LGPS or other

florita1

Hi,

i pay into a LGPS which im
quitr happy with, it looks like a good scheme. By the time I retire I will have paid  in for 35 years. 

my husband has only ever contributed recently when it became compulsory. He paid an extra £100 month for 2 years.

hes now at a new job and he pays 5% and employer 3%. We would like to overpay again but I’m wondering if there any benefits to paying into my LGPS vs his? 

florita1

I should add I earn £47k, he earns £32k basic 

cloud_dog

At the very least he should have sufficient pension in his own name, if only to maximise his personal allowance and maximise the tax efficiencies across both of you when he does retire.

florita1

That never occurred to me. Our goal is to maximise both our pensions, for our retirements so makes sense to do that. 

AlanP_2

Making sure he has a large enough pot to withdraw at a level that uses his Personal Tax Allowance in retirement as suggested makes good sense, don't forget his State Pension will kick in at some point so he doesn't need to withdraw £12.5k a year for ever, more like £3.5/4K once SP age.

You both have very different types of pension. Your LGPS is a DB scheme where your employer promises to pay you £x per year, every year until you die once retired, along with a smaller spouse pension if your husband is still alive. You are not taking any of the risk, your employer is.

He has a DC pension and is building a pot that he can use as a current account basically, withdrawing as required. The amount in the pot is not guaranteed and will depend on how his underlying investments perform, and then, how much he need to withdraw. He has all the risk.

I would suggest you work out your target "number" for how much income you need in retirement to fund the lifestyle you want and see how that compares to your expected income from the LGPS and State Pensions. If you need / want more than the guaranteed income the balance needs to be funded from his DC pension and any other savings you have.

You can increase your LGPS pension by paying for either APCs (Additional Pension Contributions) which increase your annual pension or AVCs (Additional Voluntary Contributions) which are like a DC scheme in as much as they build an invested pot. AVCs can then be used to buy additional LGPS pension at retirement or can be taken as the 25% tax free element of your overall LGPS pension.

My wife and I are fortunate enough to both be in the LGPS and our projected annual pensions are enough for what we will need to cover our normal living expenses so don't "need" additional guaranteed income for life so we use AVCs as that will give us a pot of tax free cash at retirement to use as we want.

chiefie

This from the post above is a brilliant benefit to have in the Lgps ....,

AVCs can then be used to buy additional LGPS pension at retirement or can be taken as the 25% tax free element of your overall LGPS pension.

OldBeanz

If you have been in the LGPS then you should certainly be looking to have an AVC.
When considering your number for retirement you should also look at what position either of you would be in if the other died. You should be able to see what you spouse's pension would be if you went first.