LGPS guidance (not advice) when can I walk? Silvertabby and others please guide me, thank you.

arthurdick

Hi,  Silvertabby and others, I need a little bit of help with LGPS and working out when It is doable to walk away please.

My LGPS statement should arrive this weekend coming, is this statement showing what I have as at 31/03/21?   I want to retire next August, 4 years 5 months before state pension, I Get state pension on the 21/01/27, qualified for full amount since 2017.  On 08/02/22 I will have been in the LGPS 14 years on a low income which is now at £19000.  As this is my only pension I have (never had any idea about pensions until I was 48, very late start but thanks to this site, I woke up) I knew that I was way behind where I should have been so after reading this forum around 7 years ago, I started in-house AVC’s of £300pm, by next August I should have around £35000 in AVC’s with Standard Life, and my LGPS should be around £4700 p.a.  with the taking it early reduction, I should roughly have around £300pm and AVC’s taken as max lump sum and used until state pension time, I should have around £670 pm and seeing as my target exit walk away fee has always been £1000 pm, I think it would be time to go.  If the max I can have in cash from AVC’s and LGPS limit is only around  £32000, how could the other £3000 be taken,  buy extra LGPS, or does it work some other way?  Thanks in advance for helping and maybe guiding me a bit (not advice), as I know I may be way out with my workings but I desperately want to get out, my life is more important than the extra few years of hating my job.   Thanks.

Silvertabby

arthurdick said:

Hi,  Silvertabby and others, I need a little bit of help with LGPS and working out when It is doable to walk away please.

My LGPS statement should arrive this weekend coming, is this statement showing what I have as at 31/03/21?   I want to retire next August, 4 years 5 months before state pension, I Get state pension on the 21/01/27, qualified for full amount since 2017.  On 08/02/22 I will have been in the LGPS 14 years on a low income which is now at £19000.  As this is my only pension I have (never had any idea about pensions until I was 48, very late start but thanks to this site, I woke up) I knew that I was way behind where I should have been so after reading this forum around 7 years ago, I started in-house AVC’s of £300pm, by next August I should have around £35000 in AVC’s with Standard Life, and my LGPS should be around £4700 p.a.  with the taking it early reduction, I should roughly have around £300pm and AVC’s taken as max lump sum and used until state pension time, I should have around £670 pm and seeing as my target exit walk away fee has always been £1000 pm, I think it would be time to go.  If the max I can have in cash from AVC’s and LGPS limit is only around  £32000, how could the other £3000 be taken,  buy extra LGPS, or does it work some other way?  Thanks in advance for helping and maybe guiding me a bit (not advice), as I know I may be way out with my workings but I desperately want to get out, my life is more important than the extra few years of hating my job.   Thanks.

Hi Arthur.

State pension first.  You say that you qualified for the full (single tier?) amount in 2017, but are you sure about that?  If you have always been low paid, then you would have accrued some SP2 (State pension top up) since 2002, but it is still unlikely that you would have reached the full single tier rate in 2017 due to your contracted out/LGPS service.  That said, it is possible that your NI contributions from 2017 until your last full year before SPA will get you at least very close to the full figure.  Best thing would be to obtain an actual forecast then come back to us with the figures.  Note that 'this is the most you can get' figure assumes that you will continue to work/pay NI until your last full year before SPA.

Now on to your LGPS.  Using your figures of £3,600 annual pension plus £35,000 AVC, that's :

20 x £3,600 = £72,000 (the calculation uses your actual pension, not what it would have been without the early retirement reduction).

£72,000 + £35,000 = £107,000

£107,000 X 25% = £26,750 maximum tax free cash.

£35,000 - £26,750 = £8,250 'residual' AVC fund.

What to do with this £8,250?  Well, in theory, you could transfer it into a personal pension, and take it as draw down cash.  In practice, unless you already have a suitable pension (doesn't sound like you have) this would be an enormous faff.  The most popular way of taking any residual AVC funds is to use them to buy extra index linked benefits in the LGPS.  Don't be concerned about the use of  the word 'annuity' - it's just the terminology used.  The factors used in converting AVC funds into LGPS pension are way more generous than anything you could (safely) get elsewhere. 

Hope this helps!

arthurdick

Hi Silvertabby, thank you, I think I sort of understand what you are saying, still trying to get my head around pension stuff.  As for the state pension I have been checking online for the last 5 years and it does say that I have qualified for the full amount, I will try and paste a copy of it, if I learn how.   I had 6 years on the sick getting credits, then a couple of years later I had another 8 years sick due to another serious accident, so I think they counted towards my state pension, plus the 3 years added from leaving school, also other jobs before and after accidents.. Ha , I am getting all confused now, I will try to post a copy, thank you for your help.  i may have more questions later between now and next August, I know where I can find you, cheers,

Silvertabby

arthurdick said:

Hi Silvertabby, thank you, I think I sort of understand what you are saying, still trying to get my head around pension stuff.  As for the state pension I have been checking online for the last 5 years and it does say that I have qualified for the full amount, I will try and paste a copy of it, if I learn how.   I had 6 years on the sick getting credits, then a couple of years later I had another 8 years sick due to another serious accident, so I think they counted towards my state pension, plus the 3 years added from leaving school, also other jobs before and after accidents.. Ha , I am getting all confused now, I will try to post a copy, thank you for your help.  i may have more questions later between now and next August, I know where I can find you, cheers,

Yes, you are already at the maximum so no worries re your State pension. 

Happy to help with any other LGPS queries you may have.

arthurdick

Thank you Silvertabby,  you know you said about the roughly £8000 residual avc fund, that I may be able to buy extra index linked benefits in my LGPS, would my KCC allow that or do I have to ask them if it is possible?, and roughly how much LGPS would that get me??  sorry for all the questions but I am really trying to learn as much as I can, thank you for letting me use up your time, thanks for the help, cheers.

Silvertabby

arthurdick said:

Thank you Silvertabby,  you know you said about the roughly £8000 residual avc fund, that I may be able to buy extra index linked benefits in my LGPS, would my KCC allow that or do I have to ask them if it is possible?, and roughly how much LGPS would that get me??  sorry for all the questions but I am really trying to learn as much as I can, thank you for letting me use up your time, thanks for the help, cheers.

It's a standard thing, rather than an employer discretion, so can't see any problems with that.

Can't help you with figures, I'm afraid, as I no longer have access to the relevant factors.  However, I can say that the factors are generous.

In normal times (pre covid) you would have/should have been able to request  a full quote, including AVC options, once you were within 12 months of your requested retirement date.  Covid and working from home may have limited that to within 6 months, but it wouldn't hurt to ask.

arthurdick

Thank you Silvertabby for all your help, it has made me do a bit of tweeking on my little spreadsheet but it is still more or less doable to go next August or at the very latest May 31st 23, I will arrange my Annual leave chart so that, mixed with Bank holidays up until August, I have worked it out that  I will not have to work more that 3.5 weeks on the trot, and as for April and May 2023, I can get 7 4day weeks, so that will help.. thanks