Buying Pension Lost Due to Absence – Terms and Conditions

General

If you have a period of no pay (otherwise than because of illness or injury, or ordinary or paid additional child-related leave, or reserve forces service leave i.e. a leave of absence) or a period on no pay due to a trade dispute you will not be building pension during that period.

However, you can, if you wish, buy back the amount of pension you lost during that period by paying Additional Pension Contributions (APCs). You can do this regardless of whether you are in the main or 50/50 section of the Scheme.

Buying back the whole of the lost pension will ensure the period of leave of absence on no pay, or the period on no pay due to industrial action, is included when calculating certain protections due under the scheme if you were a member of the scheme before 1 April 2015 e.g. if you are a member to whom the underpin or Rule of 85 apply.

Buying back lost pension following industrial action would be at full cost to you (unless your employer chooses to contribute towards the cost).

However, if you wish to buy back lost pension resulting from leave of absence (other than due to industrial action) of more than 30 days, your employer will meet 2/3rds of the cost provided you make an election to do so whilst you are an active member of the Scheme and within 30 days of returning to work after the period of absence. If you make an election after 30 days and whilst still an active member you can still buy back the amount of lost pension but it will be at whole cost to you (unless your employer chooses to contribute towards the cost). You can cover lost pension for any period of absence but the maximum period for which an employer must meet 2/3rds of the cost, is a period of 36 months.

You can choose to buy the lost pension by spreading payment of the additional pension contributions over a number of complete years or by making a one-off lump sum payment. However, if you are within a year or over your Normal Pension Age (or NILGOSC takes the view that spreading payments would be impracticable) you can only pay by means of lump sum.

If you choose to spread the payments, the additional contributions would be deducted from your pay each pay period and attract automatic tax relief. If you choose to make payment by a one-off lump sum this would normally be deducted from your pay (with automatic tax relief). However, you have the option to make a lump sum payment directly to NILGOSC but you would then be responsible for claiming any tax relief on the payment direct from HM Revenue and Customs via your self-assessment tax return. Please note, tax relief will only be given on contributions up to 100% of your UK taxable earnings or, if greater, £3,600 to a tax relief at source arrangement, such as an additional pension contribution arrangement.

If you choose to buy the lost pension by making a lump sum payment, you will be credited with the full amount of pension bought immediately. If you choose to spread payment of the additional pension contributions over a number of complete years you will be credited with the full amount of lost pension bought if you complete the payments or if, before completing payments, you are retired on the grounds of ill-health with an enhanced pension. In all other cases, if you cease payments early (either because you choose to cease making the payments or because you cease membership of the Scheme) you will be credited with the amount of lost pension you had bought at that time.

NILGOSC does not require a medical when buying pension lost due to absence.

Any lost pension bought increases the pension payable to you when you draw your pension. If you draw your pension before your Normal Pension Age (NPA) under the Scheme the lost pension that has been bought will, unless retirement is on the grounds of ill-health, be subject to a reduction (because you are drawing it early) and if you draw your pension after your Normal Pension Age (NPA) it will be subject to an increase (because you are drawing it late).

In the event of your death, no extra pension benefits will be payable to your dependants in respect of the extra pension bought (as the APCs buy extra pension for you only).

The Process

When making an application you must specify the amount of lost pensionable pay (as provided by your employer) and, if payments are to be made by regular contributions, the period over which the contributions are to be paid (but the end date for regular contributions can be no later than your Normal Pension Age under the scheme).

If you have more than one active pension account in the Scheme (i.e. because you are in the Scheme in more than one job) you must specify which job the lost pension is in respect of. If you wish to pay additional pension contributions for each job, you will have to submit separate applications to buy lost pension for each job.

Before using this website to obtain a quote for buying back the amount of lost pension you must first obtain a written statement from your employer showing the total amount of pensionable pay lost during the period of absence or industrial action and confirmation of the section of the scheme you were in (main section or 50/50 section) during the period of absence or industrial action. You will need this information when obtaining a quote from this website of the cost of buying back the amount of lost pension.  You should keep a copy of the written statement from your employer for your records. You can request the statement from your employer if they have not automatically sent it to you following the period of absence or industrial action. If your period of absence is authorised unpaid leave or unpaid additional child related leave and your election is made more than 30 days after the date you return to work you may seek agreement from your employer that they will contribute towards the cost of the lost pension, but your employer is not obliged to contribute.  If your employer does agree to contribute in this situation, your employer will need to sign the completed application form to confirm that this has been duly authorised.

After getting the additional pension contributions quote from this website you should, using the application form provided on this website, submit the application to your employer. On receipt of your application, your employer will check they agree the details outlined in Part A of the completed application and, where they have agreed to contribute towards the cost of any lost pension when their contribution is not required under the Scheme regulations, duly authorise this. Your employer will sign and date the form and submit it to NILGOSC.

If you choose to pay by regular additional contributions, or by a one-off lump sum deduction from pay, your employer will commence deduction of the additional pension contributions from your pay from the next available pay period and NILGOSC will notify you that your application has been accepted.

If you choose to pay by a lump sum payment made directly to NILGOSC you should not submit the payment to us until we have confirmed that your application has been accepted and have provided you with details of how to make the payment.

Please note that if there is a delay in a decision on whether your application can be accepted which is caused by you and you pass a birthday which results in the cost of purchasing lost pension to change, you will be asked to resubmit a new application.

The Agreement

By signing the application form to buy lost pension you agree to the amounts shown as payable by the member to be deducted from your pay or invoiced to you depending on the method of payment chosen. If regular payments have been selected then your agreement to deduct the amount shown as payable by the member continues for the period shown on the application form.

Should you fail to meet any of the payments due the agreement shall cease and the amount of pension purchased shall be adjusted to take account of the period over which payments have not been received.