There may be times during your career when you will have a period of unpaid leave. Whilst on unpaid leave you do not pay pension contributions and therefore you are not building up pension. This section of the website looks at the different types of unpaid leave, what it all means and the process to obtaining a quote and submitting an application to buy back lost pension due to absence.
If you have a period of no pay or a period of no pay due to a trade dispute you will not be building pension during that period (this does not include a period of no pay because of illness or injury, or ordinary or paid additional child related leave, or reserve forces service leave ie a leave of absence).
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 sections of the pension scheme.
If you wish to buy back lost pension resulting from leave of absence (other than due to a trade dispute), your employer will meet 2/3rds of the cost provided you make an election to do so within 30 days of returning to work after the period of absence. If you make an election after 30 days 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 a period of absence up to a maximum of 36 months.
Buying back lost pension following a trade dispute would be at full cost to you.
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 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 direct to South Yorkshire Pensions Authority 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 pension scheme) you will be credited with the amount of lost pension you had bought at that time.
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 pension 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).
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 a trade dispute, is included when calculating certain protections due under the scheme if you were a member of the scheme before 1 April 2014 e.g. if you are a member to whom the underpin or Rule of 85 apply.
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).
SYPA can determine that payments cannot be made over a period of time where it would be impracticable
Process to purchasing lost pension