The Local Government Pension Scheme (LGPS) is a valuable part of the pay and reward package for employees working in local government or working for other employers participating in the scheme.
As a member of the LGPS, you receive tax relief on the contributions that you pay plus you have the option when you draw your pension to exchange part of it for tax-free cash.
The LGPS is a great way to save for your future. You build up a pension from the day you join the Scheme and once you've been paying in for 2 years your benefits include:
- A pension based on your pay and period of membership. Every scheme year (1 April to 31 March) an amount equal to a 49th of your pay in that year is added to your pension account.
- A pension that increases each year in line with the consumer price rises.
- Enhanced pension if you have to stop work permanently because of ill health.
- Life Assurance cover of three times your care pay from the first day you join the Scheme.
How to increase your pension benefits
The LGPS provides valuable benefits for you and your family. As a member of the LGPS there are two ways of increasing your pension benefits in addition to the benefits you are already building up. These are additional pension contributions (APCs) and additional voluntary contributions (AVCs)
Additional pension contributions (APCs)
If you are in the main section of the LGPS, you can pay APCs to increase your pension at retirement or to cover lost pension due to authorised unpaid leave. The APCs you make will buy you an additional amount of extra pension in retirement. You can choose to pay for the extra pension by spreading the payment of the APCs over a number of complete years or by paying a lump sum.
Additional voluntary contributions (AVCs)
When you save AVCs, you build up a pot of money which is invested and used to provide additional income to your LGPS benefits. Islington Council's current AVC provider is Prudential.
New Shared Cost AVC scheme
Islington Council has partnered with AVC Wise, to offer a new Shared Cost AVC scheme for current council employees who pay into the LGPS.
This is a cost-efficient way to top up your pension pot, providing flexibility, security and value. One of the main benefits of topping up your pension via the council's AVC scheme is that you will make savings in income tax and National Insurance contributions on the money paid into your pension pot. You’ll also have the option to amend your contribution amount as and when you need to.
To find out more, visit the AVC Wise website.
If you leave your job before retirement or stop paying contributions to Islington Council Pension Fund (ICPF) before your normal pension age (NPA), the pension you have accrued may give you a deferred benefit entitlement in ICPF.
Your deferred benefit is made up of an annual pension payable for life. In additional, for members with pensionable service prior to 1st April 2008 an automatic tax free lump sum.
You can choose to take early payment of your deferred benefits subject to reductions from age 55. You do not need your former employer’s consent to take your pension before your NPA, as long as you have left the employment from which the benefit relates.
You won’t be entitled to a deferred benefit if you:
were a member for less than 2 years (or less than 3 months if you left between 1 April 2004 and 31 March 2014)
and don’t hold any other LGPS benefits in England or Wales.
Instead, you’ll usually be entitled to a refund of your contributions, less any deductions for Tax and National Insurance. If you would like to know more please contact the Pensions Office.
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More information about the Local Government Pension Scheme is available on the LGPS members website. This includes a wide range of information about what benefits are available to you if you are a member and when they become payable.