What do I pay?
The rate of contributions is based on your actual pensionable pay. There are nine different contribution rates ranging from 5.5% to 12.5% - see the tables. Your employer will assess the rate of your contributions for each employment based on your actual pay.
The pay bands and the rates that apply from April 2023:
| Band | Actual pensionable pay for an employment | Main section contribution rate for that employment | 50/50 section contribution rate for that employment |
|---|---|---|---|
| 1 | Up to £16,500 | 5.50% | 2.75% |
| 2 | £16,501 to £25,900 | 5.80% | 2.90% |
| 3 | £25,901 to £42,100 | 6.50% | 3.25% |
| 4 | £42,101 to £53,300 | 6.80% | 3.40% |
| 5 | £53,301 to £74,700 | 8.50% | 4.25% |
| 6 | £74,701 to £105,900 | 9.90% | 4.95% |
| 7 | £105,901 to £124,800 | 10.50% | 5.25% |
| 8 | £124,801 to £187,200 | 11.40% | 5.70% |
| 9 | £187,201 or more | 12.50% | 6.25% |
How much will the scheme cost? - Examples
| Jennifer is a part-time receptionist | |
| Hours of work | 30 hours per week |
| Full time equivalent pensionable pay | £22,220 |
| Actual pensionable pay | £18,000 |
| Contribution rate from April 2023 | 5.8% |
| James is a full-time trainee horticulturist | |
| Hours of work | 37 hours per week (full-time) plus non-contractual overtime |
| Full-time equivalent pensionable pay | £20,000 plus £1,000 non-contractual overtime |
| Actual pensionable pay | £20,000 plus £1,000 non-contractual overtime |
| Contribution rate from April 2023 | 5.8% |
Before April 2012, James did not pay contributions on his non-contractual overtime.
He will now pay contributions on his actual pay which includes non-contractual overtime (£21,000). This also means the pay used to work out his pension is higher.
| John is a full-time senior administration officer | |
| Hours of work | 37 hours per week (full-time) |
| Full-time equivalent pensionable pay | £47,000 |
| Actual pensionable pay | £47,000 |
| Contribution rate from April 2023 | 6.8% |
You receive tax relief on your pension contributions. To achieve this, your contributions are deducted from your pay before you pay tax.
Flexibility to pay less - the new 50/50 option
From April 2014 a new option in the scheme called ‘50/50’ was introduced. You can elect for this option at any time, pay half your normal contributions and build up half your normal pension.
How does 50/50 work?
There are now two sections in the scheme – the main section and the 50/50 section.
The main section of the scheme is the section you will be placed in. In that section, you pay normal contributions and get the normal pension build up.
The 50/50 section is a new option. You will be able to elect to move to this section if you wish. If you do so, you will then pay half contributions but, whilst you are in the 50/50 section, you will only be building up half the normal pension. If you have more than one employment you can elect for the 50/50 option in one, some or all your employments.
Regardless of the section you are in, you get full life assurance cover.
Who can elect for 50/50?
Any member can elect to pay into the 50/50 section at any time. An election form to join this section can be downloaded from www.bromley.gov.uk/lgps or obtained from the Pension Team.
How long can you remain in the 50/50 section?
The 50/50 section is designed to be a short-term option for when times are tough financially. Because of this your employer is required to re-enrol you back into the main section of the scheme every three years. This will be carried out in line with your employer’s automatic re-enrolment date. Your employer will tell you when this is if you’re in the 50/50 section of the scheme. If you wish to continue in the 50/50 section at that point you would need to make another election to remain in that section.
You can choose to revert back to the main section of the scheme at any time by informing your employer in writing and you will then start to build up full benefits in the main section from your next available pay period.
50/50 - Example
Let’s take a look at Susan and compare her being in the main section to the 50/50 section of the scheme for one year.
| Main section | 50/50 | |
| Actual pensionable pay | £24,500 | £24,500 |
| Contribution rate | 6.5% | 3.25% |
| Gross contribution amount for 1 year (before tax relief | £1,592.50 | £796.25 |
| Pension built up in 1 year (payable every year in retirement) | £500 | £250 |
| Lump sum life assurance cover | £73,500 | £73,500 |
Susan would pay less in contributions in the 50/50 section – 3.25% instead of 6.5% and she would build up half the pension in the 50/50 section, £250, payable every year in retirement, compared to a pension of £500 if she was in the main section.
But remember, the value of any lump sum life assurance cover payable (three times annual pensionable pay) remains the same regardless of which section of the scheme Susan pays into.
Flexibility to pay more – increasing your benefits
If you want to make additional pension savings to increase your pension benefits there are two tax efficient ways to do so. These are Additional Voluntary Contributions (AVCs) and Additional Pension Contributions (APCs).
Additional Voluntary Contributions (AVCs)
AVCs allow you to pay more to build up extra savings for retirement. From 1 April 2014 your contributions to an AVC arrangement were no longer limited to 50% of your pay, so you can, if you wish, pay up to 100% of your pay towards an AVC, after allowing for any tax and National Insurance liability or any other existing deductions you may have.
Contact Liberata for more information on the AVC fund(s) offered by the London Borough of Bromley.
Additional Pension Contributions (APCs)
You can buy extra pension by paying APCs regularly, over a period of time, or you can buy extra pension by paying in a one-off lump sum. The maximum amount of additional pension you can buy is currently £7,352 (2022/23), this figure will increase each year in line with the cost of living.
The amount it costs depends on how much extra pension you want to buy, the age you start paying the extra contributions and the length of time you want to pay them for.
In the new scheme you can only buy extra pension for yourself and not for additional dependants’ benefits.
Contact Liberata for more information on APCs and a quotation can be obtained from https://www.lgpsmember.org/more/apc/index.php if you are interested in this option.
Shared Cost APCs
In the new scheme, there is also the option of Shared Cost APCs.
Shared Cost APCs cover the amount of pension “lost” during periods of unpaid additional Maternity, Adoption and Paternity leave or periods of unpaid authorised leave of absence.
Shared cost means that if you want to cover such a period, the cost of buying the “lost” pension is shared between you and your employer, with your employer meeting 2/3rds of the cost (provided you make an election to buy the “lost” pension within 30 days of returning to work). Shared cost APCs can be a one off lump sum or regular amount over a period of time.
Contact Liberata for more information on APCs and a quotation can be obtained from https://www.lgpsmember.org/more/apc/index.php if you are interested in this option.
The national website for members of the LGPS
Disclaimer
The information in this leaflet applies to individuals who were contributing members of the Local Government Pension Scheme on 1 April 2014 or who have since joined. This leaflet was up to date at the time of publication in April 2023. This leaflet is for general use and cannot cover every personal circumstance, nor does it cover specific protected rights that apply to a very limited number of employees. In the event of any dispute over your pension benefits, the appropriate legislation will prevail as this leaflet does not confer any contractual or statutory rights, and is provided for information purposes only.
Bromley pensions team
Liberata UK Ltd
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