Tps or Lgps advice

Kingo63

Hi,
My wife is currently 53 and works in a college, salary is on the low side of 80000 pounds. We are only recently married but she has never took out a pension whilst working at the college for one reason or another.
I have advised that she should join the pension scheme even though she is in her early 50's. Now my question is which one? she has access to the Tps and Lgps, i am airing on advising her to go the Lgps route as it has a better accrual rate than the Tps and contributions are lower.

Is there anything else we should take into consideration, ive run the Lgps pension modeler and also some calculators on the Tps website and the Lgps trumps the Tps hands down but i am sure there maybe other things i am missing.

Many thanks 

Dazed_and_C0nfused

Have you (she) also considered purchasing additional pension within whichever scheme she eventually opts for?

This could be quite tax efficient given her salary.

Kingo63

Yes that maybe something we do so far we have not given it much thought at the moment. But definitely a consideration if you ge the 40% tax relief on it. 

jamjar92

If you was wanting a TFLS, you can invest in an AVC in the LGPS scheme (max TFLS would be 25% of 20 x pension DB amount). This could so be used to purchase additional pension when taken with the main scheme, however it does not increase the spouse pension element.

Kingo63

At the moment we are just looking at which one she should join, i am in the Lgps and have been since i was 22 now 51, and with my salary even though its now the CARE scheme is still going to be similar to what i earn now with my state pension on top but the wife sadly didnt join when she first started working in the college, big mistake i know as the next step up for her will see a big payrise. Mistake made but we move on in life, we just want to make sure she joins the one that will give her the bigger return at 67.

billywhizz1966

Better late than never. If a CARE scheme she will not be too disadvantaged but definitely if you can afford forgo as much salary in 40% bracket to plough into pension and even use the unused allowances from past 3 years to max out. Not sure when she is planning to finish but if put into an AVC she needs to access it as same time as taking pension which may need to be a consideration. 

jamjar92

@Kingo63 I was just stating one of the benefits of joining the LGPS, it only public sector scheme that allows you to take all your AVC as a TFLS subject to the limits. Cannot comment on the TPS scheme, but probably as with the CIvic Service and NHS scheme you can only take 25% tax free.  I think you already did the leg work and worked its the best of providing the main scheme benefits. The LGPS will be take 9.9% gross on £80,000, additional saving will need to go into an AVC to max your tax benefits. TPS uses the Pru, LGPS also uses the Pru but could use others. I opted for AVC's rather than APC's.

With LGPS AVC's you could purchase more pension, but not with TPS AVC's. If you join the TPS to purchase additional pension you do this via "flexibilities".

hyubh

Kingo63 said:

I have advised that she should join the pension scheme even though she is in her early 50's. Now my question is which one? she has access to the Tps and Lgps,

There should not be a choice, so the question is moot - according to the LGPS regulations, if for a given employment an individual is eligible for another public service scheme, they aren't eligible for the LGPS:

https://lgpsregs.org/schemeregs/lgpsregs2013/timeline.php#reg4

Were someone to join the LGPS when they were in fact eligible for the TPS, then I would expect a retrospective correction at some point.

i am airing on advising her to go the Lgps route as it has a better accrual rate than the Tps and contributions are lower.

TPS active member revaluation is higher, so the longer active membership is held, the more the earlier years, initially lower in value given the lower accrual rate, increase in value, and ultimately outpace the equivalent LGPS accrual. That said, once the pension becomes deferred or enters payment, they will increase the same. So the LGPS benefit structure is better for shorter periods of membership the TPS one for decades-long ones.

AlanP_2

billywhizz1966 said:

Better late than never. If a CARE scheme she will not be too disadvantaged but definitely if you can afford forgo as much salary in 40% bracket to plough into pension and even use the unused allowances from past 3 years to max out. Not sure when she is planning to finish but if put into an AVC she needs to access it as same time as taking pension which may need to be a consideration. 

For clarity - You can only make use of previous Annual Allowance for years when you were a member of a pension scheme. As the OP has stated his wife has not been in a pension scheme before this will not apply from Day 1.

Dansmam

Max out the AVC I'd say. Plus max into pension going forward. And should have a decent savings scheme somewhere unless she just jumped several grades in the pay structure. She seems to have managed fine without a control freak partner so far. Can she not post for herself?