The Hidden Benefits of the LGPS
Updated: Oct 13, 2025
Let's talk about the Local Government Pension Scheme (LGPS), why it’s so good, and how as an LGPS member you have options to make your retirement even better. We'll go over the value it offers and highlight a fantastic feature that many people don't know about but can seriously boost your pension savings.
The LGPS Advantage:
The LGPS offers its members a range of benefits that make it an attractive pension scheme. These include a secure, index linked retirement income for life. You also benefit from tax relief on contributions, have early retirement options, flexibility in contributions, and robust protection by being a public sector scheme.
Given recent economic challenges, these often-overlooked features reinforce the true value of the Local Government Pension Scheme.
However, there is an additional feature that many members may not be aware of — the Shared Cost Additional Voluntary Contributions (AVC) scheme, and it can make a huge difference to your future financial wellbeing.
Unlocking Hidden Value: Shared Cost AVCs
Ever heard of Shared Cost Additional Voluntary Contributions (AVCs)? This retirement benefit enables you to enhance your pension pot by contributing some of your salary pre-tax – and it’s exclusive to members of the LGPS. It's a way to be a bit smarter with your money and help it go much further for your future.
Due to a reduction in Income Tax AND National Insurance contributions (NICs) on contributions, for regular taxpayers every £1 is boosted by 38%, and if you pay higher taxes, it's an even bigger 72% boost – a simple way to make your money work harder for you.
If it’s flexibility you want, Shared Cost AVCs allow you to potentially retire early and take your pot as a tax-free lump sum when you retire.
Employer Benefits:
Your organisation also wins with this. If you’re an employer in the public sector, not only can you gain from accessing Shared Cost AVCs as an LGPS member, but you can generate valuable savings and better retention by offering the benefit.
The organisation can save money via a reduction in employer NI at 14.3% on the additional contributions made by their employees from their salary, making everyone happy right from the start. It's a win-win situation that helps everyone involved; employees get better retirement options, and the organisation saves at a time when it’s really needed!
If you don’t have access to this benefit as an LGPS member, you are entitled to it – you just need to ask your employer to provide you with access.
If you’re an employer reading this, Shared Cost AVCs can boost the financial wellbeing of your LGPS workforce significantly whilst generating savings for your organisation – and they’re easy to implement.
One of the most valuable retirement benefits out there, Shared Cost AVCs are really worth considering to enhance your benefits package and provide better retirement support for employees in the LGPS.
The explanation of Shared Cost AVCs makes the tax and National Insurance advantages much easier to understand, especially for LGPS members who may not realise how much this option can improve their retirement planning. Clear visuals can also help make complex ideas more approachable, and the Picture to Drawing tool could be useful for creating simple illustrations to support that kind of explanation.
The explanation of Shared Cost AVCs is especially helpful, since the tax and National Insurance advantages are easy to overlook when thinking about LGPS benefits. For organisations creating a simple visual summary of these options, a poster text editor could help make the key points easier for employees to follow.
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