Paying into LGPS, considering AVCs but not sure

OldBeanz

swanny65 wrote: »

...
Off topic but a question for blue eyes: Do the same AVC provisions apply to my AVC? i.e. will I be able to take my AVC pot in full as a lump sum. I can see my retirement coach-build motorhome becoming an A Class

No the CSPS AVC is a stand alone policy not linked to your pension in anyway hence the beauty of the LGPS scheme. I am CSPS retired and the wife LGPS. She is busy sticking all her taxable pay into an AVC and £8k pa or so into her SIPP. Tax relief on the way in and mostly tax free on the way out.

swanny65

[QUOTE=@Swanny65 - By all means tell me to mind my own business, but what is it about the Pru that you don't like? I always thought they had a good reputation?
[/QUOTE]

My mate works at Birds Eye ex: Unilever Pension Scheme. When Unilever sold the business the new owners changed the pension for employees to one offered by the Pru.

The money purchase Pru pension will never match the final salary Unilever pension (my god it was a hell of a scheme, better than my CS scheme). The choice of Pru funds is limited. Check out what funds you can invest in via the Pru, does it offer third party funds. What are the AVC charges.

My Standard Life AVC has, in my opinion, some excellent performing funds from a range of providers eg Black Rock, Henderson, Jupiter as well as there own smaller companies fund. (A expert my disagree and shoot me down)

I have spread my AVC across 11 funds. I try and ensure no one fund has more than 15% of the value of my pension pot.

Triumph13

pandora205 wrote: »

With regard to investment risk Local Government AVC providers usually offer a range of funds, and recommend moving to 'cautious' (but anticipated lower return) options the closer you get to retirement, which makes sense.

Whether or not that makes sense depends entirely on what you plan to do with it. If your are planning to pay off a mortgage or buy an annuity then it makes perfect sense. If you are planning to draw an income from it for the next 30 years then possibly not.

OldBeanz

Triumph13 wrote: »

Whether or not that makes sense depends entirely on what you plan to do with it. If your are planning to pay off a mortgage or buy an annuity then it makes perfect sense. If you are planning to draw an income from it for the next 30 years then possibly not.

In this case it is to provide a tax free cash lump sum so does make sense. The OP could buy extra pension directly through the scheme.

Triumph13

OldBeanz wrote: »

In this case it is to provide a tax free cash lump sum so does make sense. The OP could buy extra pension directly through the scheme.

The tax free lump sum is not an end in itself. The important question is what is the OP going to DO with the lump sum.

OldBeanz

Triumph13 wrote: »

The tax free lump sum is not an end in itself. The important question is what is the OP going to DO with the lump sum.

No it's not. The OP either takes the lump sum as cash as it is tax free or If he wants extra pension he buys it directly through his existing pension now rather than by AVC. So there is value in lifestyling his funds as they have to be cashed in.

Gin_and_Milk

In order to answer your questions about what I would do with the money, the plan so far is to take it as a lump sum. We will be mortgage free by the time I retire, however we live in a 3 storey house and my husband has a spinal condition which is likely to get worse. That, and I'm a bit of a nomad, so I'm not sure if we'd still be in this property or not. On my most recent statement, if I take the higher pension rate I should get around 17K p/a, and approx £8K as a lump sum. Whereas if I did it the other way round, I'd get approx 11K p/a and approx 79K as a lump sum. I think one lump sum and a higher pension would make more sense.

swindiff

Unless I really needed the lump sum I would definitely take the higher pension. An extra £6k a year for life linked to inflation for me would be much more valuable than a £79k lump sum.

swindiff

In fact it's not even £79k it's £71k. So anything over 10 years and your better off with higher pension

Gin_and_Milk

swindiff wrote: »

Unless I really needed the lump sum I would definitely take the higher pension. An extra £6k a year for life linked to inflation for me would be much more valuable than a £79k lump sum.

That's what I thought, in fact it's one of the reasons why I'm considering taking out the policy. Whilst I wouldn't get as big a lump sum with the Pru, I'd get considerably more than 8K, (providing the whole thing doesn't crash). I can always increase my contribution as well if need be to bump it up even more.