Planning Your Retirement - THE LOCAL GOVERNMENT PENSION ...

GlossaryAdditional VoluntaryContributions (AVCs)These are extra payments toincrease your future benefits.All local government pensionfunds have an in-house AVCscheme where you can investmoney through an AVC provider,often an insurance companyor building society. AVCs arededucted directly from your pay.Contracted-outThe LGPS is contracted-out of theState Second Pension Scheme(S2P). This means that, up to Statepension age, you pay reducedNational Insurance contributionsbetween the Lower and UpperEarnings Limits, unless you haveopted to pay the married woman’s/widow’s reduced rate of NationalInsurance, and that you do notearn a pension under S2P. Instead,the LGPS must guarantee to payyou a pension that in general is ashigh as you would have earnedhad you been in the State EarningsRelated Pension Scheme / S2P.For contracted-out membershipon and between 6 April 1978and 5 April 1997, this is dealtwith as detailed in the sectionentitled Guaranteed MinimumPension on page 18.For membership after 5 April1997, the LGPS has guaranteedthat the benefits it provides will,in general, be no less favourablethan those provided under aReference Scheme prescribedunder the Pensions Act 1995.DiscretionThis is the power given by theLGPS to enable your employer orthe Fund to choose how they willapply the Scheme in respect ofcertain of its provisions. Under theLGPS your employer or the Fundare obliged to consider certain ofthese discretionary provisions andto pass resolutions to form a policyof how they will apply the provision.In respect of the remainingdiscretionary provisions they areadvised to do so. They have aresponsibility to act with prudenceand propriety’ in formulating theirpolicies and must keep themunder review. You may ask youremployer or the Fund what theirpolicy is in relation to discretion.44