LGPS planning best way to retire

Nebulous2

I'm in the LGPS, in Scotland. I had been planning an exit strategy that involved phased retirement but I put it on hold during the pandemic. My job has lost its appeal recently and I have decided I want to go.  It's unlikely I would now get phased retirement. Probably leaving in June, as I have some stuff I'd like to do first. I'm running some ideas to make the most of my pension and would appreciate some thoughts, comments or ideas I haven't thought of. 

I have 32 / 60ths in the 2009 scheme, no lump sum, and by the time I stop I will have 6 years CARE contributions. The 60ths will be subject to an actuarial reduction from 65 and the CARE from 67. I'm 58, 59 in February. I've no additional pension - no AVCs, will get full state pension. 

We have a house to sell, not on the market yet, but hope to do so very early in the new year. There is a very limited chance it will sell and I'll get the money this tax year.  I can afford 6-9 months without income if it helps in the long run. 

Plan A - start an AVC, probably a Prudential cash fund and put as much as I am allowed into it for the next 6 months. If the house did sell before end of March I could put a lump sum in as well, taking me to the limit for this year. I'd then be able to draw all of the AVC tax-free at the same time as my DB pension. 

Plan B, Stop employment end of July, in reality end of June if I save up my holidays. Defer my pension until the following financial year, probably 1st April 2022, to reduce my actuarial reduction. (Would I get a CPI increase to pension from April as well? I think the CARE element at least would be revalued 1st of April.)  

I could do both, but if I put all my pay April -July into my AVC and then defer, I wouldn't be making use of my tax allowance for 21/22. If deferring for 6 months doesn't make a huge difference I might be just as well taking my pension and getting all the 6 months tax-free. If my house doesn't sell,  I might need to draw the pension before 1st April 2022. 

Any thoughts or obvious flaws in my thinking welcome! 

ZeroSum

If you're made redundant then wont suffer actuarial reductions. 

Dazed_and_C0nfused

I have 32 / 60ths in the 2009 scheme, no lump sum, and by the time I stop I will have 6 years CARE contributions. The 60ths will be subject to an actuarial reduction from 65 and the CARE from 67. I'm 58, 59 in February. I've no additional pension - no AVCs, will get full state pension. 

Have you checked your State Pension forecast in detail?  In particular reading past the headline £175.20 to see what you had accrued by 5 April 2020?

I could do both, but if I put all my pay April -July into my AVC and then defer, I wouldn't be making use of my tax allowance for 21/22

What pension contribution method is used for the AVC, net pay or relief at source?

Nebulous2

ZeroSum said:

If you're made redundant then wont suffer actuarial reductions. 

I'm not being made redundant. I'm voluntarily walking away.

Nebulous2

Dazed_and_C0nfused said:

I have 32 / 60ths in the 2009 scheme, no lump sum, and by the time I stop I will have 6 years CARE contributions. The 60ths will be subject to an actuarial reduction from 65 and the CARE from 67. I'm 58, 59 in February. I've no additional pension - no AVCs, will get full state pension. 

Have you checked your State Pension forecast in detail?  In particular reading past the headline £175.20 to see what you had accrued by 5 April 2020?

I could do both, but if I put all my pay April -July into my AVC and then defer, I wouldn't be making use of my tax allowance for 21/22

What pension contribution method is used for the AVC, net pay or relief at source?

Thanks
It says £164.47 at April 2020,  needing 3 more years. I'll have another complete one by April, so I suppose I'll have to buy two. 

As I understand it the AVC will be deducted from payroll, pre-tax, in the same way that my LGPS contributions are made for regular payments. They do also take lump sums, but they might be paid gross and I'd need to claim the tax relief myself. 

ZeroSum

Nebulous2 said:

ZeroSum said:

If you're made redundant then wont suffer actuarial reductions. 

I'm not being made redundant. I'm voluntarily walking away.

Is it on the back of departmental savings? As if it's an efficiency related retirement, then can also get the reductions waived

hyubh

ZeroSum said:

Nebulous2 said:

ZeroSum said:

If you're made redundant then wont suffer actuarial reductions. 

I'm not being made redundant. I'm voluntarily walking away.

Is it on the back of departmental savings? As if it's an efficiency related retirement, then can also get the reductions waived

That *is* a redundancy. 

ZeroSum

hyubh said:

ZeroSum said:

Nebulous2 said:

ZeroSum said:

If you're made redundant then wont suffer actuarial reductions. 

I'm not being made redundant. I'm voluntarily walking away.

Is it on the back of departmental savings? As if it's an efficiency related retirement, then can also get the reductions waived

That *is* a redundancy. 

That you dont get paid redundancy for.
I know someone who got this & it wasn't a redundancy. He wanted to go, but didn't have to & had to fight to get pensioner off as an efficiency 

Dazed_and_C0nfused

Nebulous2 said:

Dazed_and_C0nfused said:

I have 32 / 60ths in the 2009 scheme, no lump sum, and by the time I stop I will have 6 years CARE contributions. The 60ths will be subject to an actuarial reduction from 65 and the CARE from 67. I'm 58, 59 in February. I've no additional pension - no AVCs, will get full state pension. 

Have you checked your State Pension forecast in detail?  In particular reading past the headline £175.20 to see what you had accrued by 5 April 2020?

I could do both, but if I put all my pay April -July into my AVC and then defer, I wouldn't be making use of my tax allowance for 21/22

What pension contribution method is used for the AVC, net pay or relief at source?

Thanks
It says £164.47 at April 2020,  needing 3 more years. I'll have another complete one by April, so I suppose I'll have to buy two. 

As I understand it the AVC will be deducted from payroll, pre-tax, in the same way that my LGPS contributions are made for regular payments. They do also take lump sums, but they might be paid gross and I'd need to claim the tax relief myself. 

Your third year of NI is going to give you very little benefit.  This year (2020:21) will add £5.00 and if you earn (for NI purposes) enough if in the first few months of 2021:22 to add another year that will take you to £174.47.

So a third year would only add £0.73/week, definitely marginal for paying a years Class 3 NI (particularly if that £0.73 is going to be £0.59 net of extra basic rate tax).

badmemory

If you are working until July that MAY be enough to qualify for a full years NI.

hyubh

ZeroSum said:

hyubh said:

That *is* a redundancy. 

That you dont get paid redundancy for.
I know someone who got this & it wasn't a redundancy. He wanted to go, but didn't have to & had to fight to get pensioner off as an efficiency 

While I'll give you the fact the text of the regs considers them as two different things it groups together, rather than as synonyms or as one being an example of the other:

Where an active member who has attained the age of 55 or over is dismissed from an employment by reason of redundancy or business efficiency, or whose employment is terminated by mutual consent on grounds of business efficiency

However it's still the employer dismissing, not the employee voluntarily walking away.