Buying lost pension during absence

For leave commencing from 31 March 2026 or earlier: Where an employee elects to pay an APC to purchase any or all of the amount of pension ‘lost’ during the period of unpaid absence and makes the election the earliest of:

• the date you left the employment you were in during the unpaid leave
• one year after returning to work following the unpaid leave
• a longer deadline allowed by your employer

Your employers pays towards the cost (a Shared Cost APC). An APC is now only used in certain situations for lost pension such as where the authorised absence started before 1 April 2026, was due to strike, or where the member elects after the QAPA deadline. In these instances please complete the Buying Lost Pension form to confirm a member’s APC.

*the employer can choose to extend this time limit within their Pensions Discretions Policy.

From 1 April 2026: you will not need to buy back lost pension for any period of unpaid additional leave, unpaid additional adoption leave (weeks 27 to 52) or unpaid shared parental leave that starts from 1 April 2026 or later. You will continue to build up pension as if you were receiving normal pay.

If the election is made after the time limit, and the employer has not extended this time limit, the employee must pay the full cost – See Shared Cost APC section for more information

An employee can commence an APC or Shared Cost APC (SCAPC) for buying ‘lost’ pension even if they are in the 50/50 section, but can only buy all the ‘lost pension’ and not just part of it.

A member in the main section could buy part of the lost pension, but this would then be treated as buying ‘extra pension’ in the normal way and the period would not be included when calculating protections under the Underpin, or Rule of 85, or when calculating final pay for benefits relating to pre-1 April 2014 membership.

Therefore, members with service before 1 April 2014 must purchase the entire lost pension if they wish to meet the requirements of the Local Government Pension Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014 and maintain full protection for the Underpin and the calculation of Final Pay.

In relation to the Rule of 85. where the member has a period of absence with permission on no pensionable pay (otherwise than because of illness or injury, relevant child-related leave or reserve forces service leave) the period will not count towards the Rule of 85. This is unless the member makes an election to purchase the whole of the lost pension.

To buy pension ‘lost’ due to industrial action an employee can commence an APC whether they are in the 50/50 section or the main scheme. An employer is not required to pay towards the APC cost for ‘strike’ periods but can do so if they want to, and have the necessary discretion in place.

Where there is more than one period of unpaid absence in a year, the employee will no longer be required to make an election each time they return to work. The change to the regulations allowing the employer the discretion to extend the time limit means that one election for the year’s absences is now possible.

The maximum period of ‘lost’ pension a member can buy is 36 months. If the member does not return to work after a period of unpaid absence, they cannot pay an APC for ‘lost pension’.

For an APC (for leave commencing before 01 April 2026 or for any reason outlined above) the member will need to use the online APC calculator, as found below, to buy ‘lost pension’, but they should first obtain a written statement from their employer of:

• • the total assumed pensionable pay lost during the period of absence

• • the share of the cost the employer will meet – for example, 2/3rds

• • confirmation of the section of the scheme the member was in during the period of absence (it may also be helpful if you, as the employer, confirmed to the member the reason for absence and the start and end dates of the period of absence)

Use the online APC calculator

For leave commencing 31 March 2026 or before, employers should provide the above information to members either on request or automatically at the end of the period of absence, remembering that the employee only has 30 days from returning to work to make their election unless the employer chooses to extend this time limit.

For leave commencing on or after 1 April 2026, this deadline has increased to one year, and members can buy back any lost pension using what is called a Qualifying Additional Pension Arrangement (QAPA) which has replaced APC’s. Employers must provide members with dates of the unpaid break, the member cost, and the pension they could buy back on their return to work. Therefore from 1 April 2026, most members will no longer need to use the APC calculator to work out the cost of buying back lost pension in the LGPS.

For authorised leave starting after 31 March 2026, your deadline to elect to buy back the pension is the earliest of:

• the date you left the employment you were in during the unpaid leave
• one year after returning to work following the unpaid leave
• a longer deadline allowed by your employer

If you meet one of the conditions above, you can pay additional pension contributions to buy back the pension you have lost. You can spread the cost through regular contributions from your salary or pay by lump sum. If you pay tax, you will receive tax relief on these contributions.

When an employer receives a signed election form from a member they must do the following:

1. 1. Check that the information on the form is correct. If it is not correct, see the guidance provided in the ‘Regular contribution’ and ‘Lump sum’ sections below for information on how to proceed.

1. 1. Once the form has been validated, the employer must:
      • • Set up a payroll deduction
      • • Send a confirmation form and copy an election form to us
      • • Send a confirmation letter to the member

If the member has chosen to pay by regular contributions the employer should commence deductions from the next available pay period and notify the member that the application has been accepted unless:

a) The pay and section information in the application does not match that originally supplied by the employer and/or the amount of pension to be purchased and/or the share of contribution to be met by the employer is not the same as that in the written agreement from the employer.

Action: the employer should, within a reasonable period, inform the member and us that the application has been rejected, provide the reasons for that rejection and inform the member that they should submit a new application based on the correct information.

or

b) The employer considers that the member’s pay history suggests that the amount to be deducted per pay period cannot be reasonably deducted from the member’s pay.

Action: The employer must notify us together with details of the member’s pay history and notify the member that the application has been referred to us for clearance of the amount to be deducted. The employer should wait for us to notify them of its decision before commencing any deductions.

Within a reasonable period, we must notify both the member and employer of the decision under (b) above, together with the reasons if the decision is to reject the application.

However, if any decision is delayed due to action or inaction by the member and the member passes a birthday which causes the costs of the purchase to change, the member must submit a new application.

The employee and employer contributions to APCs should be paid over to us by the employer within the statutory deadlines (or such earlier deadlines as we may specify).

Where the member opts for regular contributions, the employer contributions must be made by regular contributions and not by lump sum.

Payments by regular contributions are made over a minimum period of one year or multiples of whole years. The employee chooses when they cease (so after 1 year, 2 years, 3 years, for example), but they must cease before the employee’s NPA.

It is not possible to spread the cost over a period of months. Those members who are a year or less from their NPA (or those members over their NPA but under age 75) may only pay by lump sum.

If the member has chosen to pay by lump sum they must also state on the application if they wish the payment to be made directly to us or through a deduction from the next available payroll.

If electing to pay by direct lump sum, we will check that the pay and scheme section information, the amount of pension to be purchased, and the share of contribution to be met by the employer matches that supplied by the employer and, if necessary, contact the employer to confirm the information provided.

We must check the above information and inform the member of the decision within a reasonable period of receipt of the information being received.

If the application is accepted, we should request payment from the member (and from the employer) and inform the member to claim any tax relief due on the payment from HMRC through their self-assessment tax return. Please note that tax relief will only be given on contributions up to 100% of a member’s UK taxable earnings (or, if greater, £3,600 to a ‘tax relief at source’ arrangement).

If the application is rejected, we should provide the reasons for that rejection and, if the rejection is because the pay and scheme section information and/or the amount of pension to be purchased and/or the share of contribution to be met by the employer does not match that supplied by the employer, we should inform the member that they should submit a new application based on the correct information.

If the lump sum is to be paid by deduction from pay, the employer should notify the member that the application has been accepted and deduct the payment from the next pay period unless:

a) The pay and section information and/or the amount of pension to be purchased and/or the share of contribution to be met by the employer in the application does not match that originally supplied by the employer. Action: The employer should, within a reasonable period, inform the member that the application has been rejected, provide the reasons for that rejection and inform the member that they may submit a new application based on the correct information.

or

b) The employer considers the member’s pay history to be such that the lump sum amount cannot be reasonably deducted from the member’s next pay period. Action: The employer should notify us together with details of the member’s pay history and notify the member that the application has been referred to us for clearance of the amount to be deducted from pay. The employer should wait for us to clear the application before making the deduction.

We must, within a reasonable period, notify both the member and employer of their decision under (b) above together with the reasons if the decision is to reject the application.

In both cases above, if any decision is delayed due to action or inaction by the member and the member passes a birthday which causes the costs of the purchase to change, the member must submit a new application.

A lump sum deducted from the employee’s pay together with the employer share of the shared cost lump sum APC must be paid over to us by the employer within the statutory deadline (or such earlier deadline as we may specify).

If the member elects to pay an APC by regular deductions and subsequently has a period of:

•  sickness or injury on reduced contractual pay or no pay
• child-related leave (ordinary maternity, adoption or paternity leave, plus paid additional maternity, paternity or adoption leave, plus unpaid additional maternity, paternity or adoption leave)
• absence due to a trade dispute
• reserve forces service leave
• any other period of authorised leave of absence (including buying additional leave)

any pre-existing APC/SCAPC contracts remain payable (unless the member elects to end the contract) with the exception that during a period of sickness or injury on no pay, the employee contributions to an APC/SCAPC are deemed to have been paid but the employer must continue to pay the employer contributions to a SCAPC.

It should be noted, however, that a member electing for 50/50 can continue to pay into or take out an APC arrangement or a shared cost APC arrangement providing it is to purchase an amount of pension lost due to a trade dispute or unpaid authorised leave of absence, including a period of unpaid additional maternity, paternity or adoption leave.

If the employee receives no pay, the employer contributions to a SCAPC remain payable, but the employee payments due to an APC or SCAPC which could not be collected rollover as a debt to be recovered from pay upon return to work.

Any employee APCs collected (but not those deemed to have been paid) must be added into the employee APC cumulative and any employer contributions to a SCAPC must be added into the employer SCAPC cumulative.

During any period of absence due to a trade dispute any pre-existing APC/SCAPC contracts remain payable. Although the employee is in receipt of no pay for the period of the industrial action, the employer contributions to a SCAPC remain payable.

The employee payments that were due to an APC or SCAPC should be deducted if there is enough pay in the period from which to deduct the payment. Otherwise, the employee payment that was due will rollover as a debt to be recovered from pay upon return to work.

During any other period of authorised leave of absence (including unpaid additional maternity, paternity or adoption leave) any pre-existing APC/SCAPC contracts remain payable.

Although the employee is in receipt of no pay, the employer contributions to a SCAPC remain payable but the employee payments that were due to an APC or SCAPC which could not be collected rollover as a debt to be recovered from pay upon return to work.

Members can choose to cease paying an APC at any time.

If an employee leaves employment before they have finished paying for their APC/SCAPC/QAPA, a pro rata calculation is made to work out how much of the original pension contract has been bought. It is not possible for an employee to pay the unpaid additional contributions on leaving early.

If the contract is terminated early because the member is retired with a Tier 1 or Tier 2 ill-health pension, the remaining amount of additional pension is deemed to have been purchased and is credited to the member’s active account at the point of leaving.

Please note that if the member retires early due to redundancy, efficiency or early voluntary retirement any lost pension being purchased will be reduced (even though their normal benefits may be paid in full because of protection). Pension bought in this way will be reduced or enhanced if taken before or after the individual’s NPA under the 2014 scheme (except in cases where enhanced ill-health benefits are awarded, such as. Tier1 or Tier 2).

Where an employee elects to pay an APC to purchase any or all of the amount of pension ‘lost’ during the period of unpaid absence (including any period of unpaid additional maternity, paternity or adoption leave) and makes the election within 30 days of returning to work*, the employer shall pay 2/3rds of the cost of the APC (a Shared Cost APC).

If the election is made after the 30-day time limit, and the employer has not extended this time limit, the employee must pay the full cost – See Shared Cost APC section for more information

Where an employer is paying 2/3 of cost and employee 1/3 of cost this is split as:

• • Employee cost = Total cost ÷ 3 rounded up to the nearest penny

• • Employer cost = Total cost – employees cost

Employers are advised to provide members with details of buying ‘lost’ pension before their leave starts to ensure that they are aware of the need to elect to pay APCs within 30 days of their return to work to ensure a SCAPC.

*the employer can choose to extend this time limit within their Pensions Discretions Policy.