LGPS AVP or AVC?

hyubh

Swipe said:

If I open a SIPP I would be looking to pay in a lump sum in addition to monthly contributions, so will have to take into account my existing defined benefit contributions (employee and employer) and deduct them accordingly from my annual allowance. As my DB contributions are taken pre-tax, would I deduct the amount from my allowance as shown on my payslip or do i add another 20% on top? I'm a basic rate tax payer.

DB and the AA doesn't work like that. Rather than contributions, it's the increase over the tax year in your earned pension at NRA, above inflation, multipled by 16. So if you have CARE-only benefits in the LGPS, given revaluation is CPI, it's essentially pensionable pay for the tax year x 1/49 (i.e. the LGPS CARE accrual rate) x 16. However, if you had an open APC contract during the year, then how much of the final APC you had bought (or if done as a lump sum, the whole amount bought), multiplied by 16, would be included as well -

https://www.kentpensionfund.co.uk/local-government/current-member-paying-in/increasing-benefits/triggering-annual-allowance-tax-charge

Swipe

hyubh said:

Swipe said:

If I open a SIPP I would be looking to pay in a lump sum in addition to monthly contributions, so will have to take into account my existing defined benefit contributions (employee and employer) and deduct them accordingly from my annual allowance. As my DB contributions are taken pre-tax, would I deduct the amount from my allowance as shown on my payslip or do i add another 20% on top? I'm a basic rate tax payer.

DB and the AA doesn't work like that. Rather than contributions, it's the increase over the tax year in your earned pension at NRA, above inflation, multipled by 16. So if you have CARE-only benefits in the LGPS, given revaluation is CPI, it's essentially pensionable pay for the tax year x 1/49 (i.e. the LGPS CARE accrual rate) x 16. However, if you had an open APC contract during the year, then how much of the final APC you had bought (or if done as a lump sum, the whole amount bought), multiplied by 16, would be included as well -

https://www.kentpensionfund.co.uk/local-government/current-member-paying-in/increasing-benefits/triggering-annual-allowance-tax-charge

Thanks for that. I did come across that DB pensions were calculated differently just before reading your post. I will send my calculation to my pension department for them to check my figure is accurate.