You can pay APCs to purchase additional pension to increase your pension on retirement. The amount payable is calculated in accordance with guidance issued by the Government Actuary Department (GAD).
Key points about APCs
- You can pay extra contributions to buy up to £8,344 of extra annual pension in the LGPS. This extra pension is payable on top of your normal LGPS benefits every year for life.
- At the end of every scheme year the proportion of extra pension that you have paid for in that year is added to your pension account.
- The amount of additional pension purchased provides benefits for you only. It is not used in the calculation of any survivor's or children's pensions.
- The extra pension you are buying will be paid at the same time as your main LGPS pension benefits. It increases in line with the cost of living, before and after you take your pension.
- If you are paying by regular instalments, you can start to buy extra pension at any time up to a year before your normal pension age. You decide how long you want to pay extra contributions for, although it must be for a number of whole years and payments must be completed by normal pension age
- If you are paying by lump sum, you can pay any time before age 75.
- You can choose to stop paying APCs at any time by notifying us and your employer in writing.
Cost
The cost to you of buying extra pension is calculated in accordance with guidance issued by the Government Actuary. This can be reviewed by them at any time. Your payments may change if revised guidance is received but we will write to you to tell you.
It is for you to determine the number of years over which you would like to spread the cost of paying for the additional pension. Alternatively you can make a one off lump sum payment.
The cost of APCs depend on your gender, age and the length of time of your payments.
Use the APC calculator on the national LGPS website. It can help you determine your payment preference. Please use the calculator only. Do not download the application form attached to the calculator. We have our own application form.
Considerations
If you are thinking about buying additional pension, there are other things you should consider:
APCs on retirement
Your extra pension will be paid at the same time as your LGPS benefits.
If you choose to retire early and take your benefits before normal pension age, or retire on redundancy or business efficiency grounds, the extra pension you have bought will be reduced due to early payment.
If you take your benefits on flexible retirement, you will be able to take the extra pension you have paid for. It may be reduced due to early payment.
The additional pension you have bought is reduced if you retire before normal pension age even if you meet the 85 year rule and your other pension benefits are paid unreduced.
If you take your pension after normal pension age, the amount of your extra pension will be increased to account for late payment.
If you are retired due to ill health and you qualify for the type of ill health pension where your benefits are based on enhanced pension, you will be credited with all the extra pension that you set out to buy, even if you have not completed full payment for it.
On retirement, you can choose to exchange some of the extra pension you have bought for a cash lump sum in the same way as your main LGPS pension. Find out about converting your pension to a lump sum
APCs if you leave before retirement
If you leave or retire before completing APC payments, your contributions will cease. You will be credited with the extra pension that you have paid for at the time of leaving. This will increase the value of your LGPS benefits.
If you are retired due to permanent ill health and you qualify for the type of ill health pension where your benefits are based on enhanced pension, you will be credited with all the extra pension that you set out to buy, even if you have not completed full payment for it.
APCs when you die
If you die in service then no benefits from your APC contract will be payable. This is because the amount of extra pension you buy is for you only. It is not used in the calculation of the lump sum death grant or any survivor's or children's benefits.
If you die after leaving but before retirement and your benefits are held in the LGPS for payment (deferred benefits), then a lump sum of 5 times the extra annual pension paid for will be payable.
If you die whilst in receipt of a LGPS pension under age 75, a lump sum of 10 times your extra annual pension minus any extra pension already paid to you will be payable.
Payment and tax
Additional contributions are taken from your pay, just like your normal contributions.
Your LGPS normal contributions and APCs are deducted before your tax is worked out. If you pay tax, you receive tax relief (at your highest rate) automatically through the payroll. You qualify for full tax relief on all pension contributions up to 100% of your taxable earnings. If you decide to have APCs deducted from your salary you must have an amount that will be covered by your pay.
Alternatively, you can pay by lump sum through your salary or direct to the Kent Pension Fund. However, you will not receive tax relief immediately. You need to claim any tax relief through submission of your annual tax return or directly with HM Revenue and Customs (HMRC). Visit GOV.UK for further information about claiming tax relief if you pay lump sum APCs.
Increasing your pension may result in a tax charge, particularly if you pay by lump sum. Find out about triggering the annual allowance tax charge.
Electing to buy additional pension
Elections to buy APCs are subject to a medical declaration. In some cases a full medical may be required before the contract may proceed. You have to pay for this.
Process
Step 1
Before completing the election to purchase additional pension form, use the APC calculator on the national LGPS website to decide your payment preference. Use the 'Buy extra pension option' on the calculator to provide your quotes. Please do not complete the application form within the calculator. We have our own application form. Please only use the APC calculator to decide your payments.
Step 2
Download our election to purchase additional pension form (PDF, 486.6 KB) Print the form as it needs ink signatures by you and your GP.
The form is in 2 parts:
- Election to purchase additional pension form (page 1 and 2) which is completed by you, and
- Declaration of health form (page 3) which you must give to your GP to complete. Your GP should return the Declaration of health form to you.
Step 3
Scan or photograph the completed document (pages 1, 2 and 3). Use the online enquiry and document upload form to upload the completed form (pages 1, 2 and 3) to the Pension Section.
Alternatively, post the completed form to Kent County Council, The Pension Section, Sessions House, County Hall, Maidstone, Kent ME14 1XQ. If you post the document, it may take longer to process.
Step 4
Pension Section process your completed form to confirm approval and payment. If you chose not to pay through your salary, they will provide appropriate bank details to make payment.
Already paying additional contributions
If you wish to pay APCs and you are already:
- paying APCs, or
- paying Additional Regular Contributions (ARCs) which were contracts taken out before 1 April 2015,
the amount of additional pension from these existing arrangements will be taken into account to determine the maximum extra pension you can purchase. The total must not exceed the extra annual pension limit.
Additional Voluntary Contributions (AVCs) are not included within the extra annual pension limit.
Increasing your APCs
If you want to increase your APCs, you must make another election for a separate contract. You must provide another declaration of health form.
The extra pension that you buy must keep within the extra annual pension limit.