Don't want to work to 68

MPD

Lungboy wrote: »

I'm in almost the exact same situation as the OP, (a few years younger but otherwise identical from what's been mentioned) and have pretty much written off the AVC option as it seems to offer no benefits at all for someone looking at early retirement over a SIPP while being hugely restricted in the funds on offer.

I think this is the way I will probably go. AVCs seemed very easy but if a bit of effort can give a better result then I will put that effort in.

cloud_dog

MPD wrote: »

I would like to reduce the 68 to as close to 60 as possible. My thoughts on this are using the LGPS AVC scheme provided by the Pru to take advantage of the tax savings available and for simplicity with the contributions being taken through payroll. I would then use this as a bridge before taking my LGPS at SPA or slightly before if I could live with the reduction.

I am looking at investing in the Prudential International Equity Fund with a fee of 0.65% pa, these are invested in M&G PP International Equity Funds.

Does this sound like a sensible plan? I am looking to reduce charges to a minimum and access the funds from around 60 onwards.

After much deliberating, this is the route I took with my company's DB pension AVC scheme. And even funnier, that is the fund I am using (initially) for my payments in to the AVC.

I took this route as I will benefit from salary sacrifice (saving 2% NI for 40% tax rate, and then 12% NI for 20% tax rate).

My primary driver was in achieving flexibility for retirement age and it seemed rude not to take the generous tax benefits on offer.

Under normal circumstances I cannot take my AVC pot until I take the main DB scheme pension but, should I leave the company before NRA, i.e. stop working (retire), then I can transfer the AVC pot to a SIPP (probably) and manage the draw down that way. I obtained confirmation of this in writing before continuing with this approach.

The main reason people highlight ISAs is because your money is not taxed on the way out (draw down in essence) but if you are stoping work early (retiring) then you may have little or no other taxable income anyway so you can use the pension to benefit from the tax savings going in and little or no tax coming out. As a HRT payer, even paying 20% on some of it makes good financial sense.

There are additional reasons, outside of the ballpark, for using the pension vehicle as opposed to ISAs; such as benefit considerations should you unfortunately find yourself in that position.

Thrugelmir

MPD wrote: »

I think this is the way I will probably go. AVCs seemed very easy but if a bit of effort can give a better result then I will put that effort in.

Or a separate pension vehicle that you can use to tide you over until NRA. Thereby leaving your scheme benfits intact and continuing to grow. My intention is to use my SIPP to bridge the gap (25% tax free sum plus drawdown up to annual personal tax free allowance).

MPD

Looking at HL for a SIPP, probably invest in the L&G UK index and international index trust in equal amounts.

enthusiasticsaver

HL is quite expensive. Have you looked at other platforms? If you are going for 50% UK and 50% international that is quite a lot of UK exposure.

MPD

For the small amounts I'm starting with the zero transaction charges are most important along with the discounts on the L&G funds. The £1.50 dealing charge for AJ Bell for funds makes a big difference.

longleggedhair

You can only take AVC benefits at the same time as you take your main scheme benefits in the LGPS. So I'm afaid your plan won't work unless you are willing to take your main scheme benefits at 60 and take the actuarial reduction.

If you want a bridge you would be better with a SIPP, though I would continue with the AVC as in the LGPS scheme you can take 100% of the balance with no tax to pay, if the balance is less than 25% of the total cash equivalent value of your overall scheme CETV.