Changes to your pension – Active Members

There have been changes to the Local Government Pension Scheme (LGPS). These changes, unless indicated otherwise, came into effect from 14 May 2018.

Pre-April 2014 Additional Voluntary Contributions (AVC) contracts

If you are – or were – paying Additional Voluntary Contributions (AVCs) and the contract to pay those AVCs started before 1 April 2014, you will see some changes to the way your AVCs are calculated and how you can take your AVC plan.

If you are currently paying AVCs:
• you can now pay up to 100% (rather than 50%) of your pensionable pay into your AVC plan.
• AVCs will now also be deducted from any voluntary overtime you work (if you pay AVCs as a percentage of your salary).

When you take your AVC plan:
• if you leave the scheme with a deferred benefit you can now buy additional pension from the LGPS with your AVC plan when you take your benefits from the scheme.
• when you take your main scheme benefits you will no longer be able to leave your AVC invested and take it later.
• if you die before taking your AVC and a lump sum is to be paid from your AVC plan your pension fund now has absolute discretion over who to pay that sum to (rather than it having to be paid to your estate). If the lump sum is paid at the discretion of the pension fund it does not form part of the estate and will not be subject to inheritance tax.

Expansion of underpin protection

Underpin protection has now been extended to also apply to people who were active members of a different public service pension scheme on 31 March 2012 and who were within 10 years of age 65 on 1 April 2012; if these people join the LGPS and transfer their pension benefits from the other public service pension scheme into the new LGPS scheme and part or all of that transfer buys final salary benefits in the LGPS, subject to certain conditions, the underpin will apply.