HOW MUCH WILL I PAY?
Your contribution rate is 6% of the pay you receive. Your contributions are very secure. As the LGPS is set up by Statute, payment of benefits to its members is guaranteed by law.
What does the council pay?
The council 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 the council should contribute to the Scheme. The amount will vary, but the present underlying assumption is that you contribute approximately one third of the Scheme's costs and the council contributes the remainder.
Do I receive tax relief on my contributions?
The Scheme 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 allowances 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.
What about my National Insurance contributions?
As the Scheme is contracted-out of the State Second Pension (S2P) you will, up to State Pension Age, pay reduced National Insurance contributions on your allowances between the Lower Earnings Limit and Upper Accruals Point, unless you have opted to pay the married woman’s/widow’s reduced rate of National Insurance.
Can I make extra contributions to increase my benefits?
Members are able to increase their benefits by making Additional Voluntary Contributions (AVC). Additionally, you may pay contributions into a personal pension plan or a stakeholder pension scheme.
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 amount you can pay into the Scheme’s AVC arrangement. However, tax relief will only be given 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. There will also be a tax charge if, when you draw your benefits, the value of all your pension savings exceeds the Lifetime Allowance (or, if you have opted for it, the Primary Lifetime Allowance protection or enhanced protection). Tax will be payable on any excess amount.
Can I transfer pension rights into my current LGPS Fund from a previous pension scheme?
The rules of the Scheme do not permit you to transfer pension rights into the LGPS from another pension scheme or, indeed, from another local authority pension fund.
If you have a deferred benefit from a previous period of councillor membership in the same LGPS Fund you may opt to aggregate the earlier councillor membership with the current period of councillor membership but only if you opt to do so within 12 months of rejoining the Scheme or such longer period as your council allows. This is a council discretion; you can ask your council what their policy is on this matter. Pension rights built up as an employee in England or Wales cannot be joined with rights built up a councillor or mayor in England or Wales and vice versa.