Lgps avc

malcb

As a member of the LGPS I am permitted to take out AVCs with either the Pru or the Clerical Medical - the former looks better in terms of felxibility and mgt charges. Is there any easy way I can look at recent performance (and yes I know that is not necessarily a guide!) to compare and contrast. Or should I be looking at a stand alone AVC?

Thanks

jem16

malcb wrote: »

Or should I be looking at a stand alone AVC?

Thanks

The good thing about AVCs with the LGPS is that they normally allow you to take the tax free lump sum from the AVC pot thus avoiding the need to take it from the main scheme.

Check if this is the case for you.

malcb

My LGPS Admin team say I can take a proportion of the AVC as cash but the lump sum that comes from the main scheme has to be taken as cash.

jem16

malcb wrote: »

My LGPS Admin team say I can take a proportion of the AVC as cash but the lump sum that comes from the main scheme has to be taken as cash.

I would check that with them as it may be possible to take all of the AVC pot as a tax-free lump sum.

http://www.lgps.org.uk/lge/core/page.do?pageId=102204

If you draw your AVC at the same time as your LGPS pension, you may be able to take some or all of your AVCs as tax free lump sum, provided your total lump sums from the LGPS do not exceed 25% of the overall value of your benefits including your AVC fund (or, if lower, 25% of the lifetime allowance less an adjustment for the value of other pension benefits). If you retire (other than on flexible retirement) and draw your AVCs later, you can normally only have up to 25% of your AVC fund as a lump sum.

If they still won't budge, I would consider a separate pension completely.

If you are a basic rate taxpayer, have you considered that a S&S ISA might be a better option rather than a pension?

nettymes

I am in the lgps and recently started paying AVCs to the Pru (the only option). The 'man from the Pru' comes every year or so and gives a presentation to whoever signs up to explain it all.

You can normally take up to 25% of your total fund as tax-free cash on retirement. As you get a defined benefit pension (ie based on final salary) from the main scheme you don't have an actual fund (pot of money) as such, so they multiply your pension by a multiplier (can't remember exactly what, but it's quite big, 20?) to give an equivalent fund value. Add to this any lump sum you have to take (for pre 2008 service) plus the total AVC value to give your total 'fund'. You can then take up to 25% of this as tax-free cash. This has to include any pre2008 lump sum, but you'll probably find the balance is more than your AVCs, in which case you can take it all as cash.

The Pru has an interactive Fund tool where you can see the performance of all their funds.
www.pru.co.uk/funds/tools2/
Choose Pension Funds, then filter on AVCs. You need to know which Series you can choose from, but you should have a booklet from the Pru giving you this info. Mine is Series 3.