Disclaimer: This article was written by people who genuinely get excited about how tax efficient paying into pensions can be. We are not affiliated with MoneySavingExpert, and Martin hasn’t endorsed this article or My Money Matters. This is simply our take on some of Martin’s most useful pension guidance, viewed through an LGPS lens. Any excitement that follows is entirely our own.
The origin story
We’ve always been big fans of Martin. Then he started talking pensions.
Look. We were already fans. The man has spent decades making sure ordinary people don't get ripped off. He's basically the Avengers, but for your bank account, and also just one person, and also he's British, and also much more useful. But you see where we’re going.
But then —then— he started banging the pensions drum. And we did what any self-respecting superfan would do: we grabbed our notebooks, found our pens, and prepared to have our minds mildly obliterated.
Spoiler: our minds were obliterated. Here's what he said. Here's why it matters. And here's why, if you're in the LGPS, you're sitting on something even more powerful.
An estimated £30 billion in unclaimed pensions exists in the UK right now. The average forgotten pot? Around £10,000. These are real pensions from real jobs that people simply lost track of after moving on.
Martin LOVES this topic. Practically vibrates with excitement about it. Because it's one of the only financial wins that costs absolutely nothing and takes ten minutes.
Ruth from Berkshire found £45,000. Not because she was clever. Not because she was rich. Because she checked. Martin was so excited he put her on television. We fully support this energy.
Tools to use:
Government Pension Tracking Service
Gretel
Martin's most famous pension tip fits in one sentence:
“Take the age when you start putting money in your pension, halve it, and that's the % of your salary to aim to put in for the rest of your working life.”
Simple. Brilliant. Slightly panic-inducing depending on your age.
But, before you start calculating your percentage, there’s one important thing to understand: this rule was designed for standard workplace pensions, not the LGPS.
In a standard workplace pension, the amount you contribute directly affects the size of your pension pot. The more you pay in, the more retirement income you’ll potentially have available later.
The LGPS works differently. Your pension is based on your salary and length of membership, not the amount you contribute, which is why Martin’s rule doesn’t apply in the same way.
But the principle behind it is still useful.
Rather than asking whether you’re contributing the “right” percentage, ask whether you’re on track for the retirement lifestyle you want.
The Retirement Living Standards provide a useful benchmark:
|
Comfort level |
Single-person household figure |
Two-person household figure |
|
Minimum Covers essentials only |
£13,400 |
£21,600 per year |
|
Moderate Occasional extras and trips |
£31,700 per year |
£43,900 per year |
|
Comfortable Holidays and leisure included |
£43,900 per year |
£60,600 per year |
Source: Retirement Living Standards, 2025/26
If your projected LGPS pension is likely to fall short of the lifestyle you’d like in retirement, that’s where additional savings can help.
A Shared Cost AVC gives you a separate retirement savings pot alongside your LGPS pension. So while Martin’s rule isn’t a guide to how much you should contribute to the LGPS itself, it can still be a useful prompt to think about whether you’re saving enough overall, and whether a Shared Cost AVC could help close the gap.
This is the moment in every Martin talk where someone in the audience audibly gasps. The government gives you tax relief when you save into a pension.
If you pay Income Tax, you’re already getting tax relief on your core LGPS pension contributions.
But that’s not the superpower we’re talking about here.
The real magic happens when you save extra through a Shared Cost AVC, where both Income Tax and National Insurance savings can work in your favour.
A Shared Cost AVC is a separate retirement savings pot that sits alongside your LGPS pension. Because contributions are taken before Income Tax and National Insurance, the cost to your take-home pay can be much lower than the amount that ends up invested for your future.
| Take it as salary A basic rate taxpayer receives just £72 in hand after tax from every £100 earned. |
Put it in a Shared Cost AVC £100 turns into £138.89 thanks to tax and National Insurance savings. |
That’s the gobsmacking bit. That £38.75 difference? That's the Income Tax and National Insurance you would have paid on your salary, now going into your retirement pot instead. And that’s just the basic-rate taxpayer version. Higher-rate taxpayers can benefit even more. Before any investment growth. Before anything. Just for structuring it this way.
And there’s another potential advantage. Subject to HMRC limits and scheme rules, LGPS members can often take their Shared Cost AVC pot as part of their tax-free lump sum at retirement.
No other major public sector pension scheme offers this flexibility.
The choice isn’t £72 in your pocket versus £72 in savings. It’s £72 in your pocket versus £138.89 invested for your future.
If Martin found out you had access to this and weren't using it, we think he'd do that thing where he goes very quiet and then very loud. You know the thing.
Every £137.85 invested today has time to grow. That’s why Martin is always talking about starting early. The biggest advantage isn’t finding the perfect investment. It’s giving your money more room to work.
Once money is inside your Shared Cost AVC, it has the opportunity to grow through investment returns over time.
And here’s where things get interesting. The returns your investments generate can stay invested too. Over the years, those returns can generate returns of their own.
It’s called compound growth, and it’s one of the main reasons retirement saving rewards people who start sooner rather than later.
That’s why retirement saving isn’t always about finding huge amounts of money to invest. Often, it’s about giving your money more time.
The tax and National Insurance savings provide the boost. Time gives that boost the chance to grow.
Even if you’re close to retirement, this still works. You might not get decades of growth, but you still benefit from the tax and National Insurance savings immediately. More going into your pot, less coming out of your pay.
Capital at risk when investing. The value of your investments can go down as well as up. Always talk to a financial advisor if you have questions.
As if the above wasn't enough, a Shared Cost AVC can also unlock some genuinely lovely side effects for those in the right circumstances.
Keep your Child Benefit
The High Income Child Benefit Charge claws back up to £2,337/yr for two-child families earning over £60k. A Shared Cost AVC can reduce assessable income below that threshold and stop the claw-back entirely.
Boost student loans
Student Maintenance Loans are means-tested. Drop household income from £60k to £50k via a Shared Cost AVC, and a child could receive £1,546 more per year at university.
There is a deadline. Martin would tell you not to ignore it.
From April 2029, the National Insurance saving on salary sacrifice pension contributions will be capped at £2,000 per year. The current uncapped double tax relief only applies in the window we're in right now.
Martin has spent decades saying: the best time to act was yesterday. The second best time is today.
It's time to make him proud.