Your pay may having dropped during the pandemic for a number of reasons. Whether a pay drop will affect your LGPS pension depends on the reason for the reduction.
Sick leave: If your pay is reduced or you receive no pay because you are off work due to sickness or injury, your pension builds up as if you were at work receiving normal pay. You will continue to pay pension contributions on any pay you receive during your sick leave.
Authorised unpaid leave: If you employer allows or requires you to take a period of unpaid leave, you will not build up any pension for the unpaid period. You can choose to pay Additional Pension Contributions (APCs) to buy the pension you ‘lost’ in the unpaid period.
If you choose to buy the pension you have ‘lost’, the cost will be split between you and your employer. Your employer will meet two thirds of the cost, but only if you elect to pay the APCs within 30 days of returning to work.
You can use the Buy lost pension calculator to find out how much this would cost.
Coronavirus Job Retention Scheme: To help businesses retain staff during the pandemic, the Government introduced the Coronavirus Job Retention Scheme, also known as furlough. The scheme ended in September 2021.
The Government did not expect public sector organisations, such as councils, to use the Coronavirus Job Retention Scheme except in very limited cases. Public sector employers were expected to continue to pay staff in the normal way, even if they were not at work.
If your employer was able to use the job retention scheme and you both agreed, your employer may have kept you on the payroll while they had no work for you because of COVID-19. This is also known as being ‘on furlough’. You may have been:
- fully furloughed – this means you could not do any work for your employer during the hours you were recorded as being on furlough, or
- flexibly furloughed – this means you could work for any amount of time or work pattern and your employer could claim the furlough grant for the hours you do not work, compared to the hours you would normally have worked.
The rules varied between the scheme’s introduction in March 2020 and its closure in September 2021. Your employer was able to claim from the Government part of your wages for the hours you did not work. Your employer may have chosen to top up your pay to its normal level. If you received less pay when you were ‘on furlough’, the amount of pension your built up was lower. You would have continued to pay pension contributions on any pay you did receive.
You can pay Additional Pension Contributions (APCs) to buy extra pension to make up for the pension you lost during a period of furlough. Your employer does not have to pay towards the cost of buying extra pension, but it could choose to. Use the Buy extra pension calculator to find out about the cost to you.
Emergency volunteering leave: The Government introduced a new volunteering scheme to allow the public to contribute to the coronavirus response. The scheme allows workers to take unpaid statutory emergency volunteering leave to volunteer in health and social care authorities.
If you take a period of emergency volunteering leave, your LGPS pension will build up as if you were working normally. You only pay contributions an any pay your employer pays you during the period.