Buying extra annual leave
Many employers let you buy extra annual leave. How this affects your LGPS pension depends on how the scheme works.
There are three common ways employers offer extra leave.
Method 1: Extra leave counts as authorised unpaid leave
Some employers let you buy extra leave by taking less pay. This may count as approved unpaid leave.
What does this mean for my pension?
Since 1 April 2026, approved unpaid leave is protected.
Your employer uses the pay you would have received if you hadn’t taken the leave. They don’t use your lower pay.
This means your pension can keep building up while you’re off.
Do I need to buy back lost pension?
Usually not. In most cases, there’s little or no effect on your pension.
What if I joined the LGPS before 1 April 2014?
Extra leave may affect the final pay used for benefits built up before 1 April 2014.
Method 2: Your contract hours or working days are reduced
Some employers reduce your working days for the year. Instead of taking unpaid leave, they change your contract and reduce your salary.
What does this mean for my pension?
A lower salary usually means lower pensionable pay.
You may:
- build up less CARE pension
- pay lower pension contributions
- have a lower pay figure for some pension calculations.
Can I make up the difference?
Yes. You may be able to pay an Additional Pension Contribution (APC) to buy extra pension. You’ll usually pay the cost yourself.
What if I have membership before 1 April 2014?
A lower salary could affect your benefits built up before 1 April 2014. Special protections may help.
Method 3: The cost comes from your take-home pay
Some employers pay your full salary. They then take the cost of the extra leave from your take-home pay.
What does this mean for my pension?
In this case:
- your full salary counts for your pension
- pension contributions are based on your full pay
- your CARE pension isn’t affected
- any benefits built up before 1 April 2014 aren’t affected.
Do I need to buy back pension?
No. Your pensionable pay stays the same, so there’s no loss of pension.
Important
Employers run these schemes in different ways. Before buying annual leave, check with your employer:
- how the scheme works
- if it will affect your pensionable pay
- if you can pay extra to increase your pension.
If you’re not sure how a scheme could affect your LGPS pension, contact your employer or the Pensions Service before you join.
