Pay extra into LGPS or private pension - advice please

snowqueen555

It's a shame you couldn't transfer in. I believe my £25k private pot was turned into £3500 a year at 67.
The LGPS is pretty good, and even better if you have family and children as the death in benefits is more generous to hose people.

I plan to do a separate SIPP (avoided AVC as I'd prefer to invest myself), to diversify a little bit. I just need to start it sometime soon. The main things stopping me is that I am saving for a deposit. Also, the age 55 years is certainly gong to to revised up, the private pension age was worked out as 10 years under the state pension age, and with that rising, I am certain the prviate pension age will go up to 57-58 soon.

OldBeanz

Invest in an AVC and you can take the money out as cash, tax free which if you want cash you will have to out perform the AVC by eye watering amounts. If you intend buying extra pension then the LGPS allows you to do that with your AVC at far better than commercial annuity rates. Money comes straight out of pay so no bothering the tax man and some authorities are doing Salary Sacrifice making them even better value.
The main downside to the AVC is that it has to be drawn at the same time as the main pension but its tax treatment as cash and the pension rates offered make it the icing on top of the gold pension assuming the money is coming out of taxable income.

ZeroSum

OldBeanz said:

Invest in an AVC and you can take the money out as cash, tax free which if you want cash you will have to out perform the AVC by eye watering amounts. If you intend buying extra pension then the LGPS allows you to do that with your AVC at far better than commercial annuity rates. Money comes straight out of pay so no bothering the tax man and some authorities are doing Salary Sacrifice making them even better value.
The main downside to the AVC is that it has to be drawn at the same time as the main pension but its tax treatment as cash and the pension rates offered make it the icing on top of the gold pension assuming the money is coming out of taxable income.

AVC's follow normal pension rules. Can take 25% as a tax free lump. Then future payments are liable for income tax subject to being over your personal allowance. 

marycanary

ZeroSum said:

OldBeanz said:

Invest in an AVC and you can take the money out as cash, tax free which if you want cash you will have to out perform the AVC by eye watering amounts. If you intend buying extra pension then the LGPS allows you to do that with your AVC at far better than commercial annuity rates. Money comes straight out of pay so no bothering the tax man and some authorities are doing Salary Sacrifice making them even better value.
The main downside to the AVC is that it has to be drawn at the same time as the main pension but its tax treatment as cash and the pension rates offered make it the icing on top of the gold pension assuming the money is coming out of taxable income.

AVC's follow normal pension rules. Can take 25% as a tax free lump. Then future payments are liable for income tax subject to being over your personal allowance. 

This is not correct for LGPS AVC. If you take your AVC at the same time you take your main scheme benefits you can take up to 100% of your AVC as tax free cash (as long as your total lump sums from the LGPS do not exceed 25% of the combined value of your benefits including your AVC plan, or 25% of the lifetime allowance
Mary

ZeroSum

marycanary said:

ZeroSum said:

OldBeanz said:

Invest in an AVC and you can take the money out as cash, tax free which if you want cash you will have to out perform the AVC by eye watering amounts. If you intend buying extra pension then the LGPS allows you to do that with your AVC at far better than commercial annuity rates. Money comes straight out of pay so no bothering the tax man and some authorities are doing Salary Sacrifice making them even better value.
The main downside to the AVC is that it has to be drawn at the same time as the main pension but its tax treatment as cash and the pension rates offered make it the icing on top of the gold pension assuming the money is coming out of taxable income.

AVC's follow normal pension rules. Can take 25% as a tax free lump. Then future payments are liable for income tax subject to being over your personal allowance. 

This is not correct for LGPS AVC. If you take your AVC at the same time you take your main scheme benefits you can take up to 100% of your AVC as tax free cash (as long as your total lump sums from the LGPS do not exceed 25% of the combined value of your benefits including your AVC plan, or 25% of the lifetime allowance
Mary

Well yes, but that's just 6 & 2 3's
The poster I replied to seemed to be implying you'd get AVC's tax free on top of the allowed lgps tax free elements

garmeg

ZeroSum said:

marycanary said:

ZeroSum said:

OldBeanz said:

Invest in an AVC and you can take the money out as cash, tax free which if you want cash you will have to out perform the AVC by eye watering amounts. If you intend buying extra pension then the LGPS allows you to do that with your AVC at far better than commercial annuity rates. Money comes straight out of pay so no bothering the tax man and some authorities are doing Salary Sacrifice making them even better value.
The main downside to the AVC is that it has to be drawn at the same time as the main pension but its tax treatment as cash and the pension rates offered make it the icing on top of the gold pension assuming the money is coming out of taxable income.

AVC's follow normal pension rules. Can take 25% as a tax free lump. Then future payments are liable for income tax subject to being over your personal allowance. 

This is not correct for LGPS AVC. If you take your AVC at the same time you take your main scheme benefits you can take up to 100% of your AVC as tax free cash (as long as your total lump sums from the LGPS do not exceed 25% of the combined value of your benefits including your AVC plan, or 25% of the lifetime allowance
Mary

Well yes, but that's just 6 & 2 3's
The poster I replied to seemed to be implying you'd get AVC's tax free on top of the allowed lgps tax free elements

That's not how I interpreted it, though the post could have been clearer I admit.

OldBeanz

ZeroSum said:

OldBeanz said:

Invest in an AVC and you can take the money out as cash, tax free which if you want cash you will have to out perform the AVC by eye watering amounts. If you intend buying extra pension then the LGPS allows you to do that with your AVC at far better than commercial annuity rates. Money comes straight out of pay so no bothering the tax man and some authorities are doing Salary Sacrifice making them even better value.
The main downside to the AVC is that it has to be drawn at the same time as the main pension but its tax treatment as cash and the pension rates offered make it the icing on top of the gold pension assuming the money is coming out of taxable income.

AVC's follow normal pension rules. Can take 25% as a tax free lump. Then future payments are liable for income tax subject to being over your personal allowance. 

LGPS AVCs are able to be included with the main the pension. The AVC can be taken as tax free cash linked to the total value of the pension not the value of the AVC giving a far greater benefit. It is one of very few 'Government' schemes that allow the AVCs to be rolled into the total value. It is a very valuable benefit that many members of the LGPS do not realise given the number of times it is mentioned on here.

OldBeanz

Tortoiseshell20 said:

Thanks - APCs look good but I guess you just have to hope you live long enough to get your money back (True with any pension, I know, but if I pay £100pcm for 10 years, I'll get an extra thousand pounds per year from age 68). Still unsure where to put any extra money.

You do not mention what you are trying to achieve. Do you want a larger pension; do you want a larger tax free lump sum; do you want to retire before your State Pension age?
Your signature suggest you are trying to pay off debt for example but for every £80 you pay into a pension the Government add 25% so putting money into a pension may be of more benefit than paying off low rate long term debt.
If you live until 68 then you are likely to live for 20 years (you will not be affected by childhood diseases or industrial accidents). Look up the cost of an inflation linked annuity of £1000 and you will see that the LGPS additional pension is very good value.

Tortoiseshell20

Thanks @OldBeanz - aim is a larger pension, so deciding to do this though AVCs or my previous pension.

jamjar92

I looked at APC, the downside it does not increase the spouses pension from LGPS only yours. Which is why I will continuing with my AVC.