Increasing Your Pension Benefits Oct 2018 | Page 6

2
Why Should I Consider Increasing
My Pension Benefits?
Most of us look forward to a happy and comfortable retirement.
In order to have that little bit extra to spend during your retirement years it
is worth considering paying extra contributions. It is a tax efficient way of
topping up your income in retirement.
3
Are There Any Limits On How Much I Can
Contribute To Increase My Pension Benefits?
Should you choose to purchase additional pension in the LGPS, at 1 April
2018 the maximum you can buy is £6,822 annual pension (this figure is
index linked each year).
If you choose to contribute to the Scheme AVC plan you can contribute up
to 100% of your pensionable pay.
There is no limit on the amount of contributions you can pay into a personal
pension, stakeholder pension or to a FSAVC plan. You can, however, only
receive tax relief on contributions up to 100% of your taxable earnings.
In addition, unless you have enhanced protection, there will be a tax
charge if in any year, other than the year in which all your pension benefits
have become payable, the value of your pension savings has increased in
excess of the annual allowance or if, when you draw your benefits, the
value of all your pension savings exceeds the lifetime allowance. Tax will
be payable on any excess amount.
As your normal LGPS contributions are somewhere between 5.5% and
12.5% this leaves a significant proportion of your taxable earnings that you
can invest in additional contributions to buy extra LGPS pension or in AVCs.
4
SouthYorkshirePensionsAuthority
4
What Choices Do I Have?
Pay Additional Pension
Contributions To Buy Extra
Scheme Pension
How much additional pension
can I buy?
At 1 April 2018 the maximum amount of annual
pension you can buy is £6,822 (this amount is index
linked every April). You can choose to buy additional
annual pension in multiples of £250 for you alone.
Do I get tax relief on the extra
contributions?
If you pay tax, you will receive tax relief on the
extra contributions just as you do on the basic
contributions you pay. LGPS contributions are
deducted direct from your pay and the tax relief (at
your highest rate) is automatically given through
the payroll. This means that tax is calculated on
your pay after your pension contributions have
been deducted.
How much do I have to pay?
The amount of contributions you pay will depend
on your age when you start paying the additional
contributions, the amount of pension you wish to
buy, and the period over which you wish to pay the
contributions.
SouthYorkshirePensionsAuthority
5