Additional Regular Contributions

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You can buy additional pension in blocks of £250 per year up to £5,000 per year. You will make additional monthly contributions over a period of your choice from 1 year to age 64.

You can also choose whether or not to provide a surviving partner’s Married partner, civil partner or nominated co-habiting partner pension. If you decide to do this, the pension for your surviving partner would be 37.5% of the pension you purchase for yourself.

You can start the additional contributions at any time but the cost will change if you do not start before your next birthday. The Government Actuary’s Department who provide the tables for the purchase of additional pension may increase the contributions from time to time. The increase will start from the following 1 April for those who are already paying contributions.

The amount of pension you agree to purchase will increase each April by the rise in the retail price index from the date you make the first contribution.

The contributions would be in addition to those you already pay. If you normally pay tax you will be entitled to full tax relief on the contributions paid.

There is a ready reckoner and you can also look at the tables from the Government Actuary’s Department by following the links below:

If you decide to proceed please complete the form below with the following information:

• the amount of annual pension you wish to buy (must be divisible by 250)
• whether or not you wish to provide a surviving partner’s pension
• the period over which you wish to pay the contributions
• the monthly contribution to buy £250 per year pension (from the appropriate table above)
• the total monthly contribution you wish to pay (the figure in 1, divided by 250, times the monthly contribution in 4)
• The date you wish to start paying

Please print, complete and sign the form and send it to:
Pension Services
Guildhall 2
Kingston upon Thames
KT1 1EU

When we receive the form we will check the figures and contact you if they are incorrect.

The following information may be useful to you:

• The contract once entered into may be stopped at any time before it ends, by notice in writing. You would be given the proportion of the additional pension purchased at the time your contributions cease.
• If you retire on health grounds, the full amount of pension being purchased will be credited and added to any benefits payable.
• If you die whilst still employed there will be no benefits payable in respect of the pension purchased unless you opted to provide a pension for your partner.
• The additional pension is payable from age 65. If you retire before age 65 and request payment of the pension it will be reduced.
• At retirement you will be able to exchange some of this pension for a tax free lump sum. For each £1 of pension given up you will receive a lump sum of £12.

As you will see from the election form, you are declaring that you are in reasonably good health and not currently undergoing any tests.

You can also pay additional voluntary contributions (AVCs).  This is a different way of paying additional contributions to increase your retirement benefits.  You can contribute up to 50% of your annual salary, tax free.  Your monthly contributions are invested with the Council’s AVC provider and at retirement the fund you have accumulated will be used to buy you, and your spouse/surviving civil partner (optional), additional pension in the form of an annuity.  Such benefits cannot be guaranteed at the outset since eventual amounts payable will depend upon fluctuating investment returns and annuity rates at the time of retirement.  As an alternative, when you retire, you may transfer your accumulated fund into the Local Government Scheme to purchase additional pension.

Please contact Pension Services, Guildhall II if you require any further information with regard to AVCS.

Pension benefits at retirement are now subject to a limit known as the Lifetime Allowance. When pension benefits become payable at retirement, a Benefit Crystallisation Event, you will be told by the scheme administrator, how much of your Lifetime Allowance you have used. This is calculated by multiplying the pension by 20 and adding the lump sum (your pension pot). The Lifetime Allowance for 2009/10 is £1.75 million. If your pension pot exceeds the Lifetime Allowance, the excess will be subject to tax. At retirement you are now allowed to have up to 25% of your pension pot as tax free cash. If you have paid AVCs you may take your fund at retirement as cash, providing it does not exceed this limit.

You may wish to consult an Independent Financial Adviser. You can find one in the Yellow Pages or by ringing this number, 0800 085 3250, where you will be given a list of 8 advisers in your area. You may be charged for their advice.