Buying Extra Pension LGPS

Lifematters

I wonder if someone with LGPS know how can answer this query? 

If extra LGPS of £5,000 can be bought at a lump sum cost of say £80,000, would this be available to purchase whatever your earnings are? Or is the lump sum you pay limited to your annual earnings / allowance as with a DC Pension? 

I can’t seem to find the answer on LGPS site https://www.lgpsmember.org/more/apc/index.php

I don’t work in Local Government but am considering a job offer and was wondering if buying extra pension was that easy?

Dazed_and_C0nfused

I cannot see why the (separate) tax relief and annual allowance limits wouldn't apply as normal so it's unlikely to be tax efficient and the annual allowance will come into play.

Although carry forward may mitigate that.

https://www.lgpsmember.org/more/extralimits.php

Lifematters

Playing with the LGPS calculator shows buying £6,000 pension would cost £75,000. Is this not a good buy,  even without total tax relief if bought via a savings pot, for example?

[Deleted User]

Lifematters said:

Playing with the LGPS calculator shows buying £6,000 pension would cost £75,000. Is this not a good buy,  even without total tax relief if bought via a savings pot, for example?

I have just taken up a job in local government and have been looking at the various pension options.  Yes APCs are good value (especially if you compare to buying an annuity) although you need to consider:
- You cannot take this before NRA
- There are no spousal benefits when you die

Another option to look into is transferring in other DB pensions you may have as I have read on this forum some examples of some extremely favourable uplifts (one person had a 4k per annum DB scheme and he transferred into LGPS at a rate of 10k per annum).  I am in the process of getting a quote at the moment for one of my old DB pensions.  It does depend on the LGPS Pension Fund you pay into as to whether they will accept transfers or not.

Lifematters

My only other DB pension is an old LGPS from 20 years ago so would not get any uplift on that. They could be linked but I will probably keep them separate as old DB has NRA of 60.

LGPS appear to accept transfers from DC pension, I wonder if anyone here has done this at a favourable rate? 

https://www.lgpsmember.org/arm/already-member-tvin.php

Silvertabby

Lifematters said:

My only other DB pension is an old LGPS from 20 years ago so would not get any uplift on that. They could be linked but I will probably keep them separate as old DB has NRA of 60.

LGPS appear to accept transfers from DC pension, I wonder if anyone here has done this at a favourable rate? 

https://www.lgpsmember.org/arm/already-member-tvin.php

Acceptance of transfers in from a DC scheme are allowed - but at the employer's discretion.  And, because the transfer in factors are so incredibly generous, many employers have opted not to accept transfers from non Club schemes.

Lifematters

Acceptance of transfers in from a DC scheme are allowed - but at the employer's discretion.  And, because the transfer in factors are so incredibly generous, many employers have opted not to accept transfers from non Club schemes.

Thanks for this information @Silvertabby
I don’t suppose there is a database of LA’s that have blanket policy to either accept / reject transfers from non club schemes is there? Or is it a case of having to contact the pension scheme directly?  

Silvertabby

Lifematters said:

Acceptance of transfers in from a DC scheme are allowed - but at the employer's discretion.  And, because the transfer in factors are so incredibly generous, many employers have opted not to accept transfers from non Club schemes.

Thanks for this information @Silvertabby
I don’t suppose there is a database of LA’s that have blanket policy to either accept / reject transfers from non club schemes is there? Or is it a case of having to contact the pension scheme directly?  

Not that I'm aware of.  Each LGPS has its own website, so may be on there?

OldBeanz

As the LGPS is a net pay scheme, HMRC do not refund any more than you pay in tax. So to pay in £80k and get tax relief you would need to have at least the same in tax liability.

Random47

Deleted_User said:

Lifematters said:

Playing with the LGPS calculator shows buying £6,000 pension would cost £75,000. Is this not a good buy,  even without total tax relief if bought via a savings pot, for example?

I have just taken up a job in local government and have been looking at the various pension options.  Yes APCs are good value (especially if you compare to buying an annuity) although you need to consider:
- You cannot take this before NRA
- There are no spousal benefits when you die

Another option to look into is transferring in other DB pensions you may have as I have read on this forum some examples of some extremely favourable uplifts (one person had a 4k per annum DB scheme and he transferred into LGPS at a rate of 10k per annum).  I am in the process of getting a quote at the moment for one of my old DB pensions.  It does depend on the LGPS Pension Fund you pay into as to whether they will accept transfers or not.

Are you sure you cannot take before NRA - I was of understanding you can it would just be at the same actuarial reductions of current CARE scheme rates (i.e., at time of paying in).

Anyone with good LGPS knowledge clarify this point up.

Silvertabby

Random47 said:

Deleted_User said:

Lifematters said:

Playing with the LGPS calculator shows buying £6,000 pension would cost £75,000. Is this not a good buy,  even without total tax relief if bought via a savings pot, for example?

I have just taken up a job in local government and have been looking at the various pension options.  Yes APCs are good value (especially if you compare to buying an annuity) although you need to consider:
- You cannot take this before NRA
- There are no spousal benefits when you die

Another option to look into is transferring in other DB pensions you may have as I have read on this forum some examples of some extremely favourable uplifts (one person had a 4k per annum DB scheme and he transferred into LGPS at a rate of 10k per annum).  I am in the process of getting a quote at the moment for one of my old DB pensions.  It does depend on the LGPS Pension Fund you pay into as to whether they will accept transfers or not.

Are you sure you cannot take before NRA - I was of understanding you can it would just be at the same actuarial reductions of current CARE scheme rates (i.e., at time of paying in).

Anyone with good LGPS knowledge clarify this point up.

Yes, they can - but with full actuarial reductions for early payment.