Additional contribution option

HIA

Is this a good investment for my savings which are earning very little at present? https://pensions.gov.scot/nhs/your-membership/your-contributions/increasing-your-pension

I'm 56 and have been paying in to public sector dB schemes since age 21. Most of pot is sitting with USS university scheme but last 4 years has been with NHS which gives me the option to make additional contribution, I would pay this as a lump sum and I'm very tempted to "retire" soon and certainly by age 60. I say retire but likely to continue some sort of p/t work just not what I'm doing.

HIA

Should add I'm in 2015 scheme so would pay in £6750.

Dazed_and_C0nfused

There is no "pot" with defined benefit pension schemes.

Are you a basic, intermediate or higher rate payer?

HIA

Ok, majority of my pension contributions then. I'm an intermediate tax payer and shouldn't tip into higher rate before retirement.

Dazed_and_C0nfused

It is generally seen as a good choice, particularly as the real cost will be less due to the 21% tax you will avoid paying (assuming you pay monthly).

The downside is it can be less flexible than a separate pension such as a SIPP but you know exactly what you're getting with the NHS option.

HIA

Thanks but I'd prefer to pay lump sum since I don't know how long I'm going to be working.  I understand what you mean if I pay it monthly I'm not paying tax on that amount of income.

Dazed_and_C0nfused

You can still get tax relief on lump sum contributions but you have to involve HMRC and it is a recurring issue on here with people being told no relief is due as HMRC don't seem to understand you can make this type of lump sum contribution to a public sector pension scheme.

Some people ask make incorrect assumptions about the tax relief due.

Roughly how much do you intend to pay by lump sum and what do you think your P60 will show you have earned for that tax year?

Dazed_and_C0nfused

What will your P60 show your pay to be though?

This will be the main thing that determines any tax relief due.

You do not get 20% tax relief like you would with a "relief at source" contribution to a defined contribution pension.

HIA

I don't know what my p60 will show but I know my gross income for the year.   Looking at the website again I think I have confused what I can pay in with the maximum extra pension I can purchase which is £6750 but I need to get a quote for what that would cost. Thanks for your help.

HIA

I think I've got it, every increase of £250 to my annual pension costs me £1650 up front so basically I've got to live 7 years post retirement to break even not allowing for the tax saving on the money invested. I also need to consider this additional pension will be taxed because I will be over the untaxed earning allowance. Also this extra pension will be reduced if I retire before 65. 15% annual return sounds good to me, except you don't get your capital back.

WYPBA5

AVC's or APC's?
I have been allocated a lump sum by my employers which can be only added to my LGPS pension either via AVC's or APC's.
I'm nearly 63 with my NRD in 2024 and been paying into my LGPS since 2005 and MIGHT retire before my agreed NRD.
I presently have (i.e. am paying into a low risk) AVC's but don't have any APC's, so which would be best for me for the lump sum, AVC's or APC's?