Local government pension fund AVC advice please

kremmen

I am just the enviable position of having retired at 55 and in receipt of a company pension.
After a couple of years break from work I started volunteering at a job which I enjoy so much I applied for a full time job ( at the age of 60 ) .
I love the job and I get paid to do my hobby and it comes with a Local government pension. As I am used to living off my company pension I have decided to save in the AVC that is available but I do realise that I probably only have 5 to 7 years left before I retire again and the options I have seen have confused me .
Has anyone any experience and any advice for a shorter term AVC investment in this schemes AVC offer.

Thanks

Paul

Ps. I do realise that it is likely that if I take the AVC as cash I will have pay income tax on the larger part as the fund will have only been running for a shortish time.

Wentthedaywell?

I started my AVC 2 years ago with a very short investment period in mind - I plan to retire next year. I effectively use mine as a tax free savings account and will take it all as cash next year. I can do this as I started it before the rules changed. You will only be able to take 25% as cash, under the new rules, won't you?

If you set an AVC up through your pensions dept (the charges are lower than for a free standing one) you will have a limited selection of funds in which you can invest. This cuts down the bewildering choice and you will be able to easily discount some of them on offer as not suitable in your situation.

There's lots of invaluable advice on this thread and people with stacks of knowledge and experience, I'm sure someone will be along soon.

AlanP_2

Is your overall income high enough for you to pay Income Tax as the tax relief is one of the biggest boosters to your pension pot?

25% tax free on the way out as stated above.

The amount of time the scheme is running for won't affect the level of tax paid.

kremmen

Thanks for the replies. I have been sent information with too much choice of investment but I notice that this is limited ( thank goodness ) by the Environment Agency.

With my current pension I will be earning over £30k so yes I will be taxed but my query was more that I will have to pay most of this back when I cash it in ( assuming 5 to 7 years duration ) and I was wondering if I should just find another investment route.

As I understand it the amount in a pot will affect how much I will be able to get out tax free and as I will be paying in for a relatively short period much of any lump sum will be taxed.

Paul

dunstonh

How does the AVC compare to the other options available?

xylophone

Have you looked at your retirement planning in the round?

Have you obtained a new state pension statement?

https://www.gov.uk/check-state-pension

kremmen

xylophone wrote: »

Have you looked at your retirement planning in the round?

Have you obtained a new state pension statement?

https://www.gov.uk/check-state-pension

Yes thanks but I am not sure it is important as I am trying to maximise my investment for the next couple of years and this amount would still be the same.

Paul

kremmen

dunstonh wrote: »

How does the AVC compare to the other options available?

I am not at all sure how I can compare especially as with current low interest rates.

Paul

xylophone

Yes thanks but I am not sure it is important as I am trying to maximise my investment for the next couple of years and this amount would still be the same.

What is your "starting amount" for NSP?


Are you saying that the pension you are currently drawing plus the salary you are receiving gives you an income of around £30,000 a year?

You have joined the 2014 LGPS Care Pension Scheme?

You are making the maximum contribution to LGPS

http://www.lgps2014.org/content/what-will-new-scheme-cost-me


but being used to living on your pension, you have decided to contribute as much as possible to an AVC or to some other kind of personal pension?

You intend to continue in employment up to state pension age?

Had you considered the APC option?

https://lgpsmember.org/more/apc/index.php

How does this compare with the AVC option?

http://www.lgps2014.org/content/additional-voluntary-contributions-avcs

"When you retire you can use this AVC to buy an annuity, buy a top-up LGPS pension or take up to 100% of your AVC fund as a tax-free cash lump sum."

http://www.pru.co.uk/pdf/LAVK0846.pdf - worth a read.

kremmen

xylophone wrote: »

What is your "starting amount" for NSP?

My quote is £155ish in 2021

Are you saying that the pension you are currently drawing plus the salary you are receiving gives you an income of around £30,000 a year?

Yes

You have joined the 2014 LGPS Care Pension Scheme?

Yes

You are making the maximum contribution to LGPS

http://www.lgps2014.org/content/what-will-new-scheme-cost-me

Yes


but being used to living on your pension, you have decided to contribute as much as possible to an AVC or to some other kind of personal pension?

Not as much as possible to be honest. It's quite nice to have some disposable income

You intend to continue in employment up to state pension age?

Yes

Had you considered the APC option?

https://lgpsmember.org/more/apc/index.php

No. I will investigate. I had no idea about this.

How does this compare with the AVC option?

I will investigate

http://www.lgps2014.org/content/additional-voluntary-contributions-avcs

"When you retire you can use this AVC to buy an annuity, buy a top-up LGPS pension or take up to 100% of your AVC fund as a tax-free cash lump sum."

http://www.pru.co.uk/pdf/LAVK0846.pdf - worth a read.[/QUOTE

Unfortunately I think with this short a time this will come into play but I will look at the other options . I was assuming that such a short time would give me a negligible pension.......

Tax-free lump sum
If you draw your AVC at the same time as your LGPS pension, you will be able to take
your AVC as a 100% tax free cash lump sum (as long as your total lump sums from
the LGPS do not exceed 25% of the combined value of your benefits including your
AVC fund).

This has been most helpfully.

Thanks. I will now look closely at these options.

Paul