APCs and Ill Health
If a member retires on ill-health Tier 1 or Tier 2 grounds, any outstanding APC payments will be deemed to have been paid and credited to your pension account to be included in your benefit calculations.
However, pension purchased by APCs will be subject to reduction (even if your normal benefits are fully protected) or enhancement if taken before or after the member’s Normal Pension Age (NPA) under the 2014 Scheme in all other circumstances.
If you elect to buy £2,000 or more additional pension, you will need to get our medical form completed by your GP with any cost borne by yourself.
Buying back the whole of the lost pension will ensure the period of leave of absence is included when calculating certain protections if you were a member of the scheme before 1 April 2014. For example, if the Underpin or the Rule of 85 applies to you.
Please note APCs only buy pension for an active member and do not provide pension for any dependents.
Flexible ways to use your AVC
There are loads of different ways you can use your AVC plan when you retire. These options give you greater choice and control over how and when you retire. We recommend reading through these options and noting any that may apply to or benefit your own situation:
- Take your whole AVC pot as a 100% tax-free lump sum
You can take your whole AVC pot as a 100% tax-free lump sum. This is only possible if you take your main LGPS benefits at the same time. The total tax-free lump sum you take cannot be more than 25% of the total value of the LGPS benefits you take at that time. This includes any LGPS lump sum and your AVC pot and is subject to overall HM Revenue & Customs limits. Your LGPS scheme administrator will help you work out what you can take at the time.
- Get a guaranteed income for life
You can buy an annuity – it pays you an income (a bit like a salary) and is guaranteed for life. These payments may be subject to income tax. In most cases you can take 25% of the money in cash, tax-free. You’ll need to do this at the start and you need to take the rest as income. You must normally take your LGPS benefits at the same time.
- Get a tax-free lump sum and more LGPS pension
You can usually take up to 25% as a tax-free lump sum and use the rest to give you more LGPS pension. This is only possible if you take your main LGPS benefits at the same time.
- Take more than one option
You can normally mix and match the above options as long as you are eligible for those options.
Ways to increase your retirement benefits outside of the LGPS
- Free Standing Additional Voluntary Contributions (FASVCs)
These are similar to in-house AVCs but are not linked to the LGPS in anyway. With FSAVCs, you choose the provider, usually an insurance company. You may want to consider the different charges, alternative investments and past performance when you do this.
- Personal or Stakeholder pensions
You may be able to make your own arrangements to pay into a personal pension plan or stakeholder pension scheme at the same time as paying into the LGPS. With these arrangements, you choose a provider, usually an insurance provider and again, you need to consider their charges, alternative investments and past performance when you do this.
You may wish to obtain independent financial advice before taking out any form of additional pension saving.