APCs are just extra contributions that increase your pension.
APCs are taken off your pay, along with your normal contributions and go directly to your NESPF pension account where they remain, increasing with the cost of living until you take your pension.
The cost depends on how much extra pension you want, the age you start paying and how long you want to pay APCs for. As such you can set a monthly amount that suits you. APCs can be paid monthly (minimum 1 year contract) or you can pay a one-off lump sum.
The best way to see costs is to use the APC calculator.
If you want to stop paying APCs simply contact your payroll department and let them know. You will be credited with the extra pension you have bought up to the date you stopped.
If you have less than 2 years membership in the pension scheme and you leave, you will get a refund of your APCs (minus tax).
If you leave before you have finished making APC payments and you have more than 2 years membership, you will be credited with the extra pension you have bought up to the date you stopped paying.
The extra pension you have purchased with your APCs will be paid at the same time as your main pension benefits. But remember if you take your pension early, whether by choice or in cases of redundancy/business efficiency retirement, the extra pension you have bought will be reduced for early payment.
To set up APCs visit https://calc.lgpsmember.org/scotlgps2015/apc/ and select "buy extra pension.”
If you are looking to buy lost pension, follow the steps on the PEN 11 Buying Lost Pension form.
You cannot have APCs to buy extra pension if you are in 50/50
If you are buying more than £1000 of extra pension or paying APCs for more than 1 year, you must submit a medical certificate. Your application for APCs can be refused on medical grounds.
The maximum amount of extra annual pension you can purchase is £7,075.
AVCs are extra pension contributions that are invested separately in funds managed by our AVC provider Prudential. AVCs are taken off your pay, just like normal contributions and are transferred to your Prudential account. Here your contributions and returns on investments will remain until you retire or transfer them to another provider.
The cost is entirely flexible – you decide how much you would like to pay and you can increase or decrease your AVCs whenever you like. You can pay AVCs through your salary as a one-off lump sum or you can pay monthly. You can also start and stop your AVC payments when you need to.
Prudential offers a number of funds that you can invest in. There are a range of funds which offer different investment types e.g. property, equity, and different levels of risk and reward. Funds with the most potential for growth are increasingly riskier compared to funds will less promising returns. You can move your money between funds at any time.
As your AVCs are set up through the NESPF, if you leave or opt out, your contributions to your AVC fund will stop. Your AVC fund will continue to be invested until it is paid out. You can transfer your AVCs to another pension provider or draw it down at the same time as your pension benefits.
When you retire you can use your AVCs to buy extra annual pension within the LGPS or with another provider. You also have the option to take up to 100% of your AVC as a tax free lump sum (subject to HMRC limits).
Alternatively members age 55+ can take all their AVC fund as a lump sum payment. Here you take 25% of your AVC as a tax free lump sum, with the other 75% as a taxed lump sum. This is known as an UFPLS. There are some restrictions on who can receive an UFPLS but more information can be provided on request.
To learn more, set up payments and manage your AVCs visit Prudential’s website.
We cannot give any financial advice on investments. However, we do recommend members regularly review their AVCs to ensure they are performing well. Returns on investments depend on contributions paid, performance and investment rates, so members should know the value of their investments can go down as well as up. Although the Fund monitors overall performance of AVC providers, it is your responsibility to monitor your funds.
With UFPLS, please note if you take payment of your AVC fund at retirement, an UFPLS will only be available if you cannot take your entire AVC fund as tax-free cash.
We are not financial advisors and unfortunately cannot advise you of the best option. This is a personal decision which will depend on your own circumstance and preferences. As such you should consider taking advice from an independent financial advisor.
If you have AVCs, you should regularly monitor the performance of your investments to assess whether they are delivering your desired returns and to ensure you are still on track to receive your expected pension benefits.
Information on the performance of the funds AVCs are invested in is provided below: