Apc

MrE1

People's thoughts please...

I'm 36. Should I buy extra local government pension (up to £7300 per year of extra pension) by handing over 50% of my savings as a lump sum.

Thank you in advance for any responses given

Voyager2002

Probably...

If you go to the FT website you will find an annuity tool. It will tell you how large a pension you can buy per thousand pounds, depending on age at retirement, marital status and whether or not you require index linking. You can compare the pension you could buy on the open market with what is offered through the local government pension scheme, and I expect that the latter will win hands down.

Of course, if you use your savings to buy an additional pension then you will not be able to use them to go on holiday...

Dazed_and_C0nfused

MrE1 said:

People's thoughts please...

I'm 36. Should I buy extra local government pension (up to £7300 per year of extra pension) by handing over 50% of my savings as a lump sum.

Thank you in advance for any responses given

Before doing this you might want to make sure you fully understand the tax relief implications of making a large lump sum contribution like this.

Tax relief is not automatic with these type of contributions and is entirely dependent on how much tax you personally pay.

So you can end up contributing say £15,000 and getting no tax relief.

Of course tax relief isn't the only consideration but presumably is a factor in your choice?

AlanP_2

Possibly, maybe even probably. 

It depends on your circumstances, your objectives and the plan you have in place. 

We know nothing about you or your situation so can only speculate. 

For example, if you have a potentially life threatening illness then buying APCs for when you are in your 60s may not be sensible.

If you are married and have normal life expectancy it may be sensible.

It's tricky at your age but try and calculate what you would need per year in retirement and what your LGPS pension would be. Ignore inflation for now.

If your pension plus State Pension is less than you need / want then it is starting to make sense.

Take a look at the AVC option as well, that can be worthwhile as well.

How does using the lump sum to buy the APCs compare to monthly payroll deductions? You can top up take home from savings if required to get to same position just a bit slower. 

tebbins

MrE1 said:

People's thoughts please...

I'm 36. Should I buy extra local government pension (up to £7300 per year of extra pension) by handing over 50% of my savings as a lump sum.

Thank you in advance for any responses given

How much are these savings?
How much extra pension would you get?
I've worked out similar things before and the realistic expectation is that you break even in real terms if you live to average live expectancy. I.e. you put £10k in, you take £500pa out for 20 years but the £500pa is inflation linked (

(massively oversimplified).

Main thing I'm thinking is if you put those savings in an ISA or SIPP - that's an asset you can use and pass on.

With what you're considering, most/all of the benefits disappear once you pop your clogs.