LGPS - Advice please

nichola_jh

Hi, hoping to get some advice regarding joining the LGPS scheme please. I am 36 and have no pension at all. Mortgage on £350k house is fully paid off (rightly or wrongly we ploughed everything into this as my husband had cancer some years back and we have 2 kids so we wanted the security of owning our own home). My husband has a private pension scheme and earns a reasonable self employed salary, basic rate tax payer, so we aren't loaded by any means but we do ok.

I have worked part time since 2009 due to the kids and have worked for the local government since then. Slightly regretful in hindsight that I didn't join the LGPS back then but I would like to know if it is worth joining now, bearing in mind that I earn just under the tax threshold so my contributions would only be 5.5%. Should I join or Would I be better off putting as much as I can into an ISA or other investment? I have been told that I can buy a AVC but I don't really understand it, I assumed I could just increase my monthly contributions above the 5.5%??

Any advice would be greatly appreciated and apologies in advance for my lack of financial understanding / knowledge. Thanks

enthusiasticsaver

Yes you should join. I have an LGPS and transferred an old pension into it plus paid extra to buy added years as I worked part time for many years. You can also do AVCs which I think can be treated separately to the main pension and performance is related to investments whereas the LGPS is a DB/CARE scheme. So if you can afford it you can put more than 5.5% in. Contact your pension administrator for quotes.

BobQ

Have you not been auto-enrolled into the LGPS or did you opt out when offered?

Either way its a no brainer. Cannot do anything about the past but join asap and if you can afford it buy AVCs or added pension (if available in the scheme).

5.5% contributions? You have many years to contribute. The employer will also contribute. You would probably need to earn 15% more and put it all in a pension fund to get an equivalent pension in the private sector

k6chris

Yes, yes, yes, yes and yes. LGPS is an amazingly good value (for you) pension. You will get far more out of it than you put in. YES!

hyubh

nichola_jh wrote: »

I would like to know if it is worth joining now, bearing in mind that I earn just under the tax threshold so my contributions would only be 5.5%.

The LGPS is a DB scheme with contribution rates artificially in favour of the lowest paid. In other words, the 5.5% doesn't mean you get less relative benefit than a higher earner paying (say) 8.5% - everyone gets the same 'accrual rate', or proportion of their pay that earns pension.