Making a one-off pension contribution

thatoldchestnut

Right, I rang up, and it's fine, I'm allowed back in. Interestingly, the woman I spoke to said that they allow you to opt back in once, but that after that, you're not allowed. Relief.

Thanks for your help, everyone.

CAE

thatoldchestnut wrote: »

Right, I rang up, and it's fine, I'm allowed back in. Interestingly, the woman I spoke to said that they allow you to opt back in once, but that after that, you're not allowed. Relief.

Thanks for your help, everyone.

I believe it used to be that you were only allowed to opt out twice, but this no longer applies after 1st April 2008 due to the new LGPS Regs. Glad you have opted back into scheme. Did you put your request in writing?

thatoldchestnut

No, but when I spoke to her, she said she would send the form out to me today, so hopefully I'll have that in a couple of days from now.

Pixieboy

Hi,
Good to see you've "seen the light" - that's a good friend you have there!
I notice that you were asking about making a one off lump sum payment of £3,000. I don't believe this is possible in the case of AVCs or ARCs (Additional Regular Contributions - the ones that buy the £250 chunks of pension). Both must be deducted at source from salary and the AVCs are limited to no more than 50% of the pensionable pay in any given pay period; there is no limit to the ARCs on the contribution side (save that there must be enough pay to have them deducted), the limit is on the amount of additional pension that can be provided (£5,000, i.e. 20 x £250 chunks).
I don't think it has been mentioned that the £250 chunks are subject to RPI increases starting from the date of the first contribution, not just from the date that the pension comes into payment, i.e. the £250 will have had about 38 years cumulative RPI increases applied by age 65 and should therefore be considerably more than £250. It is important to note that if the additional pension is put into payment before age 65, unless this is on permanent ill health grounds, it will be reduced due to early payment.
The Government Actuary's Department guidance on ARCs can be found here http://timeline.lge.gov.uk/GAD/Additional%20Pension%20Guidance%2021%20Feb%2008.FINAL.pdf and as is the way with these things some corrections are to be found here http://timeline.lge.gov.uk/GAD/Reg%2014%20CORRIGENDUM%20%20Paragraph%203%205%20and%20Tables%20E%20%20F.doc. GAD guidance can be a bit of a struggle at times, but if you want to check what you're being told it's the document that the administrators should be refering to, along with the actual Regulations which can be found in amended "timeline" form from here http://timeline.lge.gov.uk/Default.html. Again, a bit of a challenging read...
For more plain english info on the scheme this national site is useful http://www.lgps.org.uk/lge/core/page.do?pageId=1
You shouldn't be able to backdate your membership, but would join from the beginning of the next pay period. CAE is right, there is no longer the ability to prevent those that have opted out rejoining more than once - this discretion disappeared in April 2008.
If you are in the same employment as when you opted out, I believe that there is no option but to join the two periods together - there will just be a break in your membership.
Hope this helps.

CAE

Well put. I didn't have the time to go into so much detail!

thatoldchestnut

Thanks for your thoughts, Pixieboy. Just having a brief look at the document on ARCs; on page 8 of that PDF file, it has a table for lump sum contributions. It seems to say that for 27 year old males buying £250 of extra pension a contribution of £1,310 is required. So, if I wanted to pay that amount over a period of 12 months, would I divide that figure by 12 to get the amount I'd pay extra on top of my normal regular 5.9% contribution? Or is it more complicated than that?

Up until now I'd been saving money in an ISA with the intention of adding to it regularly but not touching it until I was much older and it had had chance to grow. At the moment I have savings in there of just over £7,200, plus £4,000 in a current account. If I wanted, I could presumably contribute a substantial amount of my earnings over the period of a year, and live off the money I've already saved until the twelve months has elapsed and my pay returns to normal? Thus indirectly using my savings to boost the pension, if you see what I mean.

Pixieboy

An employer can purchase additional pension for a member and they pay by lump sum; that is what Table A on page 7 is for. Can't imagine what employer would be doing that just at the moment though....
What you want is Table C on pages 9/10 etc - over 12 months £250 costs £111.46 per month (if you want dependants element too it's Table E and therefore £123.61 per month over 12 months). The headings on Tables E and F are correct, but the text underneath that explains what is being bought isn't on all of the pages - it should say that the dependents element is provided.
Hope that helps.