Adding extra to LGPS after tax-free lump sum from SIPP

Msjf

Hi everyone, I'm interested in your thoughts on an unexpected situation:

My OH who is 55 and works full-time (currently remotely) wants to fund private hospital treatment if his NHS-funded surgery (at a private hospital)  is postponed for a second time. To do this, he plans to action a (first) partial drawdown from his SIPP in March in order to take a tax-free lump sum and he has booked telephone guidance with his SIPP provider Fidelity to arrange. He says that if he has any residue of cash after any private medical treatment, he will put it into premium bonds and then look to make a lump sum contribution to his LGPS pension (AVP) "at some point".

OH plans to retire early in around five years. He should be comfortable in retirement from age 67 on full state pension (checked; based on accrued entitlement, not just forecast) plus his LGPS pension to be taken from the same age.  The LGPS value was boosted by a DC pot transfer in his first year of LGPS membership but he pays just the standard monthly  contribution, no AVCs or AVPs to date.

My OH's only other pension provision is the Fidelity SIPP, the sole purpose of which is to fund early retirement and/or reduced working hours, so with no intention for any of the pot to remain at age 67. He pays into this monthly what he can afford, varying the contribution amount once or twice a year on average.

We have joint savings for house maintenance, a PCP balloon payment (due in two years; monthly PCP payments are @ 0% interest), holidays (which we won't be taking this year) plus I have extra savings of my own, mostly in a S&S ISA and premium bonds.  He has a small additional amount saved. Some of our joint savings could readily be diverted to pay for surgery or I could pay for it out of my separate pots. He wants to pay for it himself however.

My questions are these: if OH doesn't need to use his tax-free lump sum for medical treatment, would he fall foul of recycling rules or need to explain himself if he then puts all or part of it into his LGPS pension (AVP) before he retires in 5 years' time?; is the cost of doing so likely to go up if he waits two or three years (bearing in mind circa a five year horizon before early retirement)?  Would it be better for him to buy extra LGPS entitlement by monthly contribution instead of via the lump sum route, or perhaps to increase his monthly SIPP pensions savings and make the SIPP last longer?  

Marcon

Msjf said:

Hi everyone, I'm interested in your thoughts on an unexpected situation:

My OH who is 55 and works full-time (currently remotely) wants to fund private hospital treatment if his NHS-funded surgery (at a private hospital)  is postponed for a second time. To do this, he plans to action a (first) partial drawdown from his SIPP in March in order to take a tax-free lump sum and he has booked telephone guidance with his SIPP provider Fidelity to arrange. He says that if he has any residue of cash after any private medical treatment, he will put it into premium bonds and then look to make a lump sum contribution to his LGPS pension (AVP) "at some point".

OH plans to retire early in around five years. He should be comfortable in retirement from age 67 on full state pension (checked; based on accrued entitlement, not just forecast) plus his LGPS pension to be taken from the same age.  The LGPS value was boosted by a DC pot transfer in his first year of LGPS membership but he pays just the standard monthly  contribution, no AVCs or AVPs to date.

My OH's only other pension provision is the Fidelity SIPP, the sole purpose of which is to fund early retirement and/or reduced working hours, so with no intention for any of the pot to remain at age 67. He pays into this monthly what he can afford, varying the contribution amount once or twice a year on average.

We have joint savings for house maintenance, a PCP balloon payment (due in two years; monthly PCP payments are @ 0% interest), holidays (which we won't be taking this year) plus I have extra savings of my own, mostly in a S&S ISA and premium bonds.  He has a small additional amount saved. Some of our joint savings could readily be diverted to pay for surgery or I could pay for it out of my separate pots. He wants to pay for it himself however.

My questions are these: if OH doesn't need to use his tax-free lump sum for medical treatment, would he fall foul of recycling rules or need to explain himself if he then puts all or part of it into his LGPS pension (AVP) before he retires in 5 years' time?; is the cost of doing so likely to go up if he waits two or three years (bearing in mind circa a five year horizon before early retirement)?  Would it be better for him to buy extra LGPS entitlement by monthly contribution instead of via the lump sum route, or perhaps to increase his monthly SIPP pensions savings and make the SIPP last longer?  

Possibly, but how much is the maximum lump sum contribution likely to be?

Msjf

He's taking £15,000 on partial drawdown, so that would be the maximum to go into the LGPS as a lump sum addition if not needed for medical treatment. If OH puts it into premium bonds for a while first, he could of course win a bit more to put in with it!