FSAVCs

nomoneyhere

Hi
Could someone help me please? I am 38 years old and have been employed by the Local Authority since I was 18. I was advised to and indeed have been paying FSAVCs since the start i.e. over 20 years now. I have recently been told that I should stop these payments as it is likely I will overpay. It was also suggested that I should complain as I shouldn't have been advised to do this from such a young age. Is this right? Many thanks.

dunstonh

I was advised to and indeed have been paying FSAVCs since the start i.e. over 20 years now. I have recently been told that I should stop these payments as it is likely I will overpay.

Who told you that?

Are you likely to have pension values of more than 1.6 million pounds at retirement?

It was also suggested that I should complain as I shouldn't have been advised to do this from such a young age. Is this right?

ROFL. The rubbish that people get told.

No, its not right. Indeed, the earlier you start, the less you need to put aside each month and the more you get back in the end due to the longer investment term.

If more people paid in from an early age, then there wouldnt be half the problems with underfunding retirement as there is now.

No offence but the person feeding you information hasnt got a clue what they are talking about.

nomoneyhere

Hi thanks for your response. No, I will not have a pension value more than £1.6m. My LGPS currently allows me to receive 2/3 my final salary, so assuming 40 years membership, I will reach this ceiling, so of what use will my FSAVCs have?

dunstonh

so of what use will my FSAVCs have?

25% tax free cash with rest going into annuity purchase or drawdown to boost your income to get you a comfortable retirement.

LGPS wont be 2/3rds. Its an 80ths scheme so 40/80ths = half. The FSAVC (which is technically a personal pension now as FSAVCs were made obsolete last year) will bridge the gap between full salary and half salary.

ffacoffipawb

nomoneyhere wrote: »

Hi thanks for your response. No, I will not have a pension value more than £1.6m. My LGPS currently allows me to receive 2/3 my final salary, so assuming 40 years membership, I will reach this ceiling, so of what use will my FSAVCs have?

The 2/3rds salary maximum has now been abolished. No reason why your pension can't significantly exceed your salary if you pay in enough!

DavidLaGuardia

dunstonh wrote: »

LGPS wont be 2/3rds. Its an 80ths scheme so 40/80ths = half.

Dunsonh, you are forgetting that the local gov superan is a 1/80 PLUS tax free cash.
A 2/3 (40/60) scheme that paid tax free cash always used to offer a residual pension about 1/2 pension. Hence such statutory schemes are broadly equivalent to a 1/60 scheme.

dunstonh

Dunsonh, you are forgetting that the local gov superan is a 1/80 PLUS tax free cash.

No. I was just concerned that the OP was in the belief that he was on for 2/3rds income. Whereas it is half plus TFC.