Additional Pension Contributions (APCs) were introduced to the LGPS on 1 April 2014 and replaced the previous option to pay Additional Regular Contributions (ARCs). You can choose to pay APCs in order to purchase additional annual pension payable on top of your normal LGPS benefits. You can elect to purchase additional annual pension up to a maximum of £8,344 from 1 April 2024.(the maximum amount of additional pension you can buy may increase each year in line with the cost of living rise). You can elect to pay APCs monthly over a period of time, or you can pay a one-off lump sum. The cost (a cash amount not a percentage of pay) is determined by your age, term of payment and the amount you wish to purchase.
You can calculate the cost of buying additional annual pension by using the online calculator below. Alternatively you can contact the pensions team and we will provide you with a quotation.
The amount that you can pay will be determined in line with guidance issued by The Government Actuary who has authority to re-determine that amount from time to time. You can stop paying APCs before the end of your APC payment period and must cease paying APCs if you leave the LGPS. You will be credited with additional pension of an amount determined by The Government Actuary having regard to the APCs you have already paid.
If you elect to pay APCs through your monthly salary you will receive tax relief on your additional contribution. If you pay a lump sum directly to the pension fund we are unable to apply tax relief, however you can apply to HMRC directly to claim this back.
If you have to leave your employment due to permanent ill-health or you die in service you will be treated as having paid your APCs up to the end of your APC payment period.
IMPORTANT NOTE:
If you cease payment of APCs earlier than the end of the prescribed payment period because you choose to opt-out of the LGPS or you choose to leave your employment voluntarily or a decision is taken by your employer to end your employment you will only be entitled to a pro rata of the additional pension you elect to purchase.
Any amount of additional annual pension purchased, whether a pro rata or the full amount purchased will be subject to a percentage reduction if payment of your benefits commences before your Normal Pension Age. A percentage reduction will also be applied if you decide to purchase additional pension by way of a ‘one-off’ lump sum payment.
The only exception to this is retirement due to permanent ill-health, you will be treated as having paid the full value of your APCs to the end of your prescribed payment period and, therefore, your pension will be calculated taking into account the full amount of additional pension that you elected to purchase – even though you would not have completed all payments – and a percentage reduction will not be applied to reflect payment before Normal Pension Age.
Calculate the cost of buying APCs by using the online calculator
An online calculator is available for you to calculate the cost of buying additional annual pension through the purchase of APCs.
If you choose to pay APCs through your monthly salary you receive tax relief automatically on the contributions you pay at your marginal rate. This means that your LGPS contributions and your APCs are deducted from your gross monthly pay before income tax is calculated.
As an alternative you can pay a lump sum to the Berkshire Pension Fund to purchase an additional amount of annual pension. Please be advised we are unable to take tax relief on a lump sum payment made to the pension fund. However you can claim the tax relief back from HMRC directly.
Can I buy APCs whilst a member of the 50/50 section?
No, you can only purchase additional pension through APCs if you are in the MAIN section of the scheme. APCs are not available for members to purchase if they are paying into the 50/50 section of the scheme.
If you are currently in the 50/50 section of the LGPS then you will need to opt in to the MAIN section in order to commence APCs.
A note about Survivors benefits and APCs
It is important to note that you can elect to purchase additional pension for yourself only and you are unable to provide for an additional survivors benefit.
Additional Regular Contributions (ARCs)
ARCs were introduced to the LGPS on 1 April 2008 and have been replaced from 1 April 2014 with APCs. However if you had an existing ARC contract in force prior to 1 April 2014, this will continue under the terms of the original contract.
Added Years
Added Years were available under the LGPS regulations until 31 March 2008. Added Years were replaced with ARCs from 1 April 2008. However if you had an existing Added Years contract in force prior to 1 April 2008, this continues under the terms of the original contract until such time as you elect to cease the added years contributions before the duration of the payment term has finished.
Converting annual pension to lump sum: at the point you retire you will be given the option of converting some of your annual pension into a tax-free cash lump sum. If you bought extra pension through an APC arrangement this will be included in the calculation of your annual pension. Therefore we will take this into account when calculating how much tax-free cash you are able to have at retirement.