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  • FIRST POST
    • bioboybill
    • By bioboybill 4th Jan 18, 12:01 PM
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    bioboybill
    LGPS Early Retirement Wannabe
    • #1
    • 4th Jan 18, 12:01 PM
    LGPS Early Retirement Wannabe 4th Jan 18 at 12:01 PM
    Hi all, Some advice/opinions welcomed on my current retirement plans.

    I am 55 with 32 years service and contributions to the LGPS. I earn just over £36K per year. My wife is 56. She currently has 18 years contributions to the LGPS, but she took voluntary severance on 31st July 2017, and has no plan to return to work. She takes a pension of £9K a year from a previous employment, which will reduce to about £2400 when she hits SPA at 67, but then her SP will kick in and she will get around £7800 from that. She has deferred her LG pension, as it would be reduced by about 35% for taking it early.

    Like many parents our age, we have been the bank of mum and dad the last 10 years getting our son through uni and just recently helping him and his girlfriend buy their first house. We have never been able to save for ourselves until the last year when we managed to save £6K. Now I am thinking it's time to start thinking about us, and after 36 years of work with no breaks already I can't bear the thought of doing this past 60!

    We are mortgage free, so that helps a great deal. We live in the North East of England where house prices are relatively low, and we live in a 3 bed semi, so downsizing and moving to a cheaper area isn't an option as part of the plan.

    Originally I was thinking of putting £600 a month into the Prudential LGPS AVC, but my wife is particularly risk averse, so I agreed to just put £300 a month in and make the £60 a month tax saving, and save £250 a month in a savings account, so we have a rainy day/house/car pot.

    If I work until 60 that then gives me a forecast pension of around £18K a year, a £30K TFLS from LGPS and another £18K +/- profits/losses in the AVC, which I believe I can also take tax free in with my LGPS TFLS. If I am correct, I will have 85 rule protection on my pension accrued up to 31st March 2008?

    My plan would be to draw down about £6K a year from my £48K ish TFLS to add to my £18K pension to take me to 67 when my SP kicks in. My wife will continue to take her £9K pension, and possibly pay into a SIPP for the tax advantage. She will defer her LGPS pension as long as possible to minimise the reduction.

    Does all of this sound sensible? Have I missed something? I thought I read somewhere that if you deferred like my wife you still accrue service that counts for the 85 rule. So for instance my wife left her job aged 56 with just under 18 years, so doesn't qualify. However, if she defers just over 6 years she will be 62 and have 24 years, so will qualify. Maybe an LGPS expert on here could advise? I know only her 1999-2008 service would be covered, but better than a poke in the eye!
Page 1
    • Silvertabby
    • By Silvertabby 4th Jan 18, 12:15 PM
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    Silvertabby
    • #2
    • 4th Jan 18, 12:15 PM
    • #2
    • 4th Jan 18, 12:15 PM
    If I work until 60 that then gives me a forecast pension of around £18K a year, a £30K TFLS from LGPS and another £18K +/- profits/losses in the AVC, which I believe I can also take tax free in with my LGPS TFLS.
    Yes, as long as your automatic lump sum (from your pre 2008 service) plus your AVC is less than 25% of the value of your combined pension/AVC benefits. There have been rumblings that HMRC will put a stop to this tax break, but nothing definite yet.

    If I am correct, I will have 85 rule protection on my pension accrued up to 31st March 2008?
    Yes

    I thought I read somewhere that if you deferred like my wife you still accrue service that counts for the 85 rule. So for instance my wife left her job aged 56 with just under 18 years, so doesn't qualify. However, if she defers just over 6 years she will be 62 and have 24 years, so will qualify. Maybe an LGPS expert on here could advise? I know only her 1999-2008 service would be covered, but better than a poke in the eye!
    Yes. Just be careful if your wife, for whatever reason, decides to work/re-join the LGPS - if her benefits are combined, the gap in between won't count towards the Rule of 85.
    Last edited by Silvertabby; 04-01-2018 at 1:07 PM.
    • bioboybill
    • By bioboybill 4th Jan 18, 1:32 PM
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    bioboybill
    • #3
    • 4th Jan 18, 1:32 PM
    • #3
    • 4th Jan 18, 1:32 PM
    Thanks, Silvertabby. Glad my understanding of the 85 rule was correct. ��

    I would still welcome any opinions as to whether my plan seems reasonable, and whether there may be some things I've missed.
    • Silvertabby
    • By Silvertabby 4th Jan 18, 1:51 PM
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    Silvertabby
    • #4
    • 4th Jan 18, 1:51 PM
    • #4
    • 4th Jan 18, 1:51 PM
    Actual advice is outside my remit, I'm afraid. Hopefully someone else will pop up with some ideas.
    • Moby
    • By Moby 4th Jan 18, 3:58 PM
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    Moby
    • #5
    • 4th Jan 18, 3:58 PM
    • #5
    • 4th Jan 18, 3:58 PM
    I'm no financial expert but that Pru AVC tax break is very generous imo. You get 20% relief added and can take it all as a tax free lump sum so long as it doesn't amount to more than 25% of your full pension benefits! I'm putting as much as I can into mine!
    Brexit: Voting to take back what we had never lost in order to lose everything we had.
    Madness!
    • bioboybill
    • By bioboybill 4th Jan 18, 6:35 PM
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    bioboybill
    • #6
    • 4th Jan 18, 6:35 PM
    • #6
    • 4th Jan 18, 6:35 PM
    Yes, I'm hoping those tax breaks stay, and will look to up contributions further when I can.
    • lazyred
    • By lazyred 4th Jan 18, 10:24 PM
    • 11 Posts
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    lazyred
    • #7
    • 4th Jan 18, 10:24 PM
    • #7
    • 4th Jan 18, 10:24 PM
    Out of interest why did your wife get VS instead of VER? I thought you could draw the LGPS without reduction after redundancy over 55.
    • OldBeanz
    • By OldBeanz 4th Jan 18, 10:34 PM
    • 714 Posts
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    OldBeanz
    • #8
    • 4th Jan 18, 10:34 PM
    • #8
    • 4th Jan 18, 10:34 PM
    Your wife is earning less than her tax free allowance so you can either transfer £1k of her allowance to her or pay £2880 into a SIPP then withdraw £3600 each year after the Government has added in 25%.
    • bioboybill
    • By bioboybill 5th Jan 18, 10:41 AM
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    bioboybill
    • #9
    • 5th Jan 18, 10:41 AM
    • #9
    • 5th Jan 18, 10:41 AM
    Out of interest why did your wife get VS instead of VER? I thought you could draw the LGPS without reduction after redundancy over 55.
    Originally posted by lazyred
    Yes, according to the rules you are correct, and I pointed that out to my union at the time. However, what our employer did was that they asked those applying whether they would accept the deal with a reduced pension, or whether they wanted payment of an unreduced pension. They made it clear that if the extra cost of an unreduced pension was more than the severance payment you would be refused. Hence my wife accepted the severance on the basis of a reduced pension and was allowed to go. Everybody asking for the unreduced pension they were entitled to was told they were "critical to the business" and refused.
    • bioboybill
    • By bioboybill 5th Jan 18, 10:43 AM
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    bioboybill
    Your wife is earning less than her tax free allowance so you can either transfer £1k of her allowance to her or pay £2880 into a SIPP then withdraw £3600 each year after the Government has added in 25%.
    Originally posted by OldBeanz
    Yes, that's part of my plan.
    • Silvertabby
    • By Silvertabby 5th Jan 18, 11:46 AM
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    Silvertabby
    “ Out of interest why did your wife get VS instead of VER? I thought you could draw the LGPS without reduction after redundancy over 55.
    Originally posted by lazyred
    Yes, according to the rules you are correct, and I pointed that out to my union at the time. However, what our employer did was that they asked those applying whether they would accept the deal with a reduced pension, or whether they wanted payment of an unreduced pension. They made it clear that if the extra cost of an unreduced pension was more than the severance payment you would be refused. Hence my wife accepted the severance on the basis of a reduced pension and was allowed to go. Everybody asking for the unreduced pension they were entitled to was told they were "critical to the business" and refused. Posted by Bioboybill
    This was becoming more common as at the time I retired a couple of years ago.

    The employer costs due in respect of an unreduced pension at 55 (bearing in mind that OP's wife wouldn't have any R85 protections then as 55 + 18 = 73) would have been very substantial.
    • bioboybill
    • By bioboybill 5th Jan 18, 1:45 PM
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    bioboybill
    Kier administer our pension scheme and have a myownpension website where you can register and get a calculation of your pension from the current date or any day into the future, which is quite nice. However, when my wife tried to register a month before she took severance they told her she couldn't because she would no longer be a member even though she said she was deferring her pension. They said she can always request an estimate once a year for free. That seems daft to me and a waste of resources.
    • Silvertabby
    • By Silvertabby 5th Jan 18, 4:48 PM
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    Silvertabby
    Kier administer our pension scheme and have a myownpension website where you can register and get a calculation of your pension from the current date or any day into the future, which is quite nice. However, when my wife tried to register a month before she took severance they told her she couldn't because she would no longer be a member even though she said she was deferring her pension. They said she can always request an estimate once a year for free. That seems daft to me and a waste of resources.

    Going forward, your wife should receive an annual benefit statement as at 31 March of each year (although they won't be issued until later in the year). This will either be available to look at on line, or will be issued as a paper statement - depends on how your LGPS provider operates.
    • lazyred
    • By lazyred 5th Jan 18, 5:23 PM
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    lazyred
    This was becoming more common as at the time I retired a couple of years ago.

    The employer costs due in respect of an unreduced pension at 55 (bearing in mind that OP's wife wouldn't have any R85 protections then as 55 + 18 = 73) would have been very substantial.
    Originally posted by Silvertabby
    Thanks for the replies and apologies for gong off topic. I am not eligble for 18 months but VER is still offered at my LA. Hopefully this won't change.
    • MakeMoneyWork
    • By MakeMoneyWork 6th Jan 18, 10:51 AM
    • 1 Posts
    • 0 Thanks
    MakeMoneyWork
    Hi All
    This is my first post on MSE and this topic is very pertinent to my current situation.
    My employer (Natural Resources Wales) will be running a voluntary exit scheme in 2018/2019. I was under the impression that it would not be suitable for me as my pension strain costs for receiving an unreduced pension would be around £110,000.
    I will be 57 at the time of the VES with 31 years pension contributions and thus eligible for immediate payment of my pension. I thought that if being made redundant through VES or business efficiency then under LGPS rules I would have to take my pension unreduced.
    From the comments here it appears that I would have the option to take the VES and elect to have my pension paid at the standard reduced rate for my age?
    If I have understood this correctly then this would result in no pension strain costs as they would be being met by me through the reduced pension?
    This would then mean I get the full VES lump sum payment and hopefully make me more likely to be accepted for VES.
    • bioboybill
    • By bioboybill 8th Jan 18, 3:03 PM
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    bioboybill
    Another question regarding LGPS pension, AVC scheme and voluntary severance:


    My plan is to retire at 60, take my pension under the 85 rule where my pre-March 31st 2008 pension is unreduced and take my AVC as a TFLS if that is still allowed. However, if a voluntary severance scheme was available around that time or maybe a year earlier I might be able to get accepted for voluntary severance and defer my pension for a year and live off the severance money. If I was to do that am I able to continue paying into the AVC and get the tax break on contributions until I take the main scheme benefits a year later? Or would I just have to leave the funds invested and take with my main benefits when I choose to take them?
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