Hopefully simple questions!

Interested!

I'm 43. If I retire at 57 with an LGPS pot value of £300,000, an LGPS AVC worth £20,000 and an Interactive Investor SIPP with a value of £80,000 can I take 100% of my AVC and 100% of my SIPP (£100k total) as tax free lump sums as it only equates to 25% of my total pension? (I'd use this £100k to subsidise my first 10yrs of retirement until I get state pension).

 

Should I use my LGPS AVC (Prudential) or II SIPP for my additional pension saving?

Thank You

xylophone

Your SIPP and your LGPS pension are completely separate arrangements.

You would be able to take a PCLS of 25% of the value of the SIPP - the balance would be taxable as income in the year(s) that you drew it down.

With regard to the LGPS, if you were able to access the pension before normal scheme retirement age, you would need to consider the actuarial reduction.

https://www.lgpsmember.org/your-pension/planning/taking-your-pension/

With regard to the AVC see

https://www.lgpsmember.org/your-pension/planning/paying-extra/#:~:text=If you take your AVC,benefits, including the AVC plan

Albermarle

If I retire at 57 with an LGPS pot value of £300,000

LGPS is a defined benefit scheme, where you build up entitlement to a pension . The longer you are in the scheme and the higher your salary , the larger the pension ( simplified explanation) . There is no pot like with the AVC or SIPP. just a guarantee to pay a certain level of pension.

MX5huggy

How have you decided your LGPS is (or will be) worth £300000? 

If it’s because you’ve multiplied the annual pension of £15000 by 20 then you  are on the right track. Because that is the value used for LTA and it’s value the 25%  for working out how much Tax Free AVC you can have as lump sum. 

So you should use the AVC for additional savings as you can get it all out tax free up to £80k in your case. That’s not to say exceeding £80k Is a bad idea. 

If the AVC is available via Salary Sacrifice even better than the SIPP.