LGPS APC - any thoughts please?

Wentthedaywell?

I am nearly 58 so can retire in 2017 at 60 though may stick out another 2 years max. I currently have almost 35 years’ service and am a basic rate tax payer. I opened a AVC last year and am putting in £1000 gross pm, to take as a 100% tax free sum.

However I am wondering if an APC might be a better option (assuming I don’t croak soon after retiring!). I’ll have my pre-2008 lump sum, and modest savings, so a regular index linked income may be preferable. I have not dependants.

I’ve just asked for a quote, but the on-line calculator indicates a £800 p.m. gross payment for 2 years would give me £1318 (subject to reduction for taking before 66). Does this sound like a good/bad deal?

I have had a downward regrading, but my pension will be protected so I can elect the best 3 consecutive years from the final 13. That’s not relevant to the APC is it?

I’d value any thoughts. I know I’ve left this all ridiculously late but all my spare cash previously went on my mortgage and I'm having final flurry of desperately salting money away.

hyubh

Wentthedaywell? wrote: »

I am nearly 58 so can retire in 2017 at 60 though may stick out another 2 years max.

What do you mean by the first bit - you meet the 85 year rule at 60, or something else? Voluntary early retirements in England or Wales are now from 55 (changed last year).

I have not dependants

Spouse/partner? Only asking because APCs don't come with survivor benefits.

I have had a downward regrading, but my pension will be protected so I can elect the best 3 consecutive years from the final 13. That’s not relevant to the APC is it?

Correct, it is not - while an APC gives you extra DB benefits, they aren't extra final salary scheme benefits specifically (more like extra CARE scheme benefits).

Wentthedaywell?

hyubh wrote: »

What do you mean by the first bit - you meet the 85 year rule at 60, or something else? Voluntary early retirements in England or Wales are now from 55 (changed last year).

Spouse/partner? Only asking because APCs don't come with survivor benefits.

Oh, I thought one could only retire at 55 with the employer's agreement, but anyone one can go early at 60 ? In any case, I will be working till 60 (unless made redundant!), another 2 and a bit years. I may stay a further 2 if I can bear to.

No spouse, so survivor benefits don't matter.

Wentthedaywell?

£800 gross p.m. over 2 years in a APC will give me (estimate) £1,318 pm gross, £1,054 p.a. after tax, index linked. It'll cost me in total £15,360 net

£800 pm in a AVC will give £19,200 (assuming no increase or decrease) with tax advantages at both ends. I get it straight away upon retirement to blow while I'm still "young" or to invest.

At it's simplest, I'd have to draw pension for over 18 years to make it worth while. While this is actuarially possible, by the time I'm 78 another grand a year may not be a big benefit, compared to a bigger lump sum earlier on in retirement.

Does this seem a fair assessment, or am I missing something? Thanks.

hyubh

Wentthedaywell? wrote: »

Oh, I thought one could only retire at 55 with the employer's agreement, but anyone one can go early at 60 ?

Like I said, changed last April, however a voluntary early retirement way before normal pension age would be subject to a large reduction (http://www.lgps2014.org/content/when-can-i-take-it). I notice you didn't answer my question about where you stand with the 85 year rule however.

Does this seem a fair assessment, or am I missing something?

How long's a piece of string? Both sound pretty good options for a person in your situation. How much is your standard LGPS pension?

Wentthedaywell?

hyubh wrote: »

I notice you didn't answer my question about where you stand with the 85 year rule however.

Sorry, I thought it was apparent. I have over 34 years' service, and am 57, so yes, I hit the 85 year rule. I don't get full protection though.

I think my LG pension will be about £16,500 at 60, almost £18,000 if I stay another couple of years. I've had 4 differing estimates and statements - I think the higher grading calculation has confused them, so this is a bit of a guess. My pensions section won't give me another quote till next year!

Durban

I'm also quite interested in this although quite a bit younger

hyubh

Wentthedaywell? wrote: »

I think my LG pension will be about £16,500 at 60, almost £18,000 if I stay another couple of years.

A salary of around £37K then, presumably... Any chance of a flexible retirement at 60?

I've had 4 differing estimates and statements - I think the higher grading calculation has confused them, so this is a bit of a guess. My pensions section won't give me another quote till next year!

For the relevant pay figure(s) the pensions section is going to be dependant on whatever payroll give them, however the fact you benefit from the underpin does no doubt make things more complicated on the pension team's side...

Wentthedaywell?

hyubh wrote: »

For the relevant pay figure(s) the pensions section is going to be dependant on whatever payroll give them, however the fact you benefit from the underpin does no doubt make things more complicated on the pension team's side...

Yes, three different pension schemes in six years, protection due to a change of contract and tapered protection in current scheme, I can imagine it's not easy!

I just miss the underpin, though do get some tapered protection. That's why I feel I should work a couple of years more, rather than leaving a full 6 years early.