Can I run a SIPP alongside my LGPS pension?

blizeH

Thanks, my LGPS pension definitely isn't final salary, but I think it does get matched by the employer at least so I'm very grateful to have it. It's just a shame I missed out on the ARCs as a nice extra!

taktikback

yes it is final salary, but it's changing to career average from April 1st

..unless you're not in the LGPS which the last 3 pages suggest you are...

jem16

blizeH wrote: »

Thank you, I may have misunderstood but I think I already have a DC plan - I just liked the idea of ARCs as a nice top up

The LGPS is a DB plan, not a DC plan. ARCs are simply being replaced by Additional Pension, more or less the same so you can still do that if you want.

blizeH wrote: »

Thanks, my LGPS pension definitely isn't final salary, but I think it does get matched by the employer at least so I'm very grateful to have it. It's just a shame I missed out on the ARCs as a nice extra!

As already said it is final but about to become career average. Both are Defined Benefit plans so subject to actuarial reduction if taken early.

blizeH

Oh, thank you very much both! Good to know. I was especially worried that the new APCs would be different (and worse) in some way but if they're more or less the same (ie pay in a reasonable amount, and get a reasonable amount back that is linked to inflation) then it's still a winner

For some reason I thought my pension had already switched to career average but obviously not... IMO that probably makes more sense anyway and it's still a really good deal compared to the alternatives.

Thanks again!

jem16

blizeH wrote: »

Oh, thank you very much both! Good to know. I was especially worried that the new APCs would be different (and worse) in some way but if they're more or less the same (ie pay in a reasonable amount, and get a reasonable amount back that is linked to inflation) then it's still a winner

If you want the guarantee that a Defined Benefit pension brings, then yes they are still a good choice.

For some reason I thought my pension had already switched to career average but obviously not... IMO that probably makes more sense anyway and it's still a really good deal compared to the alternatives.

Thanks again!

LGPS switches to career average on 1st April. However that's still a DB pension, not a DC pension.

Do you have any intention of retiring before state pension age? If you have that's where an alternative might be a good idea, especially now with the proposed changes to DC pensions.

amandajc

I'm interested in this discussion too as I am hoping to fund the years between 60 and 66 (my normal retirement age) from my S&S ISA so that I don't have to take the reduction on my LGPS pension (which would be about 27%). I have recently started paying into the inhouse AVCs scheme but they can't be taken till 66 either.

As I have an existing FSAVC payable at 60 (sold to me by the COOP 16 years ago - perhaps not wisely since I should really have been directed towards ARCs or inhouse AVCs?) the Chancellors news was quite welcome. I should now be able to use this rather than have to buy an annuity.

At the moment it's not a very large amount (latest transfer value about £16,000) and I'm just trying to work out the best way of using it, and how much to add rather than put into the ISA. Would I perhaps be better transferring it into a SIPP? Or just leave it where it is and up the payments? It has a "guaranteed minimum fund" with charges of "less than 1%". I have an iii account for my ISA and could have it managed there for £120 pa but I'm struggling to decide what best to do.

Thoughts very welcome.

atush

Sipps may not be what you need (unless you want to invest in Commercial property and single shares). If like most you a re investing in bonds and funds, a Personal pension might be cheaper- look at both.

Keep your isas, but putting new money into a DC pension of some type will give you an immediate boost of tax relief at your highest rate. So 100 into a pension will only cost you 60-80 depending on your rate. And you can take it anytime after age 55.

Isas being tax free on the ay out, don't use your Personal allowance of 10.5K. Pension will, so after your TFLS you could take out as much as your PA each year and pay no tax.

amandajc

Thanks atush. I'll look at what's available for personal pensions. The FSAVC is not a good deal then, you think?

I am a basic rate tax payer (and that won't change) so I presume it's best to fund my pension enough to be able to take out just below the tax threshold each year between 60 and 66 (using the 25% tax free LS in year one) and then take all other income from my S&S ISA? (If it's there :-))

It is important to me that I can make this work as my husband is 6 years older than me so will be retired when I am 60 (in 5 years time). I don't want to have to wait until he is 71 before I can join him.

This is all going to be a bit touch and go, so I am very grateful for the help.

atush

The FSAVC is not a good deal then, you think?

No, not if it is tied to the main pension to be taken at the same time. And not if it doesn't get extras like salary sacrifice does.

amandajc

Thanks atush, but it isn't tied to the main pension - it's a CIS free standing AVC, currently "worth" about £16,000 and can be taken from 60.

Never really thought about it much until the Budget, just been paying the £50 per month for the last 16 years, but now it looks as if could be a real help as it could be taken as cash over the 6 year period.

I'm thinking I could add to it rather than take out a new PP but I'm not sure whether I'm paying over the odds for it and I might get more value elsewhere by transferring?