LGPS Help & Suggestions

JoeCrystal

LoopySnooker, you really need to get a quote on the amount of pension it will buy with a SIPP beforehand to make the decision. However, I read somewhere on the forum that you can only buy a maximum of 50% of your current salary as a CARE pension with the transfers in (So maybe a maximum of £7,500 per year with a partial transfer in). Of course, I may get that horribly wrong so happy if someone can correct me on that!

Silvertabby

JoeCrystal said:

LoopySnooker, you really need to get a quote on the amount of pension it will buy with a SIPP beforehand to make the decision. However, I read somewhere on the forum that you can only buy a maximum of 50% of your current salary as a CARE pension with the transfers in (So maybe a maximum of £7,500 per year with a partial transfer in). Of course, I may get that horribly wrong so happy if someone can correct me on that!

Joe - the £7K + limit applies to APCs,  not transfers in.

OP - the transfer in calculation uses many factors, and you really should obtain a proper quote before deciding.  I take it that you have asked your employer if they accept transfers in from a non public sector scheme?  Not all do. 

LoopySnooker

Silvertabby said:

Joe - the £7K + limit applies to APCs,  not transfers in.

OP - the transfer in calculation uses many factors, and you really should obtain a proper quote before deciding.  I take it that you have asked your employer if they accept transfers in from a non public sector scheme?  Not all do. 

Thanks again.  I filled in an online enquiry form stating I had a SIPP and they asked me to fill in a Transfer Value Authority Form.  The website says you may be able to transfer pension rights into the LGPS from:

• Another LGPS fund
• A previous employer’s pension scheme
• A self employed pension plan
• A personal pension plan
• A stakeholder pension scheme

So I hope they do after not saying no initially !!  I guess once they get the value confirmed they will prepare a proper quote which I can then consider.

Silvertabby

LoopySnooker said:

Silvertabby said:

Joe - the £7K + limit applies to APCs,  not transfers in.

OP - the transfer in calculation uses many factors, and you really should obtain a proper quote before deciding.  I take it that you have asked your employer if they accept transfers in from a non public sector scheme?  Not all do. 

Thanks again.  I filled in an online enquiry form stating I had a SIPP and they asked me to fill in a Transfer Value Authority Form.  The website says you may be able to transfer pension rights into the LGPS from:

• Another LGPS fund
• A previous employer’s pension scheme
• A self employed pension plan
• A personal pension plan
• A stakeholder pension scheme

So I hope they do after not saying no initially !!  I guess once they get the value confirmed they will prepare a proper quote which I can then consider.

You're OK - they clearly do allow transfers in.  Many employers exercised their discretionary rights NOT to allow SIPP etc transfers in back in 2014, when the very generous factors were announced. 

OldBeanz

Dazed_and_C0nfused said:

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.

 A very indirect way of making that point and the example I gave was on the full year figure he gave and stated he wouldn't get tax relief if he was not liable for tax.

LoopySnooker

Hi all,

Just need a bit more help regarding my LGPS if that’s OK !

I’d like to contribute a decent lump sum this tax year to boost my annual pension (APC rather than AVC I think) but I’m not sure I fully understand what limits apply and how the Tax Relief works / is received.

Earnings 21-22 will be just under 16k before and around 15k after LGPS contributions.  Is there a simple way of working out the most I can pay in this year to get full Tax Relief ?  I’ve read somewhere about calculating 16x the DB increase in the tax year (roughly £5k in my case) and deducting that from annual salary but it’s quite likely that I’ve misunderstood how it works.

In simple terms, I want to pay in as much as possible and optimise tax relief.  

EDIT: If I decide to top up my SIPP instead, do the same limits apply ?

Many thanks in advance for any help.

Dazed_and_C0nfused

Earnings 21-22 will be just under 16k before and around 15k after LGPS contributions.  Is there a simple way of working out the most I can pay in this year to get full Tax Relief ? 

If your tax code is 1257L and you earn £15,000 in taxable income (i.e. after normal "net pay" pension contributions) and you have no other taxable income then the maximum tax relief you will get by making a lump sum APC contribution is £484.

It will be a fraction less if you are Scottish resident for tax purposes.

You would need to contribute £2,430 to get this relief (assuming taxable income of £15,000).

You normally need to notify HMRC about lump sum contributions where no tax relief is received at the time and the tax relief comes back to you, either as a reduction (to £0) in tax paid during the year or if that isn't possible then HMRC will refund the tax overpaid to you next spring/summer.

It looks like LGPS offer a different option where they will operate net pay tax relief on a lump sum, which would definitely be simpler than trying to get relief from HMRC (there have been several threads where people have found this particular situation difficult when it comes to getting the tax refund).

If you contribute to a personal pension or SIPP that would be a "relief at source" contribution which work in a totally different way.

OldBeanz

You can use the MSE salary calculator to work out how much tax you pay. Paying extra to the LGPS is constrained by the amount of tax you pay (assuming you want tax relief). You can pay £15k *.8 into a SIPP or £12.570*.8 if you max out the LGPS.

cloud_dog

Isn't this situation complicated by the OP needing the PIA amount to be able to calculate correctly?

MX5huggy

cloud_dog said:

Isn't this situation complicated by the OP needing the PIA amount to be able to calculate correctly?

No not in this case because they are only earning £16k ish so that will be the limiting factor.

They are not going to hit Annual Allowance which PIA will reduce (or rather use up AA).