LGPS & advice on top up please

Loubylou2

Hello
I'm 52 and have basically had my head in the sand for years. I work part time hours in a school and have a LGP which is really low. I will be working for at least 15 more years possibly more.
I had a small pension which I transferred to this pension from when I was in the civil service.
Anyway my PROJECTED pension including CARE is only £6168.46 (Lump sum £4888.52) Thats 2030
So I am hping that somebody can give me some advice on what would be best to do. I don't have a lot of spare cash as we have a long mortgage but is there sensibly something I could do right now please?
My salary is only IRO £11000 a year at the moment.
I am not stupid but have so many problems understanding pensions hence the fact my head has been in the sand for so long.
Thank you in advance:T

xylophone

You will also have state pension under the new scheme and can obtain your "Foundation Amount" after April 6 next year - contracting out also ends then and you should be able to increase your state pension to or close to the maximum?


https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf


Does your employer produce a booklet like the one below setting out scheme pension options?


http://www.rbwm.gov.uk/berks-pension/current-members_increasing_your_benefits.htm

Loubylou2

thank you for replying. Yes my employer has a very similar leaflet but I just didn't know what the best thing to do was. I don't pay much tax therefore am I limited with AVCs? Or am I misunderstanding the system? Would you think it was best to wait until next year before I do anything or
should I start AVCs?
Sorry to ask so many questions and thank you again

xylophone

Remember that your NI will increase from April 2016 - what information has been provided to you in this respect by LGPS?

Does your authority provide "planning your retirement" seminars that you could attend?

MARTYM8`

xylophone wrote: »

Remember that your NI will increase from April 2016 - what information has been provided to you in this respect by LGPS?

Does your authority provide "planning your retirement" seminars that you could attend?

In my experience LGPS administrators are often keen to report upsides - not downsides. How many realise that next year they are likely to see a 1.4% pay cut - as their NI rebate stops - I think the unions are highlighting it but not employers?

https://www.unison.org.uk/content/uploads/2015/04/TowebPensionUpdateMarch2015.pdf

Several employers do offer planning for retirement seminars for over 45s - alternatively Prudential who operate most AVC LGPS schemes run events.

The OP is in a tricky situation - maybe the priority for them should be to pay down their mortgage while rates are low. Given their earnings they may get little or no tax rebate from investing in an AVC - and any such investment is subject to the vagaries of the stock market.

hyubh

Loubylou2 wrote: »

So I am hoing that somebody can give me some advice on what would be best to do. I don't have a lot of spare cash as we have a long mortgage but is there sensibly something I could do right now please?

If you haven't already, use the APC calculator to see what additional DB pension you could buy (would be index linked like your main benefits, although without spousal benefits after you die):

https://apc.lgps2014.org

hyubh

MARTYM8` wrote: »

In my experience LGPS administrators are often keen to report upsides - not downsides. How many realise that next year they are likely to see a 1.4% pay cut - as their NI rebate stops

There's no real 'hard luck' story here for members, as most will now earn additional state pension for those extra NI conts.

I think the unions are highlighting it but not employers?

I think you'll find employers are very much aware of sharp NICs increase they are facing!

The OP is in a tricky situation - maybe the priority for them should be to pay down their mortgage while rates are low. Given their earnings they may get little or no tax rebate from investing in an AVC - and any such investment is subject to the vagaries of the stock market.

An AVC is not the only option.

System

Hi

To improve your pension in the LGPS area is not easy.

An AVC may be attractive for the tax relief and it can be varied to suit circumstances.

Any increase in pay would have an effect for the entire length of your pension, so if you are able to improve your salary in the future.

So are there any ways you could try to change role?

greenglide

In my experience LGPS administrators are often keen to report upsides - not downsides. How many realise that next year they are likely to see a 1.4% pay cut - as their NI rebate stops - I think the unions are highlighting it but not employers?

https://www.unison.org.uk/content/uploads/2015/04/TowebPensionUpdateMarch2015.pdf

It would help, though, if the unions could actually get their facts right even though the government etc have singularly failed to.

I like

Issues for UNISON members:

potential to create cash flow problems for the funded schemes, leading to
possible instability;

generally not in best interests of scheme member,but temptation will be great;

this flexibility is likely to worsen annuity rates further so for many members of defined contribution arrangements (there will be no choice but to take it as cash and suffer tax;

potential for new market in pension scams;

members get taxed on the lump sum in a way they may never have had to on the pension itself

While several of the points are genuine problems the statement "there will be no choice but to take it as cash and suffer tax" is clearly not true. What is the issue is that people who have never managed significant amounts of capital before may be presented with a choice between a dire annuity rate and using drawdown which looks attractive (maybe several tens of thousands pounds) but a failure to understand true life expectancy, inflation and a tendency to see anything over £10,000 as a "lot of money".

Loubylou2

Thank you everyone. My head is spinning even more now.
I think I need to delve further and maybe the suggestion to increase my mortgage payments is the most sensible at present.
I didn't realise how much the increase in NI contributions would be!:eek: