Retirement

Guidance on retiring from the Local Government Pension Scheme.

Additional Voluntary Contributions (AVCs)

If you have an AVC fund held with Prudential you will have certain options available to you at retirement. 

  • You could take up to 100% of your AVC pot as a tax-free cash lump sum when you take your AVC benefits at the same time as your LGPS pension (as long as the total lump sum you take isn’t more than 25% of the total value of your LGPS benefits taken)
  • Use your AVC Fund to buy an annuity from an insurance company, bank or building society of your choice (although you can defer purchasing an annuity until, at the latest, the eve of your 75th birthday)
  • Buy an additional amount of pension within the LGPS
  • If you started paying your AVC before 13 November 2001 you can, in certain circumstances, even transfer your AVC Fund into the LGPS to buy additional LGPS membership

You can use an online calculator to find out the maximum AVC fund value that you could take as tax-free cash: 

Maximum AVC calculator

At the point the pension team contact you with your retirement options - we will also include your AVC lump sum options in the same letter.

Important information: 

In the LGPS there is generally no guaranteed investment return or guaranteed annuity rate on your AVC fund value upon retirement. Your AVC fund is a Defined Contribution (DC) pot that is invested, and its value can go up or down.

Please remember the value of your LGPS AVC fund can go down during the retirement process, or at any time it is invested. This is because the money in your AVC plan is invested in funds, and like all investments, its value is subject to market fluctuations.

  • Your AVC is a form of investment, not a savings account with a guaranteed return. The value depends on how the chosen underlying investments (such as stocks, bonds, or property) perform in the market.
  • The value of the fund can rise and fall in response to market conditions, economic news, or global events. The closer you are to retirement, the less time there is to recover from a market downturn.
  • If your AVC fund is still invested during the period you are applying for and finalising your retirement benefits, its value can continue to fluctuate until it is actually paid out or used to purchase an annuity.
  • The amount of pension an annuity provides depends on the value of your fund at the time you purchase it and prevailing annuity rates (which are affected by interest rates). If the market is down or interest rates are unfavourable when you buy an annuity, you might get a lower income.
  • Remember, you have a choice of investment funds, which carry different levels of risk and potential performance. Our AVC provider offers a range of options, from higher-risk/higher-reward funds to lower-risk/more stable funds (such as "with-profits" or cash funds, which may have their own mechanisms like a Market Value Reduction).