LGPS and private pension

hyubh

00kitkat00 wrote: »

With limits of LGPS in terms of drawing anything early and not having the added risk of stockmarket which Aviva has - Which could boost that 14k pot if it steadily rose over next 30 years, it seems that it is a good idea not to put all eggs in to one basket?

See what LGPS pension the 14K will buy first. Also keep in mind 'not putting all eggs into one basket' in this case doesn't mean, 'spread risk', just, 'provide more flexibility'.

Presumably I could still claim on a self assessment form for tax back on these contributions and would also benefit from any risk funds that did well

Assuming you are a higher-rate taxpayer, otherwise basic rate tax relief is automatic.

I have filled in the form to enquire about the quote/transfer value for Aviva to LGPS - Presumably LGPS will offer less than the 14k to get it paid in with them

At the risk of sounding like a broken record - the 14K is equivalent to if you went to transfer out your LGPS benefits at a later date, and so got a CETV ('cash equivalent transfer value') in lieu of scheme benefits (pension, life cover...). The other way round means you would be exchanging the 14K pot for additional LGPS pension, as if you had earned extra pensionable pay this year and so had a higher CARE accrual than you actually did.

In practice many people think that the terms LGPS funds currently have to use when calculating transfer in values from private schemes is unreasonably generous, including it seems some LGPS administering authorities (= equivalent of trustees in private sector schemes) - at least, the last poster on here asking about transfering into the LGPS found that the applicable administering authority didn't allow this sort of transfer. That said, the way to find out is to wait for the formal quotation you've requested.

What if you don't have a partner at time of death - Would it go to next of kin?

Surviving partner pensions are for surviving partners. Assuming no dependant children, then there is the possibility of a death grant still though - see here:

Dying while an active member - https://lgpsmember.org/arm/already-member-prot.php

Dying after leaving but before drawing your pension - https://lgpsmember.org/arl/already-left-protdef.php

Dying while drawing your pension - https://lgpsmember.org/arl/already-left-prot.php

Presumably if I die before taking any benefit they would get the whole value of the fund?

LGPS is DB, not DC, so you have no fund against your name - instead, there's a collective fund that employers have to replenish if it's not big enough to pay the benefits promised (this is why employer contribution rates above 30% aren't unknown - about half of that will typically be deficit contributions).

Sorry for all the questions I am so blind in this area it baffles me.

Main thing, I think, is that you've only ever known DC pensions up to now. DB is conceptually quite different.

Kynthia

Asking questions is good. No-one here dislikes answering questions and sharing knowledge.

Get a quote for the transfer asap as that will give you information to help you make your decision but doesn't commit you in any way.

If I were you I would seriously consider transferring it in. It is likely it will buy you more than £14k would get you in a DC pot in the future. While I think it's a good idea to have other funds in addition to a DB pension for flexibility, at your age it's likely you will get a DC pot with a future employer so you should take advantage of the lgps while you can.

00kitkat00

xylophone wrote: »

Had you considered transferring the Aviva Pension into the Pru AVC and making AVC contributions?

Confusing me further! :huh:


Thank you all so much, I completed the transfer enquiry request form last night and posted today. As soon as I hear back, no doubt I will come back with more questions and probably be more puzzled, I’ll have a read meanwhile through other threads so if I can up my knowledge on pensions somewhat. Thanks again :beer:

Malthusian

00kitkat00 wrote: »

Whole pension thing confuses me- lots of colleagues have opted out of paying into the LGPS or any pension at all saying you lose other benefits if you have a private pension I.e pension credit/free glasses/dental care/housing benefit (majority of those that have said this live in housing assc properties so are secure where they are)

They opted out of paying into the LGPS because they want more money to spend on getting drunk at the weekend, or whatever their preferred short-term poison is. Not because of vague woo woo about losing means tested benefits.

It is likely that if they carry on as they are they will not be entitled to means tested benefits anyway, because they will have a full State Pension, which means no Pension Credit. This in turn means no free dental care. As for housing benefit, who knows.

I know you aren't considering opting out yourself but I still feel compelled to point out that your colleagues should be ignored.

Triumph13

Given your aim of retiring at 65, if you expect to remain in your current employment until then I wouldn't be inclined to transfer in (unless offered a very good deal).
If your salary (and the state pension) just rises by inflation over the next 29 years, then when you do reach state pension age, probably 4 years later, and both pensions come into payment, your net income would be about 10% HIGHER than when you were working. (Gross is lower, but no NI and no pension contributions to pay!)
Your challenge therefore becomes how to bridge the gap between 65 and SPA. That Aviva pension will probably have grown enough to live off for two of those years.

Silvertabby

“ Whole pension thing confuses me- lots of colleagues have opted out of paying into the LGPS or any pension at all saying you lose other benefits if you have a private pension I.e pension credit/free glasses/dental care/housing benefit (majority of those that have said this live in housing assc properties so are secure where they are)
Originally posted by 00kitkat00 ”

They opted out of paying into the LGPS because they want more money to spend on getting drunk at the weekend, or whatever their preferred short-term poison is. Not because of vague woo woo about losing means tested benefits.

It is likely that if they carry on as they are they will not be entitled to means tested benefits anyway, because they will have a full State Pension, which means no Pension Credit. This in turn means no free dental care. As for housing benefit, who knows.

I know you aren't considering opting out yourself but I still feel compelled to point out that your colleagues should be ignored. Posted by Malthusian

I agree with Malthusian. I'm a retired LGPS administrator, and have heard every excuse under the sun for 'opting out' - but they all boil down to one reason and one reason only. More money in their pockets now.

Yes, they'll get the full State pension at 67,68, whatever, but that will be their lot. Whereas you will have the same amount of State pension and your private/LGPS pensions.