LGPS - need to check everything

pandora205

It's just as well I'm on top of everything as my employer certainly isn't. I'm retiring in August having given four and a half months' notice. Over the last year I've discovered the following issues (not all LGPS related) which just shows that it's important to check everything:

• My LA changed AVC provider and transferred me to a new company. Instead of my investments being placed in parallel fund ('cautious') which would be usual approaching retirement they were transferred to a high risk one ('adventurous').
• I reached state pension age in March but my LA has continued to deduct NI payments in full. I was given a refund last month but when I was paid at the end of the month it happened again.
• I notified my pensions department when I put in my resignation in April and as I hadn't had confirmation I contacted them again last week. I discovered that my manager has not submitted the leavers form to HR so pensions haven't done anything yet.

It's just as well I go through everything with a fine tooth comb!

daveyjp

None of those appear to be LGPS related!

Silvertabby

davey is right.

When you spoke to your LGPS did they explain that if you want your lump sum/first pension payment as soon as possible after your last day of service, you should cancel your AVC payments at least a month before you leave?

The reason for this is that your LGPS can't/won't start payment until they have all the documentation they require. ie, your own application forms and documents, your final leaver details from your employer and either payment or written confirmation of your final AVC amount from your AVC provider.

Briefly, your AVC contribution is taken from your salary by your employer. They don't then send this singular amount to your AVC provider - instead, they run a list of ALL their AVC contributors and the amounts they have paid (usually within 2 weeks after that month's pay run has been put to bed), and then send this list plus the total amount to the AVC bods. The AVC bods receive this list - plus lists from all other LGPS employers that they deal with - and then set about transferring the details to individual records. This can easily take another month.

Rule of thumb in the LGPS I worked for was that first payment in the event of no AVC/AVC cancelled a month before retirement should be made within 4 weeks of the date of retirement. In the event of the AVC running to the bitter end, however, and we were looking at at least 8 weeks.

Of course, you may be one of the few who want to maximise your AVC benefits and who don't need payment as soon as possible after retirement - in which case you don't need to do anything.

pandora205

True everyone, not actually LGPS related at all, more Local Authority related.

Silvertabby, thank you for the information about AVCs. My LGPS department are incredibly elusive with no telephone number and a 10 day turnaround on emails, so it very difficult to communicate with them at all. I was assuming that my AVCs would automatically be cancelled but I can see there may be a delay if I don't do it in advance. Would I just write to do this, as I can't find a form on the website other than an initial application? Thanks

On second thoughts, if I cancel my AVCs early it'll push me back into the higher tax bracket, so I may just sit it out. I will have a lump sum with my LGPS if that is paid any quicker.

Silvertabby

pandora205 wrote: »

True everyone, not actually LGPS related at all, more Local Authority related.

Silvertabby, thank you for the information about AVCs. My LGPS department are incredibly elusive with no telephone number and a 10 day turnaround on emails, so it very difficult to communicate with them at all. I was assuming that my AVCs would automatically be cancelled but I can see there may be a delay if I don't do it in advance. Would I just write to do this, as I can't find a form on the website other than an initial application? Thanks

On second thoughts, if I cancel my AVCs early it'll push me back into the higher tax bracket, so I may just sit it out. I will have a lump sum with my LGPS if that is paid any quicker.

Normal procedure would be to tell your employer/payroll to cancel your AVC contribution wef xx/xx/2019. And then write/e-mail your LGPS to tell them what you have done.

Your LGPS will need confirmation (or even payment) of your final AVC fund amount in order to calculate all of your final pension benefits, including the lump sum - so, no, you would still have to wait for a good 8 weeks for your lump sum if you let your AVCs run to the end.

As you would be saving 40% tax in and possibly getting your AVC tax free out, then making that final AVC payment makes sense - as long as you have money to tide you over for a couple of months.

I say this gently, as a lot of the ear bashing I received from LGPS pensioners was from those who assumed that they would get their lump sums the day after they retired - and had booked holidays etc based on this assumption!

pandora205

Thanks Silvertabby. You are a mine of information about all this! I will put it in writing to Payroll and Pensions to cancel my AVC after August. Are you saying that I will need to wait a similar period to receive my LGPS lump sum too? (I do have holidays booked but can manage for a while and have savings I could draw on if necessary, though I'm hoping my LGPS pension will kick in at the end of September).

I did ask a Pensions officer from our LA about the timeliness of payment when I attended a one to one surgery last year. She said as long as they had at least 3 months notice there shouldn't be a problem in receiving pension and lump sum immediately. I'm not sure I was very specific about dates though.

I will prepare for all eventualities!

Silvertabby

pandora205 wrote: »

Thanks Silvertabby. You are a mine of information about all this! I will put it in writing to Payroll and Pensions to cancel my AVC after August. Are you saying that I will need to wait a similar period to receive my LGPS lump sum too? (I do have holidays booked but can manage for a while and have savings I could draw on if necessary, though I'm hoping my LGPS pension will kick in at the end of September).

I did ask a Pensions officer from our LA about the timeliness of payment when I attended a one to one surgery last year. She said as long as they had at least 3 months notice there shouldn't be a problem in receiving pension and lump sum immediately. I'm not sure I was very specific about dates though.

I will prepare for all eventualities!

Yes - your LGPS will have to know the exact value of your AVC fund in order to work out your pension and lump sum - and your AVC provider won't be able to confirm that (called 'disinvestment') until after they have received your final contribution and input it to their records. My personal record for paying out a pension with an AVC that ran to the member's final month was 6 weeks from the last day of service - but that was pushing it !

The union at the LA I worked for used to tell people that they 'would receive their lump sums the week after they retired'. What they should have said was 'they would receive their lump sums the week after the LGPS had received everything they needed' - which included things out of the LGPS's control, such as the employer's final pay details and the AVC fund, if applicable.

You will only need to actively cancel your AVC contributions if you want to do so from, say, July. If you let then run to your last day then they will cease automatically.

I'd love to say that you will receive your money by the end of September, and I can't sit here and say that it won't happen that way - all I can say, from experience, is that it would be pushing it.

Hope things aren't too traumatic for you !

Hint - your LGPS may ask for photocopies of your birth certificate, your marriage certificate and hubbies/partners birth certificate (if applicable) so if you don't have them to hand I'd get copies made now.

atush

On second thoughts, if I cancel my AVCs early it'll push me back into the higher tax bracket, so I may just sit it out.

Or you could cancel the AVC and maximize pension using a personal pension or sipp.

pandora205

Silvertabby wrote: »

Yes - your LGPS will have to know the exact value of your AVC fund in order to work out your pension and lump sum - and your AVC provider won't be able to confirm that (called 'disinvestment') until after they have received your final contribution and input it to their records. My personal record for paying out a pension with an AVC that ran to the member's final month was 6 weeks from the last day of service - but that was pushing it !

The union at the LA I worked for used to tell people that they 'would receive their lump sums the week after they retired'. What they should have said was 'they would receive their lump sums the week after the LGPS had received everything they needed' - which included things out of the LGPS's control, such as the employer's final pay details and the AVC fund, if applicable.

You will only need to actively cancel your AVC contributions if you want to do so from, say, July. If you let then run to your last day then they will cease automatically.

I'd love to say that you will receive your money by the end of September, and I can't sit here and say that it won't happen that way - all I can say, from experience, is that it would be pushing it.

Hope things aren't too traumatic for you !

Hint - your LGPS may ask for photocopies of your birth certificate, your marriage certificate and hubbies/partners birth certificate (if applicable) so if you don't have them to hand I'd get copies made now.

Thank you Silvertabby, I'm glad I started this thread as I do need to prepare. I also need to double check my manager has completed that leaver's form otherwise it will hold everything up. To add further complexity our LGPS is actually handled by a neighbouring LA, so it is two different council offices involved at this end. I will certainly ensure I have copies of everything ready.

pandora205

atush wrote: »

Or you could cancel the AVC and maximize pension using a personal pension or sipp.

That's not a bad idea though not really a short term measure. I would imagine it would also take a while to get the tax back. I haven't had to complete tax returns for many years (as my pay is PAYE and my savings are in ISAs and premium bonds).

BelindaDido

pandora205 wrote: »

I was assuming that my AVCs would automatically be cancelled but I can see there may be a delay if I don't do it in advance. Would I just write to do this, as I can't find a form on the website other than an initial application? Thanks

On second thoughts, if I cancel my AVCs early it'll push me back into the higher tax bracket, so I may just sit it out. I will have a lump sum with my LGPS if that is paid any quicker.

Do you need to worry about the higher tax, as it might be only temporary? Won't it be 'repaid' over the rest of the tax year as your monthly pension will presumably be less than your monthly salary was? If so, then if you cancel your AVC payment early then you may get your pension and lump sum paid out more quickly.