We all want to look forward to a happy and comfortable retirement. You may wish to consider paying extra pension contributions now to boost your income in later life. There are two primary ways you can pay extra contributions in the LGPS.

You can pay Additional Pension Contributions, Additional Voluntary Contributions, or both. You can also pay extra outside of the LGPS to increase your retirement income. Don't forget you get tax relief on extra contributions which lowers their real cost to you. 

Additional Pension Contributions (APCs)

If you are in the main section of the LGPS, you can pay additional contributions to buy extra pension. The most that you can buy is £8,903 of extra yearly pension (2025/26 tax year). You can pay for the extra pension by paying APCs over  a number of complete years, or by paying a lump sum. 

The cost depends on your age, how much yearly pension you buy and how you choose to spread the payments. The cost of buying extra pension is reviewed from time to time. If you buy extra pension by paying regular contributions, the amount you pay each pay period could possibly change in the future.

You cannot buy extra pension via APCs if you are in the 50/50 section of the LGPS.

If you wish to buy extra pension by paying a lump sum, there are two ways that you can do this:

  • Through your employer payroll
  • Pay East Sussex Pension Fund (ESPF) directly – you will need to arrange tax relief with HMRC via your self-assessment tax return

You can read more about tax relief at your highest marginal rate on the Government website using this link:Tax on your private pension contributions - This link opens in a new browser window 

If you pay APCs over a number of years, the regular contributions would be taken from your monthly pay, just like your normal pension contributions. Your normal contributions and additional contributions are deducted before your tax is worked out. If you pay tax, you will receive tax relief automatically through your payroll. Tax relief is available on all pension contributions up to 100% of your taxable earnings.

The shortest period that you can spread APC payments over is 12 months. The maximum is the number of years to your Normal Pension Age. Your Normal Pension Age is linked to your State Pension age. If you are a year or less from your Normal Pension Age, you can only pay by lump sum.

You can find out more about buying extra pension in the Buying extra pension – terms and conditions.

Getting quotes and applying for APCs

Use the LGPS  Extra pension calculator to find out more about paying APCs and the cost to you.

If you are happy with the quote provided, an application should be sent to ESPF.

Contact details here

Note: Your employer has the discretion to award some extra pension, albeit this facility is very seldom used. If your employer has agreed to meet part of the cost of buying the extra pension, you must also enclose written agreement from your employer showing the amount of extra pension to be bought and the share of the cost that they will meet.

Taking your extra pension

 Any extra pension that you have paid for is linked to your LGPS benefits and quoted therein. The extra pension will be paid to you when you take your main LGPS pension. The extra pension is deemed payable from your Normal Pension Age. It will generally be reduced if you take your pension early or increased if you take it later. Different rules apply if you retire because of ill health.

 

Additional Voluntary Contributions (AVCs)

When you pay Additional Voluntary Contributions (AVCs), you build up a pot of money which you use to provide benefits on top of your LGPS benefits. AVCs are taken directly from your pay before your tax is worked out, so if you pay tax, you receive tax relief automatically.

All Local Government Pension Funds have an arrangement with an AVC provider that you can invest money in – an in-house AVC. East Sussex Pension Fund use the Prudential. You have your own personal account and you decide how the money in your pot is invested. You can pay AVCs if you are in the main or 50/50 section of the LGPS. You can pay up to 100% of your pensionable pay into an in-house AVC.

Information on the Prudential AVC

East Sussex Pension Fund has an arrangement with an AVC provider (Prudential) through which members can invest money in a range of funds. The employee has their own personal account that, over time, builds up with the contributions they pay in and the assets they choose to invest into. At retirement they have a range of options they can select based on the pot of money they have accrued.

Employees have the right to reduce, increase or stop paying AVCs at any time.

ESPF has selected a range of funds for you to invest your pension savings in. The Prudential have created (and maintain) a ‘Fund guide’ which includes information to help you understand the fund options and investment risks. The guide has detailed descriptions of the funds that are available to you. And includes a glossary and other practical information. Please read the guide fully before you choose where to invest.

Explore Fund Guide here

Prudential also provide fact sheets for all Funds available which provide the latest information on the make up of the Fund and performance. Go to Workplace pensions fact sheets. Once there, click on the Workplace Pensions fund prices tool and filter the fund series to view Series 3 funds. The With-Profit fund’s factsheet (which is the default offering) is available here.

How to apply for a Prudential AVC

You can apply to take out a Local Government AVC through the Prudential's website.

You will then need to select 'East Sussex County Council Pension Fund' from the list of LGPS Funds and enter your employer. To apply you will need your payslip and details of your investment choice.

The AVC arrangement will be set up between the Prudential and yourself. Prudential will pass information to your payroll department with details of your start date and how much needs to be deducted from your salary each month.

Once you have set up your AVC, Prudential offer an online service that gives you quick and secure access to your policy whenever you like. You have access to a whole range of features to help you manage and control your policy quickly and easily.

Explore what the online service offers

Register for the online service

Shared cost AVCs

Your employer may offer a Shared Cost AVC through a salary sacrifice arrangement (usually via a third party called “Money Matters”. In these circumstances, in addition to saving on Income Tax you can also benefit from National Insurance contributions savings on the AVC contributions paid through a salary sacrifice arrangement. Your employer also benefits because they also pay lower national insurance contributions. You will need to check with your employer whether they offer a Shared Cost AVC scheme.

Using your AVC at retirement

There are several options available to you when you retire which include buying a regular income for life (via the Fund, AVC provider or provider of your choice) or taking a tax-free lump sum (in full or partial value). You can transfer your AVC to another pension arrangement.

For a full list of options please refer to:

A guide to additional voluntary contributions in the LGPS

Making the right decision

Deciding how to use your AVC plan is an important financial decision. You should consider getting guidance or independent financial advice to help you.

Pension Wise, a service from MoneyHelper, is a free, impartial service offered by the Government to help people over age 50 understand their pension options, including your AVC options. You can find out more on the Pension Wise website or by calling 0800 138 3944 to book a phone, online or face to face appointment. You can also use MoneyHelper to help you Find a retirement adviser.

Other ways to increase your retirement income

Free Standing Additional Voluntary Contributions

These are like in-house AVCs but are not linked to the LGPS in anyway. With Free Standing Additional Voluntary Contributions, you choose a provider, usually an insurance company. You may want to consider the different charges, alternative investments and past performance when you do this.

Personal or stakeholder pensions

You can pay into a personal pension plan or stakeholder pension scheme at the same time as paying into the LGPS. With these arrangements, you choose a provider, usually an insurance provider. You need to consider their charges, alternative investments and past performance when you choose.

You may wish to obtain independent financial advice before starting any sort of additional pension savings.