When you join the LGPS, you will be placed in the main section of the Scheme. However, once you are a member of the Scheme you will be able to elect in writing to move to the 50/50 section at any time.
In the 50/50 section you pay half your normal contributions. This may be useful in times of financial hardship as it allows you to remain in the Scheme, building up valuable pension benefits, instead of opting out.
You can ask your Scheme employer for a 50/50 option form.
If you are paid allowances or a salary by more than one body, you will have more than one pension account. You can choose to move to the 50/50 section in respect of some or all of these accounts. You will need to make a separate 50/50 option to each body that pays you an allowance.
If you elect for 50/50, you would be moved to that section from the next pay period. You would then start paying half your normal contributions and build up half your normal pension. When you make an election for the 50/50 section, your Scheme employer must provide you with information on the effect this will have on your benefits in the Scheme.
If you were to die while you were in the 50/50 section of the Scheme, the lump sum death grant and any survivor pensions would be worked out as if you were in the main section of the Scheme. If you are awarded an ill health pension which includes an enhanced pension, the amount of pension added to your pension account is worked out as if you were in the main section of the Scheme.
The 50/50 section is designed to be a short-term option for when times are tough financially. Because of this, your Scheme employer must put you back into the main section of the Scheme about every three years. If you wish to continue in the 50/50 section at that point you would need to make another election.
If you go onto no pay because of illness, you do not pay pension contributions during this time. Your pension is protected as it is worked out using your assumed pensionable pay – this is a notional pay figure used to make sure your pension builds up as if you were receiving normal pay. If you are in the 50/50 section when you go onto no pay, your Scheme employer will move you back to the main section at the start of the next pay period if you are still on no pay at that time. This means your pension builds up in the more generous main section from that point. If you wish to rejoin the 50/50 section when you start getting paid again, you must complete a new form.
There is no limit to the number of times you can elect to move between the main and 50/50 sections.
There are several ways you can provide extra benefits on top of the benefits you are already looking forward to as a member of the LGPS. You can improve your retirement benefits by paying:
Subject to HMRC limits, you will get tax relief on contributions you pay to a UK pension scheme.
Your LGPS pension fund can give you more information on the first two of these options.
As an elected member, your Scheme employer cannot contribute towards any of the above methods of increasing your pension benefits. However, some Scheme employers offer salary sacrifice arrangements to contribute towards your AVC plan. If they do, you will benefit from tax relief and national insurance savings on the AVC contributions. Your Scheme employer would also benefit from lower national insurance contributions. They cannot contribute more than the amount of pay you sacrifice. Check with your Scheme employer if they offer a salary sacrifice scheme for AVC contributions.
You may wish to take independent financial advice before you decide to pay extra.