LGPS & AVC's query

jockob

My mum retired on 26 Dec 2008. She is in the LGPS and has also paid AVC's into it for many years (invested through Standard Life).

As of Friday 23/1/09 she is still being told that it is not possible to calculate how many years she could buy back with her AVC's due to 'waiting on new factors' that apparently came into effect in October 2008.

I know very little about how these things work but it seems a bizarre that she can be put into a position where she has a pot of money but no clear information on which to make decisions, such as whether to take more or less as a lump sum etc, almost a month after she retired. Does anyone have any similar experience? Is this normal?

On the same point, could my mum be losing out because of these delays - for instance it is not clear to me where the money actually is now - is it still at Standard Life, and possibly at risk of further stock market fluctations? Or would it have been moved somewhere safer (gaining interest?) on her normal retirment date?

Thanks

dunstonh

It will stay at Std Life until it is transferred. It will be invested in whatever funds your mum chose and assuming she hasnt switched her funds (which is what you normally do as you approach retirement) she will get the performance of those funds whether up or down. She would have the responsibility to switch as she is not using an adviser.

Using your AVC to buy added years after you have retired is not a common transaction. Indeed, it is not one I have heard of before and to be honest, I didnt think would be possible. Using the AVC in conjunction with the main scheme to take lump sum benefits from the AVC rather than the main scheme would be far more common and that is a relatively new option.

jockob

dunstonh, thanks for quick reply.

With regards your second point. Even with my almost total ignorance of the subject, I had thought I understood choices with AVC's to be mainly about how much to take as a lump sum, and how much to use to 'add years' to increase monthly retirement payments. I am surprised to hear to say this is not common. Am I maybe just using the wrong terminology?

Pixieboy

A few questions:
1) was she in the Scotland or England/Wales LGPS?
2) when did she start paying AVCs (before or after November 2001)?
3) Was she paying AVCs right up to leaving, or did she stop at some time before leaving?
4) Was she in active membership up to 26th December, rather than having a deferred benefit from an earlier leaving date coming into payment then?
5) Has she already made an election regarding how she wishes to take her main LGPS benefits (i.e. standard benefits or increasing her tax-free lump sum by giving up some pension) and declared any other pension rights that she is entitled to (for HMRC lifetime allowance purposes)?
6) Did she retire on grounds of permanent ill health?

There have been problems with the transfer factors that are used to determine the service credit for some protected AVC option cases, which may have caused the delay.

jockob

Hello pixieboy,

In answer to your questions...

1. Scotland
2. Before Nov 01, started sometime around 1990
3. Right up to leaving
4. Active right up to 26th Dec
5. Already made election - standard benefits I think although I will check this
6. No, she retired on reaching age 65 in good health