Extra Pension payments to maximise employers contribution (LGPS)

Assistant

Hi

I currently pay into a LGPS.
I have read on other threads about making regular extra payments into this as it can maximise my employers contributions into it?

Can anyone offer an idiots guide to explain this to me?

Many thanks

xylophone

http://www.rbwm.gov.uk/berks-pension/current-members_increasing_your_benefits.htm
Look up your own authority's pension page?

hyubh

Assistant wrote: »

I currently pay into a LGPS.
I have read on other threads about making regular extra payments into this as it can maximise my employers contributions into it?

In a defined benefit scheme like the LGPS, the employer contribution rate is irrelevant for calculating the employee's pension - rather, the employer will pay whatever the actuary determines is necessary to fund the liabilities being accrued overall, either for the fund as such or the individual employer (local policies can vary). Twenty years ago that might have been 6%, ten years ago 12% and now 18%, given different actuarial assumptions over time, but that won't have any bearing on the pensions the fund pays out. Similarly, if the stock market has a boom that it's never had before and the value of fund investments dramatically rises, any corresponding fall in contribution rates wouldn't mean pensions get smaller.

More practically, any additional contributions you make yourself will not be matched by any additional employer contributions. While in principle an employer *could* pay to provide an employee with additional pension if they have a policy saying they might, it's highly unlikely you have an employer that would do that.