Buying added pension

Buying added pension means paying extra into your public sector scheme in return for a fixed amount of additional yearly pension, which then rises with inflation like the rest of your benefits. The NHS Pension Scheme, the Teachers’ Pension Scheme (TPS), the Local Government Pension Scheme (LGPS) and Civil Service alpha all let active members do it, either as a lump sum or by regular deductions from pay. The price depends on your age, the amount you want and the payment method, so each scheme gives you a quote before you commit.

How added pension works

All four schemes now build up pension on a career average basis: each year you earn a slice of pension based on that year’s pay, and the slices are revalued until you retire. Added pension is an extra slice you buy directly. You choose a yearly amount of pension, the scheme works out what it costs, and once paid for it is added to your record.

Because it sits inside a defined benefit scheme, the scheme carries the investment risk. You know in advance how much extra pension a year you are buying. What you do not know is how long you will live to draw it, which is why the scheme actuary’s factors, based on your age at the time you buy, set the price.

There is usually an upper limit on the total added pension you can hold, set by each scheme and updated from time to time. Check your scheme’s current figure before you ask for a quote.

Lump sum or regular contributions

Option	How you pay	Points to weigh
Lump sum	One payment, often through payroll so tax relief applies	Buys the pension straight away; needs cash to hand
Regular contributions	A fixed amount from each month’s pay over a set number of years	Spreads the cost; if you stop early you get a reduced amount
Shared cost (LGPS)	Paid by you and your employer	Only for buying back pension lost during certain absences

A lump sum can suit someone who has received an inheritance or redundancy payment and wants a guaranteed income in retirement. Regular payments suit people who want to budget for it month by month. Regular contracts usually have to finish before your normal pension age, and in some schemes a medical declaration is needed when you start.

Scheme by scheme

NHS Pension Scheme

Members of the 2015 Scheme can buy additional pension in set units by lump sum or periodical contributions. There is also the Early Retirement Reduction Buy Out (ERRBO), which lets you pay extra so that you can retire a limited number of years before your normal pension age without the usual early payment reduction. NHSBSA publishes the factors and an online calculator. Following the McCloud remedy, all active members now build up pension in the 2015 Scheme, so this is the route open to everyone still working in the NHS. The NHS Pension Scheme guide covers the basics.

Teachers’ Pension Scheme

TPS members can buy additional pension, again by lump sum or by instalments from pay. Teachers’ Pensions also has a faster accrual option, where you pay a higher contribution rate in exchange for building up pension faster for that year. Both are managed through your online Teachers’ Pensions account. The Teachers’ Pension Scheme guide explains how the core scheme builds up.

Local Government Pension Scheme

The LGPS calls these Additional Pension Contributions (APCs). You can buy extra pension in your own right, and there is a special shared cost APC to buy back pension lost during authorised unpaid leave, unpaid child-related leave or unpaid absence through illness or injury. If you apply within the deadline set in the scheme rules, counted from your return to work, your employer pays most of the cost. Miss it and you pay the whole cost yourself. School support staff and council employees in the LGPS should ask their payroll team as soon as they come back from a period of unpaid leave.

Civil Service alpha

Alpha members can buy added pension for themselves, or for themselves and their dependants. They can also buy an effective pension age (EPA), which works like the NHS buy-out: you pay extra now so you can take your pension earlier than your normal pension age without a reduction.

Tax relief and the annual allowance

Added pension bought through payroll is taken from your pay before Income Tax, so you get tax relief at your highest rate. Say you are a basic rate taxpayer in England and pay £100 a month for added pension. Your tax bill falls by £20, so your take-home pay drops by about £80. A higher rate taxpayer would see take-home pay fall by about £60. National Insurance is still charged on the full amount, because pension contributions made this way are not salary sacrifice. In Scotland the saving depends on your Scottish band (19% to 48%). Pension tax relief goes through this in more detail.

Added pension counts towards your pension input for the year. If you are a higher earner, or you buy a large lump sum, the extra could take you over the pension annual allowance and leave you with a tax charge. Each scheme sends a pension savings statement if you go over its own reporting level, but you can ask for a figure at any time.

Added pension compared with the alternatives

The ordinary contribution rates already give you a sense of the trade-off. In 2026/27 NHS members pay 5.2% to 12.5% of pay, TPS members 7.4% to 12%, LGPS members 5.5% to 12.5% in the main section, and alpha members 4.6% to 8.05%. Those rates buy pension, death cover and ill-health cover together. Added pension buys only the extra pension.

The two common alternatives are:

• An additional voluntary contribution (AVC) arrangement, which builds an invested pot. Schemes either have an in-house AVC provider or point members to arrangements outside the scheme.
• A personal pension or stocks and shares ISA, which you control fully but which carries investment risk and no inflation guarantee.

Which is better depends on your age, health, expected retirement date and other savings. That is a personal decision, and these pages give general information only. A regulated financial adviser can look at your whole position, and MoneyHelper (the government-backed guidance service) gives free general guidance on pensions.

How to get a quote

Log in to your scheme’s member portal or contact the pensions administrator. NHS members use NHSBSA’s online services; teachers use their Teachers’ Pensions account; LGPS members contact their local fund; alpha members use the Civil Service Pension Scheme member hub. Ask for the cost of a lump sum and of regular contributions so you can compare, and check the deadline for returning the election form, because quotes are usually only valid for a short time.