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HOW TO BOOST YOUR PENSION

CONTENTS

Purchase Of Added Years

Additional Voluntary Contributions (AVCs)

Free Standing AVCs (FSAVCs)

Contributions To Concurrent Personal Pension Plan Or Stakeholder Pension Scheme

Transfer from a Previous Pension Scheme

(Not All Of The Above Alternatives Will Apply To Every Individual)

Disclaimer

 

PURCHASE OF ADDED YEARS

Members can buy a maximum of 6 2/3 added years to increase benefits by paying additional contributions until normal retirement age.  This purchase will increase your pension benefits (pension, tax free cash, spouse’s/civil partner’s/dependants pensions).  The added years purchase is part of the main scheme and is a final salary type arrangement.  This means that the benefits are linked to the number of added years purchased and your pensionable pay at retirement or date of leaving.  The cost of purchasing added years is a percentage of your wages or salary paid from your next birthday to age 65 (for any elections to purchase added years after 30 September 2006).  All applicants are required to undergo a medical examination with the Committee’s doctor at their own expense.

Election prior to 1 October 2006 (even though payment may not start until after 1 October 2006)

Any elections to purchase additional membership made prior to 1 October 2006 will be treated as membership purchased prior to 1 April 2008 i.e. that membership will be protected pre-April 2008 membership. These purchases are payable from the member’s next birthday to the birthday prior to the member’s earliest retirement date.

Election received after 30 September 2006

Any elections received after 30 September 2006 will be treated as post 31 March 2008 membership and are payable to age 65. 

Further information and quotations are available from NILGOSC on request.

 

ADDITIONAL VOLUNTARY CONTRIBUTIONS (AVCS)

Members of the Scheme can top up their own pension, or their dependant’s pension in the event of their death, by paying Additional Voluntary Contributions (AVCs).  The AVCs are invested separately in funds managed by an insurance company or building society.  The in-house AVC schemes are managed by the Prudential and the Equitable Life Assurance Society (existing contributors only).  Members can also use the AVCs to provide for additional Life Assurance.

You can currently pay up to 100% of your pay to an AVC arrangement, however new legislation will limit the maximum contribution to 50% of pay with effect from 6th April 2008. AVCs are deducted directly from your pay and the tax relief (at your highest rate) is automatically given through the payroll.  This means that tax is calculated on your pay after your pension and AVC contributions have been deducted.

Our understanding of current legislation is that since 6 April 2006 your money purchase AVC can be taken in whole or in part as tax-free cash.  You are allowed to take 25% of the value of your benefits under the LGPS(NI) as tax-free cash.  If the value of your AVC is less than 25% of the overall value of your LGPS(NI) benefits you could opt to take your entire money purchase AVC as cash and take less cash from the main scheme, thus receiving a higher LGPS(NI) pension.   This does not apply to Free Standing AVCs.

Prudential – more information, including application forms and quotations, is available directly from Prudential or they may be contacted at The Pensions Connection on 0845 607 0077.

Equitable Life – information on existing contracts is available directly from NILGOSC.  Equitable Life has sold parts of its business to Halifax Equitable Clerical Medical. Click HERE for an update on the status of Equitable Life AVCs.

   

FREE STANDING ADDITIONAL VOLUNTARY CONTRIBUTIONS (FSAVCS)

FSAVCs work in much the same way as AVCs.  However, there are some important differences.  Some of these are:

 

CONCURRENT PERSONAL PENSION OR STAKEHOLDER PENSION SCHEME

You may, if you wish, make your own arrangements to pay contributions to a personal pension plan or stakeholder pension scheme at the same time as being a member of the LGPS(NI) scheme. 
Stakeholder pension schemes will have to satisfy minimum standards relating to the maximum charge that can be made and there should be no penalties on discontinuing membership.  This does not apply to personal pension schemes.
If you choose to contribute to a concurrent stakeholder or personal pension scheme you must make the necessary arrangements.At retirement up to 25% of your accumulated fund can be taken as a tax-free lump sum.  The remainder is usually used to buy you an annuity.

 

TRANSFER FROM PREVIOUS PENSION SCHEME

If you previously paid into a pension scheme of either a former employer or to a personal pension scheme before joining the Local Government Scheme, you can ask for the value of the benefits you have built up to be transferred into this Scheme. The transfer value paid will purchase a period of membership in this Scheme.You can apply for a transfer by completing Section B of the Employee’s Membership Option form which will be given to you by your employer when you commence employment, or by completing the transfer request sheet which is issued along with your Membership Cerificate. An application to transfer has to be made within 12 months of your date of joining the Scheme.

 

DISCLAIMER

The information on these pages is based on our understanding of current pensions and taxation legislation, and of HM Revenue and Customs practice, all of which are liable to change.   NILGOSC is not authorised under the Financial Services Act to give scheme members individual advice. 
If you wish to receive individual and independent advice you may wish to talk to a registered independent financial adviser.