Local Authority Pension Buying More

LookingForwardToRetiremet

Please could anyone share their knowledge. 
Is there an obvious best option to do this?.
I'm late 50s and have excess money I could pump into my work pension but is it worth it?

A Local Authority Pension Scheme in Scotland 

Thanks 

Westertonbilly

You maxing AVCs relative to the annual allowance?

xylophone

https://www.spfo.org.uk/index.aspx?articleid=14707

billywhizz1966

Definitely worth while
As westernbilly says are you maxing out your annual allowance at £40k per year. My wife earns circa £80k which left her with unused allowances of about £9k per year. Used her underpayments from last 3 years and this has allowed her to pay in circa £27k   via AVC's set up with the Prudential via work as she is in LGPS scheme. This means she has maxed out contributions and got the benefit of saving on the tax relief too. The only thing is you cannot draw until you draw your pension. It may be possible to take the AVC as a tax free lump sum if you meet criteria to do so or instead buy extra pension with it. It is a good scheme but without knowing more about your position/circs cannot help further. May be worth expanding    

LookingForwardToRetiremet

Thank you for your kind replies. 
I'm ashamed to say but feel I should say ; all things re tax/ pension is like double Dutch to me 🙄

I retired from the NHS and have taken my pension 11k, I've gone back to work for a LA and joined their scheme. I earn 17 k. To date  haven't paid any extra into it. 

LookingForwardToRetiremet

billywhizz1966 said:

Definitely worth while
As westernbilly says are you maxing out your annual allowance at £40k per year. My wife earns circa £80k which left her with unused allowances of about £9k per year. Used her underpayments from last 3 years and this has allowed her to pay in circa £27k   via AVC's set up with the Prudential via work as she is in LGPS scheme. This means she has maxed out contributions and got the benefit of saving on the tax relief too. The only thing is you cannot draw until you draw your pension. It may be possible to take the AVC as a tax free lump sum if you meet criteria to do so or instead buy extra pension with it. It is a good scheme but without knowing more about your position/circs cannot help further. May be worth expanding    

Please see post below 

billywhizz1966

I would definitely contact your payroll department who will give you all information about the Pru that you need. You could save the 20% tax by paying an AVC contribution but you will need to explore the benefits/limits/time issues  of doing so as you can only draw on when taking your LGPS pension. Based on your circs this could mean actatorial deductions if taken before 67. It may be better to do it into a SIPP that will give you greater flexibility  to get tax benefits or even ISA's bit others would know more than me

AlanP_2

You have two choices within the LGPS scheme - AVC or APC.

APC - Additional Pension Contribution buys more annual pension. This is subject to actuarial reduction if taken early.

AVC - Additional Voluntary Contribution builds an invested pot (with the Pru or one of the other providers used by your LGPS) that can be used as your tax free lump at the point of taking your main scheme benefits (or used to buy additional annual pension at that time instead).

What do you want / need - Additional annual pension or a lump sum is the first question?

Additional considerations for you and your circumstances:

1. Using the AVC as a lump sum is limited by HMRC rules to be 25% of ((Annual Pension * 20) + Lump Sum). Based on your 1/49th CARE accrual rate and your salary of £17k that equates to £347 of pension per year. The theoretical maximum you want to add to an AVC each year is then (((347 * 20)/3) * 4) = £2313.25. To check this (347 * 20) + 2313.25 = £9253.25 and 25% of that is £2313.31. So, if your AVC contributions are much more than that you won't be able to take it all tax free. You can't work it out exactly as accrued CARE pension revalues each year and investments will go up and down in value as markets move.
2. The way tax relief works on LGPS pension contributions is that they are taken off Gross Pay to arrive at a Taxable Pay figure so you pay no tax on the pension contribution. This works fine until your Taxable Pay falls below your Personal Tax Allownce (£12.5K in England this year) as there is then no tax to be avoided. This would apply for AVC or APC in general terms so could influence decisions around how much to contribute.
3. The tax issue in Point 2 can be got around by setting up an external Personal Pension and contributing to that as the provider will add 25% tax relief to whatever you contribute irrespective of tax paid.
4. Total gross pension contributions are limited to your Gross Salary.

Depnding on what you want as the outcome and how much you can afford to contribute you could utillse AVC or APC down to your persdoanl tax allowanc eand put anything extra into a PP.