2.2–ADDITIONAL BENEFITS
EMPLOYEE OPTIONS
The employee has 2 options in which they can increase their retirement benefits by deduction from their salary:
Additional Pension Contributions (APCs)
Since April 2014 a member can elect to purchase additional annual pension of up to £6500.00 by paying additional pension contributions each month over a number of years (minimum of one year). The proportion of additional pension purchased each will be added to the member’s earned CARE benefits during each year of purchase. If the member leaves before all payments have been made then the additional pension awarded will be pro-rated unless they are retiring on ill-health grounds under either Tier 1 or Tier 2 (Tier 3 retirements will only get a pro-rated pension) when the full additional pension will be added to their benefits. The pension purchased is payable in full on retirement at the member’s normal pension age in the Scheme or on retirement on Tier 1 or 2 ill health grounds but will be reduced for early payment in all other cases under current legislation.
Any additional pension purchased is for the member only with no survivor’s benefits.
Information on this option can be found in our Purchase of Additional Pension Employee Factsheet under the ‘Topping up Benefits’ on our website or by contacting Peninsula Pensions. Within the Factsheet is an on-line calculator for the member to use to calculate the cost etc. of purchasing the additional pension. The employer does not contribute to this arrangement.
Members who had previously elected to purchase added years will continue with this arrangement unless they elect in writing not to.
Additional Voluntary Contributions (AVCs)
A member can opt to contribute to the In-House AVC scheme provided by Prudential. Information can be obtained from Peninsula Pensions
All In-House AVCs deducted by the employer must forwarded to Equitable Life (old AVC provider) or Prudential by BACS transfer and a schedule listing the details of the payments, to whom they refer, information about the relevant scheme and the employer who sent it must be forwarded to the AVC provider. This must be done without delay to allow the money to be invested as soon as possible. The employer will be asked to quote a particular unique reference number for each employee's contributions (i.e. the members National Insurance Number).
On retirement all documentation about the options available in respect of the AVCs will be dealt with by Peninsula Pensions. This will cover the conversion to an annuity, the option to use the AVC fund to buy some additional scheme benefits(where applicable) and the tax free cash available to the member.
If a scheme member decides to take out an In-House AVC then please contact the pension section if you need further assistance about how to proceed.
As an alternative to the in-house AVC arrangements a scheme member can arrange a Free-Standing AVC or a Stakeholder pension with a provider of their choice which will require them to set up a Direct Debit via their personal Bank Account.
Peninsula Pensions are happy to provide further information about topping benefits but are not qualified to give advice and it is suggested that the scheme member contact an independent financial advisor before making any decisions relating to paying any form of additional contributions.
Please note that the employer must continue to deduct APC contributions and additional contributions for those that elected to purchase added years under earlier regulations, even if the member is on reduced or no pay i.e. unpaid leave. If the member is on half pay or no pay due to sickness then they are only required to make these payments on the pay they receive, although it will be deemed that full contributions have been made for this period. The member can choose not to continue their AVC or additional LGPS contributions at any time.
EMPLOYER OPTIONS
The employer can award additional benefits to a member as follows:
Shared Cost Additional Pension Contributions (SCAPC)
Subject to their Discretions Policy, the employer can choose to award a member additional pension up to a maximum of £6500.00 per annum (payable in full on retirement at the member’s normal pension age under the LGPS 2014 or if retirement is on the grounds of Tier 1 or 2 Ill Health but reduced for early payment in all other cases under current legislation). Please see the ‘Buying Additional Pension Employer Guide’ in the Employers section of our website under ‘Absences and APCs (Additional Pension Contributions)’ for further information..
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There are no survivors benefits attached to this award.
Once an employer SCAPC is awarded there is no further cost to the employer for that additional pension.
This option is available to active members of the scheme and for those leaving on redundancy or business efficiency when the award can be made up to 6 months after the date the member’s employment ended. For administration purposes, payment is to be received by Peninsula Pensions at least 4 weeks before leaving if the member is to cease their employment wherever possible.
The employer will be liable to pay the cost as an immediate one-off payment to the relevant Pension Fund and notify Peninsula Pensions that the payment has been made.
Additional Contributions (October 2014) Page 1 of 2