The cost to you
The rate of contributions you will pay is based on how much you are paid. When you join, and every April afterwards, your employer will determine your contribution rate. If you have more than one job your contribution rate will be determined separately for each job. If your pay changes throughout the year, your employer may decide to review your contribution rate at that time, rather than wait until the following April.
Contributions table 2020/21
Here are the pay bands and contribution rates that apply from April 2020.
|If your actual pensionable pay is:||You pay a contribution rate of:|
|Up to £14,600||5.5%|
|£14,601 to £22,800||5.8%|
|£22,801 to £37,100||6.5%|
|£37,101 to £46,900||6.8%|
|£46,901 to £65,600||8.5%|
|£65,601 to £93,000||9.9%|
|£93,001 to £109,500||10.5%|
|£109,501 to £164,200||11.4%|
|£164,201 or more||12.5%|
The contribution rates and / or pay bands will be reviewed periodically and may change in the future. This is to maintain the average contribution from employees at 6.5% and to ensure the long term costs of the scheme are managed. If you decide to join the scheme you should check your payslip to make sure that pension contributions are being deducted. Your contributions are very secure. As the LGPS is set up by Statute, payment of benefits to scheme members is guaranteed by law.
Your employer currently pays the balance of the cost of providing your benefits after taking into account investment returns. Every three years, an independent actuary calculates how much your employer should contribute to the scheme. The amount will vary, but generally your employer will contribute two thirds of the scheme's costs and the employee contributes one third.
At the present time there is no overall limit on the amount of contributions you can pay, although, there is a limit on the extra LGPS pension you can buy, currently £7,194. However, tax relief is only given on:
If you are interested in paying additional contributions to increase the benefits you will receive in retirement you should refer to the section How to increase your pension benefits.
Additionally, under HM Revenue and Customs rules there are controls on the pension savings you can have before you become subject to a tax charge - although most people will not be affected by these controls if you are interested in paying additional contributions you should be aware of the limits. To find out more, see the section on Tax controls and your LGPS benefits.