Local authority final salary pensions

[Teenagemum34]

I work for a local authority and have a final salary pension, I’m still in my 40s but have recently paid off my mortgage so have got a bit of spare cash. I’d wondered if there was an option with final salary pensions to pay extra into your pension and what the resultant benefit would be?

Hi, yes I think you can. I used to work for an LA too, and our scheme had something called additional voluntary contributions. They didn't actually pay into the final salary bit of the pension, but were a separate savings/investment policy that ran along side the final salary. The employer didn't pay anything into it either. I didn't take one out so didn't research it, but I think some people found that they got a better return from other products. But this all depends on interest rates and guaranteed payouts ect.

I think Prudential still do the AVCs. I've always found them to be very helpful in explaining how it all works.

Contact the pension fund and ask them about making AVCs.

The Local Government Pension Scheme is no longer final salary - it’s been career average salary since 2014.

But yes you can pay extra. There’s two options - paying Additional Voluntary Contributions to a company like Prudential to build up a pot you can choose what to do with, or you can pay Additional Pension Contributions to buy additional pension in the main scheme.

More info here: https://www.lgpsmember.org/your-pension/paying-in/paying-more/

You can also look on your pension fund’s website and that will tell you who the AVC provider is and what you need to do to get the payments started.

It won't all be final salary, some old parts might be but anything you are currently paying into is defined benefits but not final salary.

I am a member of a FB group for NHS, CS and LGPS pensions and the people who run the group have webinars from time to time, there is a LGPS one coming that might help https://events.teams.microsoft.com/event/5b2994f8-83ee-4af0-bcd4-f41cd31b1e1e@c73c6e7b-388e-4af2-a9e6-cd3c31210c52

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Thanks for all the responses -
need to get better informed!

You can. However, the additional pension you will get won't be generous in the same proportion as the existing pension you get. It will come to a fairly conservative guess ar what the pension fund can achieve investing the extra money between now and retirement. On the plus side this would be very low risk. However you can probably get a better return on the same money with a separate private pension.

You can. But you might also want to investigate putting the extra into a separate self invested defined contribution plan.
It has the advantage you can draw it from 10 years pre state retirement age - whereas if you take your local govt pension early you will get less per year.
You still have a while for capital growth given you are only in your 40s too.

Additional Pension Contributions are payable at state pension age. If you were to die before this time, their value is lost.
AVCs are payable from age 55/57 but, as with any other contribution scheme, the funds would form part of your Estate if you were to die before SPA.
If you are looking to retire before SPA, I would consider AVCs.