previous pension rights, unless your employer and administering authority allows you longer.

This is a discretion; you can ask your employer what its policy is on this matter.

Whether or not you should transfer your pension rights is not always an easy decision to make, and you may wish to seek the help of an independent financial adviser.

Can I rejoin the LGPS if I have been a member before?

If you rejoin the LGPS and you have deferred benefits in an LGPS fund in England or Wales (which you were awarded other than as a result of electing, on or after 11 April 2015, to opt out of membership of the scheme) your deferred benefits will normally be automatically joined with your new active pension account.

If you want to retain separate deferred benefits then you must make such an election within 12 months of rejoining the scheme (or such longer period as your employer may allow).

If you have deferred benefits in an LGPS fund in England or Wales which you were awarded as a result of electing, on or after 11 April 2015, to opt out of membership of the scheme, you cannot join those benefits with your new active pension account. They will remain as a separate deferred benefit.

If you rejoin the LGPS in England and Wales and have a deferred refund, this must be joined with your new active pension account.

If you have deferred benefits in the LGPS in England and Wales and left the Scheme before 1 April 2014, or your deferred benefits include membership built up before 1 April 2014, please see the section If you joined the LGPS before 1 April 2014 for further information.

If you wish to transfer your previous LGPS pension rights you should contact the Fund as soon as possible to find out about this and about the matters you will need to consider in making your decision.

Pension rights built up as a councillor or mayor in England or Wales cannot be joined with rights built up as an employee in England or Wales and vice versa.