Being made redundant

billpaul812

Thanks again Alan

AlanP_2

billpaul812 wrote: »

Thanks again Alan

No problem, glad to be of help.

Let us know how you get on as others might want to go down the same route at some stage.

billpaul812

I've just had a chat with my AVC people and it seems that paying my lump sum into my AVC as suggested above is a non starter for the following reasons.

1. I can only pay pensionable pay into an AVC
2. The amount that I can pay into my AVC is capped at 50% of my pensionable pay

Any suggestions other than just ploughing as much as I can afford into my AVC for the next 3 months?

AlanP_2

That's a shame. I wasn't aware of the "pensionable pay" criteria but having taken a closer look I can see it here, about halfway through the AVC section:

https://www.lgpsmember.org/arm/already-member-extra.php

I guess you have a pre-2014 AVC scheme to be limited to 50% of salary.

Ploughing as much as you can in over next few months may be the best you can do in the circumstances.

billpaul812

Yes, my AVC has been running for about 8 years.

Thanks again for your advice.

bigadaj

AlanP wrote: »

That's a shame. I wasn't aware of the "pensionable pay" criteria but having taken a closer look I can see it here, about halfway through the AVC section:

https://www.lgpsmember.org/arm/already-member-extra.php

I guess you have a pre-2014 AVC scheme to be limited to 50% of salary.

Ploughing as much as you can in over next few months may be the best you can do in the circumstances.

Why not pay any excess that can't be put into the AVC imto a personal pension or sipp, with similar tax savings, though without NI. Tax it need to be reclaimed but the net effect would be similar.

AlanP_2

I was thinking that after I posted my comment. Would need to be done this tax year whilst there is enough qualifying income but certainly worth running the numbers.

I don't think the net effects would be quite the same as the OP would be taxed on 75% of what was taken out of the PP whilst the LGPS AVC would be tax free in its entirety.

If nothing else it would get the tax paid on the over £30k portion into a pension pot belonging to the OP.

kidmugsy

AlanP wrote: »

Would need to be done this tax year whilst there is enough qualifying income.

Agreed!

Is there any chance that paying more National Insurance Contributions could be worthwhile in terms of a bigger State Retirement Pension?

billpaul812

bigadaj wrote: »

Why not pay any excess that can't be put into the AVC imto a personal pension or sipp, with similar tax savings, though without NI. Tax it need to be reclaimed but the net effect would be similar.

Thanks for the suggestion, putting in my own words to check whether I've understood!!

I have a £67K lump sum.
Deduct the tax free £30K.
Deduct tax @ 40% from the remaining £37K (=£14K) leaving £23K.
Pay that £23K in a personal pension or SIP and then I will be able to claim the £14K back from the tax man?


So I put the £23K (that is left after deduction of the tax free £30K and the 40% tax on the remainder tax into a PP or SIP and then i will be able to reclaim the £14K tax that my employer deducted?

AlanP_2

billpaul812 wrote: »

Thanks for the suggestion, putting in my own words to check whether I've understood!!

I have a £67K lump sum.
Deduct the tax free £30K.
Deduct tax @ 40% from the remaining £37K (=£14K) leaving £23K.
Pay that £23K in a personal pension or SIP and then I will be able to claim the £14K back from the tax man?


So I put the £23K (that is left after deduction of the tax free £30K and the 40% tax on the remainder tax into a PP or SIP and then i will be able to reclaim the £14K tax that my employer deducted?

Personal Pension Provider will automatically claim / add BR tax element for you, so increasing the value of your pot, leaving you to claim the difference from HMRC.

That might be provided by way of Tax Code Adjustment as opposed to cash in hand, either way it does not end up in your pension pot.

Withdrawals from the PP will be taxable (except for the 25% TFLS), but likely to be at BR unless your LGPS pension is very high.