Calling LPGS Pension Experts!

hyubh

russell_anderson wrote: »

Yes, I'm going to check with the company Pension Dept. next week

It's the fund administrator you really want to check with, not the company pension department (most LGPS funds are multi-employer, with the fund for a single county possibly having a few hundred employers participating).

It allows me to choose other providors but I'm not sure if the AVC would then be linked to my Final Salary Pension to allow me to take it all as a cash free lump sum or whether I would then be restricted to 25% of the AVC?

'In-house AVC' = linked to the main pension, 'free-standing AVC' = not linked.

moneyfoolish

jamesd wrote: »

You can have an unlimited number of pensions so you can both use the company AVC and make personal pension contributions this year if you like.

Can't really say more without knowing what your pension people say. If you can't use the AVCs for the full pension lump sum, the three investment choices from SL don't look particularly good.

Why settle for only 2.6% from an ISA? You can get 6% without trouble from investments within a stocks and shares ISA. But that won't beat the benefit you get from making pension contributions.

What are your home plans when retiring? Thinking of downsizing? Asking now because downsizing sooner to boost pension contributions could do very well for you on the pension front.

1. I've just managed to find information on the company rules from the intranet and I CAN take out 100% of the AVC as a tax-free lump sum subject to limits. By using the LGPS calculator I think that with the mandatory cash from the pre 2008 pension this gives me around £26,000 if I work until one year after next April or £30,000 if I work until 2 years after next April which covers most of what I will be putting in. The rest I can get with Flexible Drawdown but will obviously be taxable. The current year payments will be a problem as it says I can't put in a lump sum and it must be payed monthly through payroll up to a maximum of 50% of Pensionable Income which means I will only be able to put in around £4,500 this year. I'm only going to use the SL Sterling Fund as it's so short-term and the tax advantages are good enough for me.
2. The 2.6% refers to my lowest current ISA (I only have Cash ISAs) which I will realise for to cover the money I'm putting into the AVC.
3. Not planning to downsize as we like our house and think we can manage on my pension of around £30,000 plus 2 old age pensions (increased by deferring both) plus £150,000 in cash isas and NI Index Linked. I guess the surviving wife or husband would sell up and downsize but until then we'll stay where we are if possible.

moneyfoolish

hyubh wrote: »

It's the fund administrator you really want to check with, not the company pension department (most LGPS funds are multi-employer, with the fund for a single county possibly having a few hundred employers participating).



'In-house AVC' = linked to the main pension, 'free-standing AVC' = not linked.

1. I said the company because I work for West Sussex County Council (indirectly now as we've been outsourced but still in the pension under TUPE) and I noticed that although our AVC is with Standard Life many other councils are with Prudential. I'm assuming (maybe incorrectly!) that somebody in the council Pensions Dept. will be able to tell me what I need to know.
2. Spot on. I've now confirmed what you said re AVCs.

jamesd

£150,000 in cash ISAs? That's shockingly bad for retirement planning. Huge missed opportunity to be better off by having used and using S&S ISA investments instead. To give you some idea, that £150,000 in cash ISA could be switched to S&S ISA and invested to produce something like £9,000 a year of tax free income.

Looks as though getting the AVCs and personal pensions up to the maximum the £50,000 limit or your taxable PAYE income allows is going to be the most profitable course for you.

moneyfoolish

jamesd wrote: »

£150,000 in cash ISAs? That's shockingly bad for retirement planning. Huge missed opportunity to be better off by having used and using S&S ISA investments instead. To give you some idea, that £150,000 in cash ISA could be switched to S&S ISA and invested to produce something like £9,000 a year of tax free income.

Looks as though getting the AVCs and personal pensions up to the maximum the £50,000 limit or your taxable PAYE income allows is going to be the most profitable course for you.

I fear you're correct and I should have been using the S&S ISAs for a long time. Too conservative by half, I'm afraid after getting burned in the Technology slump when I was investing in high-tec shares!!!!!! I'm thinking of switching some of the Cash ISAs to S&S now because of the low rates but maybe I'll switch a lot more!

kidmugsy

Hold on! You imply that your wife won't have any pension bar her State Pension. So why not start contributing to one right away? Even if she has no earnings she can contribute £3600 (gross) p.a. and then when she draws it it'll be tax-free!! (Well, at least until she is, ahem, a widow.)

Here's the arithmetic. For each £2880 (net) she contributes, £3600 enters the fund. Ignoring growth and inflation for simplicity, when she crystallises it she gets £900 tax-free lump sum, and she uses the remaining £2700 for either an annuity or as income withdrawal.

moneyfoolish

kidmugsy wrote: »

Hold on! You imply that your wife won't have any pension bar her State Pension. So why not start contributing to one right away? Even if she has no earnings she can contribute £3600 (gross) p.a. and then when she draws it it'll be tax-free!! (Well, at least until she is, ahem, a widow.)

Here's the arithmetic. For each £2880 (net) she contributes, £3600 enters the fund. Ignoring growth and inflation for simplicity, when she crystallises it she gets £900 tax-free lump sum, and she uses the remaining £2700 for either an annuity or as income withdrawal.

If I pop off first, my wife gets 50% of all my pensions and she downsizes. Unfortunately, she's never been interested in investing anything. She prefers spending money to saving!!!! She thinks I'm "mean" because I want to save money!!!!!

hyubh

russell_anderson wrote: »

I said the company because I work for West Sussex County Council (indirectly now as we've been outsourced but still in the pension under TUPE) and I noticed that although our AVC is with Standard Life many other councils are with Prudential. I'm assuming (maybe incorrectly!) that somebody in the council Pensions Dept. will be able to tell me what I need to know.

Well, if you've been TUPE'd, then your employer will no longer be the council, however the new employer will have become an 'admitted body' in the West Sussex Pension Fund in order for you and others to remain in the LGPS. Funnily enough, and not that it should (!) matter, but WSCC pension staff have recently been TUPE'd themselves...

moneyfoolish

hyubh wrote: »

Well, if you've been TUPE'd, then your employer will no longer be the council, however the new employer will have become an 'admitted body' in the West Sussex Pension Fund in order for you and others to remain in the LGPS. Funnily enough, and not that it should (!) matter, but WSCC pension staff have recently been TUPE'd themselves...

Spot on! I'm in IT and we were moved over a year ago but most of the Admin staff (including HR/Pensions) have only moved recently - or are you speaking as one of them?

pandora205

I'm no expert but I am a LGPS contributor who also pays into AVCs. From a recent presentation I attended I seem to recall that some AVC companies now impose penalties for those contributing less than 5 years (PRU was one - I'm with Clerical Medical which I don't think does), so that will be worth checking.

I don't know about your scheme but with mine it is fine to take the lump sum entirely or partly from the AVCs provided they don't make up more than 25% to the calculated total pension pot (I have the calculation somewhere but I don't get close). However, I think the pre 2008 lump (LGPS) does have to be taken in cash but I could be wrong.

I have a few years to go so not as well informed as I will be nearer the time!