LGPS 2014 - additional years contract

hyubh

pandora205 wrote: »

They're cutting it very fine for implementing the April 2014 changes, aren't they? I'm assuming there is no more news on AVCs and lump sums, etc.

The government are, yes. Apparently a new 'top secret, don't share with anyone' version of the new transitional regs was sent to administering authorities just recently (second time it's happened - the government are being very childish).

pandora205

hyubh wrote: »

The government are, yes. Apparently a new 'top secret, don't share with anyone' version of the new transitional regs was sent to administering authorities just recently (second time it's happened - the government are being very childish).

That's why there's nothing on their site..... It's all a bit sinister.

gardenia101

pandora205 wrote: »

They're cutting it very fine for implementing the April 2014 changes, aren't they? I'm assuming there is no more news on AVCs and lump sums, etc.

hyubh wrote: »

The government are, yes. Apparently a new 'top secret, don't share with anyone' version of the new transitional regs was sent to administering authorities just recently (second time it's happened - the government are being very childish).

Does anyone have any idea when the government will be confirming/amending these details? April is getting very close now....

Thanks.

FatherAbraham

jem16 wrote: »

If you don't use the whole pot for the tax-free lump sum and instead you use it to buy an annuity, the income from that will be taxed as you will more than likely have used up your personal allowance with income from the main scheme. As a basic rate taxpayer with basic rate tax relief, you will then have lost the tax advantage.

Ach, sorry, I've just noticed this.

What you're trying to imply is wrong. That's because an annuity bought with money which is not in a pension fund (and the tax-free lump sum is not in a pension fund) is a purchased life annuity. This has quite different taxation rules from a pension annuity.

In particular, not all of the distributions from a purchased life annuity are regarded as "income" for taxation purposes -- a proportion is capital return, and is therefore exempt from income tax.

So, an annuity bought with tax-free lump sum is income-tax-free, as far as the gradual return of that initial capital is regarded.

Warmest regards,
FA

jem16

FatherAbraham wrote: »

What you're trying to imply is wrong.

Please don't try to put words into my mouth - or posts as in this case.

That's because an annuity bought with money which is not in a pension fund

Which I never said, nor implied. What I did say, and that you managed to selectively cut out, is this;

jem16 wrote: »

The whole point of this thread is whether or not to use ARCs, AVCs or something else entirely.

AVCs offer good value if used to fund the tax-free lump sum as you are getting the whole pot tax-free having gained either basic rate tax or even higher rate tax.

I was quite clearly talking about the AVC pot which is of course a pension. I was also quite clearly talking about the LGPS AVC pot which, until the end of March 2014, will allow you to take the whole pot as a tax-free lump sum instead of commuting pension from the main scheme.

As from April 2014 the AVC rules will revert to the more normal 25% tax-free lump sum and annuity and thus will lose their advantage over a PP or SIPP.

woolly_wombat

hyubh wrote: »

The government are, yes. Apparently a new 'top secret, don't share with anyone' version of the new transitional regs was sent to administering authorities just recently (second time it's happened - the government are being very childish).

I don't think the government are just being childish in their refusal to release details of the LGPS 2014 regulations. I think they will look very foolish indeed if people are panicked into leaving the LGPS because they suspect details are being withheld because valuable features of the current LGPS will be lost if they stay in from 1 April 2014.

WW

FatherAbraham

woolly_wombat wrote: »

I don't think the government are just being childish in their refusal to release details of the LGPS 2014 regulations. I think they will look very foolish indeed if people are panicked into leaving the LGPS because they suspect details are being withheld because valuable features of the current LGPS will be lost if they stay in from 1 April 2014.

No, it would be a great result if loads of people were panicked into leaving LGPS. The state's future liabilities would fall, and those of us in defined-contribution schemes would get a slightly fairer deal.

Warmest regards,
FA

bigadaj

FatherAbraham wrote: »

No, it would be a great result if loads of people were panicked into leaving LGPS. The state's future liabilities would fall, and those of us in defined-contribution schemes would get a slightly fairer deal.

Warmest regards,
FA

Harsh but true. I wonder if the government would then be liable from Mis selling type scandal?

hyubh

FatherAbraham wrote: »

No, it would be a great result if loads of people were panicked into leaving LGPS. The state's future liabilities would fall,

It would in fact cause a funding crisis leading to sharply increased employer rates and/or the government nationalising LGPS funds like it did with the Royal Mail, taking the assets and putting them against the national debt, and allotting the liabilities into the black hole that is the pay-as-you-go schemes' way of accounting for things.

amandajc

As an LGPS member I did believe that the scheme was not actually a burden on "the state" in the way that some other public sector pension funds are. The LGPS is fundamentally different from the other public sector schemes. It is a ‘funded’
scheme, with around £145bn in assets that are invested in order to pay benefits. Am I under a misconception?