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Contributions

Contributions are the amounts paid into the pension scheme to secure future benefits. For more general information about contributions please see the details below.

What do I pay?

There is a five-tier contribution system, with contributions based on how much of your pay falls into each tier. Here are the tiers that apply from April 2010:

Whole time pay

Contribution rate (%)

On earnings up to and including £18,000 5.5%
On earnings above £18,000 and up to £22,000 7.25%
On earnings above £22,000 and up to £30,000 8.5%
On earnings above £30,000 and up to £40,000 9.5%
On earnings above £40,000 12%

The pay ranges are reviewed each April and may rise in line with the cost of living.

Part-time workers

If you work part-time hours your contribution rate is worked out on the whole-time pay rate for your job, although you will only pay contributions on the pay you actually earn.

Let's take a look at someone who works full-time at a pay rate of £22,000. They'll pay 5.5% on their pay up to £18,000, and 7.25% on the next £4,000. That gives an overall contribution rate of 5.8% - around £106 a month in contributions. If they were working half-time, they'd still pay the same contribution rate. That's because the whole-time rate for their job is still £22,000, but their contributions would be based on their part-time earnings, so instead they'd pay half - around £53 a month.

How can I increase my pension?

As a member of the Local Government Pension Scheme, you can pay extra to increase your pension benefits. You may wish to consider paying extra contributions, which are a tax efficient way of topping up your income when you retire. You can combine any of these options.

You can improve your retirement benefits by paying:

  • Additional Regular Contributions (ARCs) to buy extra LGPS pension.
  • Additional Voluntary Contributions (AVCs) to the in-house AVC scheme.
  • Free Standing Additional Voluntary Contributions (FSAVCs) to a scheme of your choice.
  • Contributions into a stakeholder or personal pension plan.

Are there any limits on how much I can pay to increase my pension benefits?

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 Scheme pension you can buy). However, tax relief will only be given on contributions up to 100% of your taxable earnings.

Additionally, under HM Revenue and Customs tax rules there are controls on the pension savings you can have before you become subject to a tax charge - these will mainly affect some higher paid people.

Can I increase my dependant’s benefits?

You can pay extra contributions to increase the level of your husband’s, wife’s, civil partner’s or nominated co-habiting partner’s pension and any pension payable to your eligible children on your death. You can also increase your death in service life cover as part of an AVC arrangement.

For full details of your options please contact your Pension Fund administrator.

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