Paying into Public Sector pension + AVC: Advice on strategy?

bitofatit

Your_Hero wrote: »

You can't do that with the AVC if it doesn't support drawdown, i.e. you can't take the 25% and then decide what to do with the 75% later. Most AVCs only offer the basic option of annuity and/or lump sum. You'd need to transfer to a provider who can facilitate this. However, with the new Pension freedom rules next April, there is a suspected "third option" for withdrawals so this may be possible but we are still waiting to find out.

So If I am made redundant in say December will I be able to take as much cash as poss from the AVC and transfer the rest to a provider that does drawdown, like H&L for instance?

kidmugsy

bitofatit wrote: »

TBH I'm being made redundant so I think they pay the pension at the full rate rather than reduced - thank you public sector!

Surely you mean "thank you taxpayer".

bitofatit

kidmugsy wrote: »

Surely you mean "thank you taxpayer".

LOLz

lets not go their. But can I thank you all. :beer:

hyubh

kidmugsy wrote: »

Surely you mean "thank you taxpayer".

The standardised way pension issues are treated when it comes to late-career redundancies in the LGPS is quite sensible to me - limits haggling, simplifies costings, prevents the pension fund being diddled by dubious HR decisions, etc...

saver861

bitofatit wrote: »

Wow - thanks for the helpful advice. I joined the scheme in 2010 I think. So I think I can take the 25% lump sum from the AVC and have the benefit of a bigger LGPS Pension.

TBH I'm being made redundant so I think they pay the pension at the full rate rather than reduced - thank you public sector!

Well if it is LGPS then you get the accrued pension without any reduction. However, I would double check your individual circumstances.

There is a formula for working out the total pension pot which takes into account your annual pension that is based on a 20yr assumed take up. Added to that is the lump sum and eventually you get whatever 25% is. It is a total pot.

I'd be inclined to get the precise figures of your entitlement and then work out the options.

bitofatit

Helpful - I think I shall wait till I get my redundancy papers - expected in September and get the settlement figures as you suggest.
Thanks

System

Hi

You can take upto 25% as cash, this can be from the AVC, from the LGPS or a bit of both.

You can buy a pension with your AVC from any provider, including the LGPS. This can be for you alone or to include a spouse.

The LGPS-AVC pension would increase with CPI, this provides "growth" equivalent to CPI that may not be achievable with an ISA. In the private sector there may be more choices.

Getting a return on the 25% lump sum, with little risk will be a pittance in my opinion, probably lower than inflation.

If in doubt please ask.