LGPS Help & Suggestions

LoopySnooker

Hi folks and Happy New Year,

I’ve recently joined a LGPS for the very first time and would appreciate some suggestions on the best ways to increase its value.  Some info below to (hopefully) help:

• I have a SIPP (approx £100k) which I have enquired about transferring in
• Current salary around £15k part time (may become full time in future)
• I have a marriage allowance tax code (I get the extra allowance)

Also considering paying extra into AVC and/or APC.  Ideally I would like to get as much as possible in over the next 8-10 years.

Many thanks in advance.

Dazed_and_C0nfused

Receipt of Marriage Allowance or were you the applicant?

LoopySnooker

Dazed_and_C0nfused said:

Receipt of Marriage Allowance or were you the applicant?

Receipt of (I get the extra allowance)

Dazed_and_C0nfused

Transfers into LPGS tend to be quite popular as they are seen as good value.

The slight downside (depending on viewpoint) is loss of flexibility but you have some time to build up a separate DC pot again albeit contributions would be limited by relatively low income level at the moment

Silvertabby

How old are you?  Your age is one of the factors used in the calculation of a transfer in.  Best to get a quote (how much LGPS this £100K would buy you) before deciding.

APCs are good value if you intend to work/defer payments of benefits until SPA, not so much if you are looking to retire at 55.  If you want to increase your tax free lump sum, then AVCs could be the way to go. 

OldBeanz

You have to be aware that your pension contributions are paid under a net pay arrangement i.e. deducted before tax thus decreasing tax paid. Your tax allowance will be £13750 and you will make a 5.8% contribution from £15k which is £870 meaning you can only contribute an extra £380pa through your pay and receive tax relief as HMG does not refund tax that has not been paid.

LoopySnooker

Thanks everyone for the comments & help.  

I’ll probably add to my SIPP today so that when the Tax Relief comes through in a few weeks I’ll be able to transfer in the region of 115k to the LGPS (providing the numbers are OK).  I've had a look at the factors for the non-club based transfers in based on NPA67.  I don’t mind losing a bit of flexibility as I still have time to build up another DC pot by moving some cash savings into a new SIPP.  Will probably avoid APCs altogether and delay contributing to the AVCs until I'm able to take advantage of the Tax Relief on them.

Dazed_and_C0nfused

OldBeanz said:

You have to be aware that your pension contributions are paid under a net pay arrangement i.e. deducted before tax thus decreasing tax paid. Your tax allowance will be £13750 and you will make a 5.8% contribution from £15k which is £870 meaning you can only contribute an extra £380pa through your pay and receive tax relief as HMG does not refund tax that has not been paid.

The "refund" bit only applies to net pay and gross contributions with no relief at the point of payment.

Qualifying relief at source contributions get tax relief irrespective of how much tax is actually payable.  So the op could in theory contribute say £10k and get £2.5k tax relief added even if they only paid £380 income tax.

Real amounts would obviously depend on actual earnings and other pension contributions.

OldBeanz

Dazed_and_C0nfused said:

OldBeanz said:

You have to be aware that your pension contributions are paid under a net pay arrangement i.e. deducted before tax thus decreasing tax paid. Your tax allowance will be £13750 and you will make a 5.8% contribution from £15k which is £870 meaning you can only contribute an extra £380pa through your pay and receive tax relief as HMG does not refund tax that has not been paid.

The "refund" bit only applies to net pay and gross contributions with no relief at the point of payment.

Qualifying relief at source contributions get tax relief irrespective of how much tax is actually payable.  So the op could in theory contribute say £10k and get £2.5k tax relief added even if they only paid £380 income tax.

Real amounts would obviously depend on actual earnings and other pension contributions.

The OP asked specifically how he could improve his LGPS pension by AVC or APC both of which are very restricted compared to the SIPP he presently has. He will only be able to contribute £380 to gain any tax advantage using those options.

Dazed_and_C0nfused

OldBeanz said:

Dazed_and_C0nfused said:

OldBeanz said:

You have to be aware that your pension contributions are paid under a net pay arrangement i.e. deducted before tax thus decreasing tax paid. Your tax allowance will be £13750 and you will make a 5.8% contribution from £15k which is £870 meaning you can only contribute an extra £380pa through your pay and receive tax relief as HMG does not refund tax that has not been paid.

The "refund" bit only applies to net pay and gross contributions with no relief at the point of payment.

Qualifying relief at source contributions get tax relief irrespective of how much tax is actually payable.  So the op could in theory contribute say £10k and get £2.5k tax relief added even if they only paid £380 income tax.

Real amounts would obviously depend on actual earnings and other pension contributions.

The OP asked specifically how he could improve his LGPS pension by AVC or APC both of which are very restricted compared to the SIPP he presently has. He will only be able to contribute £380 to gain any tax advantage using those options.

Probably not in this tax year though.

As they only recently joined LGPS it will depend on what other taxable income they have in the current tax year as their LGPS income may be well under £10k in this tax year.

LoopySnooker

Can I just check that I'm reading the factors correctly and not being a total numpty ?

As an example, if a 50yr old (last birthday) male transfers in say 104k to LGPS they could expect an annual pension of 10k based on NPA67 ?  This is what I'm thinking based on the March 2017 document, I can't seem to find anything more recent.