Prudential is one of the UK’s largest additional voluntary contributions providers for Local Government Pension Scheme funds. Standard Life, Scottish Widows, Aegon, Legal & General and Clerical Medical also process AVCs.

LGPS members have two options when it comes to increasing their pension benefits. They may buy an extra pension in the LGPS, and are allowed to make additional contributions to buy up to £7,316 of extra pension, if they are in the main section of the scheme, or they may build up a pot of money by saving AVCs, which then provide additional benefits to their LGPS savings. These are conducted through a contracted AVC provider and deducted directly from a member’s pay before tax, providing instant tax relief. Around 3 to 5 per cent of LGPS members make use of AVCs.

New system causes delays

In 2020, members and schemes began to report long delays in the divesting of AVC pots, which led to delays in LGPS members being able to access their main scheme pension. There were also “serious delays” in Prudential attributing contributions to members’ individual AVC pots when they pay contributions, according to one source with knowledge of the matter.

When people paid their AVC contributions these payments would be made to Prudential, but in some cases these were not attributed to their individual pots “for months”.

Problems began when Prudential migrated to a new platform it uses to process members’ reports. The new system would reject an entire schedule of members if one of them had left the scheme, causing delays.

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