Lump Sum from Police Final Salary Scheme - "Mad not to take it"

jamesd

The VCTs do these when they want to raise money, normally for new investment. There's no way to know yet if they will do another one after this one closes on 30 September 2015.

The usual time for announcing new VCT offers is in the October to November timespan. The most popular ones can sell out very rapidly. Last year one sold out on its first day and one of the more popular ones didn't do any fund raising at all.

For diversification my next buy(s) will be in different VCT(s) in that October to November timespan and most likely at a higher overall risk level.

System

Hi

They are GAD figures issued to us (Pension People) at the time #

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/283544/PPS_commutation_guidance_9_May_2012.pdf

17 pages of guidance, help and examples etc.

It was noticed that some factors could exceed the 25% LS allowance, and have a few thousand pounds liable to tax. Options were to scale back the amount commuted slightly, or to pay a small amount of tax on a LS amount of 120K.

green_man

Thanks johndough.

There's an interesting implication from this doc. It suggests if pension is taken by someone prior to being 55 they will only receive increases from age 55. I'm not sure my wife is aware of this. It is only actually referring to someone who defers their pension for a period (sect 2.8) though I don't see why they would not get increases if someone who takes it immediately would.

Deneb

I assume your wife is in the 1986 scheme? Cost of living increases do not become payable until after the retiree's 55th birthday, but the increase at age 55 is calculated on the increase in CPI since the date of retirement. The following is cut and pasted from my PPS Members' Guide, but you need to replace all references to RPI with CPI now:

Pensions in payment are increased annually in line with inflation. These increases are paid to all pensioners aged 55 or over and ensure that the benefit maintains its original buying power. Deferred pensions are also increased to maintain their value up to the date they become payable.

Inflation increases will also be paid:

• to you before you reach the age of 55 if you retired on grounds of ill-health or injury, or are totally disabled from any occupation and therefore unable to earn a living; and

•to your survivors who are in receipt of survivor benefits.

When the pension increase becomes payable it will take account of the movement in the retail price index (RPI) since the date of your retirement. Subsequent increases take place in April of each year and are based on the rise in the RPI in the 12 months up to the end of the previous September.

green_man

I assume your wife is in the 1986 scheme?

Thanks for the Info Deneb. Hers is actually the 1987 scheme (is that what you meant - I'm not sure how many different versions of these schemes there are). If the same as the above applies to her scheme that will be a bit of a relief for her.

Deneb

Sorry, yes I meant the 1987 scheme. The other thing your wife ought to be aware of is that it is possible to lose her protected pension age in certain circumstances if she takes her pension and intends to take re-employment in any capacity with the same constabulary whilst aged between 50 and 54.

There are various documents on the NARPO website that explain further, but it is possible by making a wrong decision to end up with a tax bill for receiving unauthorised pension payments.

Most constabularies seem to be aware of this now and have IMO gone a bit over the top by preventing reemployment within 6 months of retirement in all cases.

http://www.narpo.org/index.php/pensions/police-pensions.html

Scroll down to Taxation of Pension Entitlement Following Re-employment.