Local Gov Pension Scheme
Discussion
Does anyone have experience of the LGPS ?
My wife is looking at retirement and most of it is straightforward but she has £65K in AVC's which can be used to top up her pension or taken as 100% tax free or buy an annuity.
Now, we can't seem to get an idea on how much pension a year 65K would buy in the LGPS and they are being really difficult when we ask for a quote.
Anyone been through it recently
She is 61 and intends to retire in 2030 after going down in March 2027 to 3 days a week (they even advised her to pull out of the CARE scheme at that point !)
It feels to me as if we should take 100% tax free at retirement.
My wife is looking at retirement and most of it is straightforward but she has £65K in AVC's which can be used to top up her pension or taken as 100% tax free or buy an annuity.
Now, we can't seem to get an idea on how much pension a year 65K would buy in the LGPS and they are being really difficult when we ask for a quote.
Anyone been through it recently
She is 61 and intends to retire in 2030 after going down in March 2027 to 3 days a week (they even advised her to pull out of the CARE scheme at that point !)
It feels to me as if we should take 100% tax free at retirement.
I'm guessing that it's difficult to get a quote from the scheme as the proposed retirement date is so far in the future. I'd suggest that you could probably get a reasonable estimate from just using an annuity calculator online. I don't imagine what you'd get from the scheme itself would be significantly more or less generous than the market generally.
I'm surprised that they've recommended that she cease active membership in the scheme when going part time though. I definitely wouldn't do this as you're just giving away the benefit of the employer contributions and additional accrual for three years.
One thing to consider is whether she might want to pay more of her salary into the AVC fund in the years leading up to retirement, if she can afford to do this. That way she can obtain full tax relief on the contributions and then withdraw the AVC fund as a tax free lump sum on retirement. Just check that she doesn't take the AVC fund to more than 25% of the value of the overall benefit from the scheme, otherwise tax will be payable on any lump sum over the 25%.
I'm surprised that they've recommended that she cease active membership in the scheme when going part time though. I definitely wouldn't do this as you're just giving away the benefit of the employer contributions and additional accrual for three years.
One thing to consider is whether she might want to pay more of her salary into the AVC fund in the years leading up to retirement, if she can afford to do this. That way she can obtain full tax relief on the contributions and then withdraw the AVC fund as a tax free lump sum on retirement. Just check that she doesn't take the AVC fund to more than 25% of the value of the overall benefit from the scheme, otherwise tax will be payable on any lump sum over the 25%.
Gary C said:
Does anyone have experience of the LGPS ?
My wife is looking at retirement and most of it is straightforward but she has £65K in AVC's which can be used to top up her pension or taken as 100% tax free or buy an annuity.
Now, we can't seem to get an idea on how much pension a year 65K would buy in the LGPS and they are being really difficult when we ask for a quote.
Anyone been through it recently
She is 61 and intends to retire in 2030 after going down in March 2027 to 3 days a week (they even advised her to pull out of the CARE scheme at that point !)
It feels to me as if we should take 100% tax free at retirement.
I d be getting advice re the idea of dropping to three days, as I was advised not to.My wife is looking at retirement and most of it is straightforward but she has £65K in AVC's which can be used to top up her pension or taken as 100% tax free or buy an annuity.
Now, we can't seem to get an idea on how much pension a year 65K would buy in the LGPS and they are being really difficult when we ask for a quote.
Anyone been through it recently
She is 61 and intends to retire in 2030 after going down in March 2027 to 3 days a week (they even advised her to pull out of the CARE scheme at that point !)
It feels to me as if we should take 100% tax free at retirement.
I took the AVC as cash, I looked at buying extra pension & decided against it.
I don t know her situation but depending on years in the scheme you can leave after 60.
Jump on the portal & have a look the calculators, I asked for a forecast & decided time was more important to me so left.
g40steve said:
I d be getting advice re the idea of dropping to three days, as I was advised not to.
Why would you need to get advice on that? Either you can afford the reduction in pay or you can't. It's not exactly complex.You're always going to be worse off financially working fewer hours, but if you don't need the cash, then having the free time could be more valuable.
Gary C said:
Does anyone have experience of the LGPS ?
My wife is looking at retirement and most of it is straightforward but she has £65K in AVC's which can be used to top up her pension or taken as 100% tax free or buy an annuity.
Take it tax free - topping up her pension is probably the worse option as it will buy so little, you don't get the employers contributions and if its anything like the Cheshire LGPS this will be significantly more than your wife's contribution, i.e. employee pays 6.5% employer pays 22%.My wife is looking at retirement and most of it is straightforward but she has £65K in AVC's which can be used to top up her pension or taken as 100% tax free or buy an annuity.
Gary C said:
She is 61 and intends to retire in 2030 after going down in March 2027 to 3 days a week (they even advised her to pull out of the CARE scheme at that point !)
This could be sound advice if she has any pension in the final salary scheme which was prior to April 2014. Defcon5 said:
Are they suggesting she does flexible retirement? Where you draw some pension benefits whilst reducing your hours?
I think with this you start a new LGPS pension account under your new hours and accrue that separately to your previous one.
Yes, they are but I dont know why. Cant see it makes much difference. She doesn't need to draw thr pension when she reduces to 3 days so I think to keep paying as being a CARE its not going to make much difference to the final pension.I think with this you start a new LGPS pension account under your new hours and accrue that separately to your previous one.
And we will keep paying AVCs at max
Cheers for your views people.
I think people are right about the avc's can take 100% tax free and we are putting the max in. It would need to boost the pension by a fair bit to make positive benefit in any reasonable timescale
lauda said:
NWMark said:
This could be sound advice if she has any pension in the final salary scheme which was prior to April 2014.
It s not. The final salary pension will be based on full-time equivalent pay. Quoted from Cheshire LGPS...
For membership built up between 1 April 2008 and 31 March 2014 you receive a pension of 1/60th of your final pay as a pension.
For membership before 1 April 2008, you receive a pension of 1/80th of your final pay plus an automatic lump sum of three times your pension.
Your final pay is usually your pensionable pay in the year you leave the Scheme. Pay from one of the previous two years can be used if it is higher.
NWMark said:
lauda said:
NWMark said:
This could be sound advice if she has any pension in the final salary scheme which was prior to April 2014.
It s not. The final salary pension will be based on full-time equivalent pay. Quoted from Cheshire LGPS...
For membership built up between 1 April 2008 and 31 March 2014 you receive a pension of 1/60th of your final pay as a pension.
For membership before 1 April 2008, you receive a pension of 1/80th of your final pay plus an automatic lump sum of three times your pension.
Your final pay is usually your pensionable pay in the year you leave the Scheme. Pay from one of the previous two years can be used if it is higher.
“If you are working part time in your final year, the final pay used to work out your pension is the pay you would have received if you worked whole time.”
She should have access to free advice either as part of normal course of pension preparation, or through the union. If she is in a senior role and has a big pot, it may also be worth getting independent advice - there are some complex rules in play if she is a long standing member.
I can't see any possible scenario where ending membership when reducing days is advisable. There are many protections in place around the final salary implications of doing so. She would also lose her death in service benefit by coming out of the scheme.
I can't see any possible scenario where ending membership when reducing days is advisable. There are many protections in place around the final salary implications of doing so. She would also lose her death in service benefit by coming out of the scheme.
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