AVC to purchase LGPS additional membership or additional LGPS pension

jamjar92

The council I work for is moving from AVC to SSAVC scheme, no problem is that.

The question is do I move to the existing AVC pot to the new scheme or leave it where it is.

Because the AVC was started before 2001 (late 90s), it could be used to purchase additional council pension in the old scheme, but will have no effect on the lump sum.

If I transfer it to the new scheme it could be used to purchase additional pension in the post 2014 pension.

Both could be added to together as part of TFLS at retirement, which was the intended purpose.

I am leaning to leave the original AVC pot as is, and start again as the underlaying funds will be the same, as it all with the same provider.

Questions:

Does anybody have a reason not to leave it as is and transfer to the new pot?

If I did to decide to purchase additional pension in the future, which would give me more pension the old or the new scheme for same lump transferred.

The old scheme retirement age is 65, the new one is NRA, so 67, so taking at 60 would a reduction of 5 years for the old scheme, or 7 years for the new scheme. The old scheme gives some R85 protection, but only pre 2008 for me is my understanding. I would be purchasing additional pension post 2008, pre 2014 from the old scheme.

jamjar92

I have been some reading on other LGPS pension website, as there is no details on my providers.

With my existing AVC I can purchase more membership, where an AVC opened post 2014, or if I transfer it to the new SSAVC scheme I can purchase additional pension.

I have asked my local LGPS the same question, still awaiting a response.

Do any of the LGPS experts on here know the difference between purchasing additional membership or purchasing addition pension?

Both on face of are going increase my DB pension at retirement, so there must be pros and cons for opting for one or the other.

AlanP_2

I'm in the LGPS and use AVCs but am not an expert.

To my mind they are likley to be different ways of expressing the same thing as pension value is related to length of membership.

Whether your employer offers Salary Sacrifice as the method of purchasing AVCs is irrelevant to the underlying LGPS rules on what you can do with an AVC.

My employer does not offer SS, yours does - we will both be subject to the same rules in the LGPS Scheme Booklet.

Silvertabby

Very briefly,

Using AVCs to buy additional membership = extra service which is then linked to your final pensionable salary.

Using AVCs to buy extra pension = buying pension at the current conversion factor.

If you think that the extra membership option was stopped (for newbies)  because it was more expensive for the LGPS......

jamjar92

AlanP_2 said: we will both be subject to the same rules in the LGPS Scheme Booklet.

AlanP_2 cannot disagree with that. Can you download this booklet somewhere?

Silvertabby said:

Very briefly,

Using AVCs to buy additional membership = extra service which is then linked to your final pensionable salary.

Using AVCs to buy extra pension = buying pension at the current conversion factor.

If you think that the extra membership option was stopped because it was more expensive for the LGPS......

The whole LGPS is less generous, but still a good scheme to be part of. Do you know, rule of thumb,  how much an extra 1 year membership costs, or what current conversion factor is? The simple fact extra membership costs the scheme more makes me think I should leave it where it is and start a new pot under the SSAVC scheme. Part of me thinks it’s a way to get AVC pots under the new rules.

AlanP_2

https://www.lgpsmember.org/ is the national source of information.