Topping up LGPS pension contributions due to sick leave and AVC’s query

saucer

SarahB16 said:

OldBeanz said:

Your AVC is most valuable when you take it at the same time as your main benefits as within very high limits it will all be tax free. You can draw the funds any time after 57 but subject to pension withdrawal rules and tax.

Thank you that's very helpful to know. 

I believe AVC's are defined contributions - do you know where I can see what the options are for the investments in terms of which funds I wish to invest in?  Do you know what I need to ask HR so that I can see this choice of funds?    

LGPS AVCs are offered through independent providers, most commonly the Prudential. The choice of funds depends on your employer. https://www.mandg.com/pru/workplace-pensions/employees/public-sector-avc-schemes/local-gov?utm_source=legacyurls&utm_medium=301&utm_campaign=/localgov

OldBeanz

SarahB16 said:

OldBeanz said:

Your AVC is most valuable when you take it at the same time as your main benefits as within very high limits it will all be tax free. You can draw the funds any time after 57 but subject to pension withdrawal rules and tax.

Thank you that's very helpful to know. 

I believe AVC's are defined contributions - do you know where I can see what the options are for the investments in terms of which funds I wish to invest in?  Do you know what I need to ask HR so that I can see this choice of funds?    

Each local authority can chose their own provider. Prudential are one of the largest (going by the posts on here). Like most providers they  offer low to high risk options with derisking options over the years prior to claiming. Google is your friend for your LA provider or worth looking at the pru as they check if you are with a relevant LA. They admit their service has been appalling but do sort things out eventually along with compensation.

Dave_5150

Thank you that's very helpful to know. 

I believe AVC's are defined contributions - do you know where I can see what the options are for the investments in terms of which funds I wish to invest in?  Do you know what I need to ask HR so that I can see this choice of funds?    

LGPS AVC's are specific to your local pension scheme so speaking to your pensions team or checking out their website would be a good starting point. 

SarahB16

Silvertabby said:

Although your pension contributions are a %age of your actual earnings, your pensions accrual will be based on your 'assumed pensionable pay' for the period your pay was reduced.  In its simplest form, that's the average of your 3 months of full pensionable pay before it was reduced due to sick leave.  So, no need to worry about topping up your contributions (other than checking your annual benefit statement to ensure that your HR passed the right figures to your LGPS.....)

Alan is right.  If you want to take your AVC as tax relief in/lump sum tax free out, then it must be taken at the same time as your main scheme benefits. 

@Silvertabby you raised a really good point so I’m going to check on that.  It’s too early for me to see the details at the moment though however what I did notice and would be grateful for yours and others help with is a possible error regarding what is showing as my pensionable earnings as at 1/10/14. 

Looking at my HR records which on our system at work it shows the following: 

Effective Date                        Pensionable earnings                                 Position

1/7/14                                                £41,040                                             ‘Job A’

1/10/14                                              £41,040                                             ‘Job B’

1/4/15                                                £52,289                                             ‘Job B’

I applied for a new role at work (still within the same organisation) and began in that role on 1/10/14 then surely my pensionable earnings should have been increased?  I have looked back at my monthly payslips and my payslip dated 15/10/14 shows a monthly gross salary of £4,314.25 which equates to an annual salary of £51,770.88.  Therefore surely my pensionable earnings on the row 1/10/14 should be £51,770?  

SarahB16

OldBeanz said:

SarahB16 said:

OldBeanz said:

Your AVC is most valuable when you take it at the same time as your main benefits as within very high limits it will all be tax free. You can draw the funds any time after 57 but subject to pension withdrawal rules and tax.

Thank you that's very helpful to know. 

I believe AVC's are defined contributions - do you know where I can see what the options are for the investments in terms of which funds I wish to invest in?  Do you know what I need to ask HR so that I can see this choice of funds?    

Each local authority can chose their own provider. Prudential are one of the largest (going by the posts on here). Like most providers they  offer low to high risk options with derisking options over the years prior to claiming. Google is your friend for your LA provider or worth looking at the pru as they check if you are with a relevant LA. They admit their service has been appalling but do sort things out eventually along with compensation.

I have checked and I am in the Westminster City Council LGPS and this pension fund is administered by Hampshire Pension Services but looking on their website I can't seem to find details of which funds are available to invest in for AVC's.   

On a slightly separate topic I presume AVC's are far more preferable compared to making APC's (additional pension contributions)?   

Thank you very much for the replies so far I really do appreciate the help.  

Dazed_and_C0nfused

As I understand it APC's are buying extra LGPS pension (DB scheme) so will have similar (or the same) restrictions as your main pension.

AVC's are a pot of money you can use from age 57 (currently 55) so good for bridging from early retirement to taking DB and State Pensions.  

AVC's are more flexible but their value will be largely determined by how or bad your investment choices are.

Silvertabby

SarahB16 said:

Silvertabby said:

Although your pension contributions are a %age of your actual earnings, your pensions accrual will be based on your 'assumed pensionable pay' for the period your pay was reduced.  In its simplest form, that's the average of your 3 months of full pensionable pay before it was reduced due to sick leave.  So, no need to worry about topping up your contributions (other than checking your annual benefit statement to ensure that your HR passed the right figures to your LGPS.....)

Alan is right.  If you want to take your AVC as tax relief in/lump sum tax free out, then it must be taken at the same time as your main scheme benefits. 

@Silvertabby you raised a really good point so I’m going to check on that.  It’s too early for me to see the details at the moment though however what I did notice and would be grateful for yours and others help with is a possible error regarding what is showing as my pensionable earnings as at 1/10/14. 

Looking at my HR records which on our system at work it shows the following: 

Effective Date                        Pensionable earnings                                 Position

1/7/14                                                £41,040                                             ‘Job A’

1/10/14                                              £41,040                                             ‘Job B’

1/4/15                                                £52,289                                             ‘Job B’

I applied for a new role at work (still within the same organisation) and began in that role on 1/10/14 then surely my pensionable earnings should have been increased?  I have looked back at my monthly payslips and my payslip dated 15/10/14 shows a monthly gross salary of £4,314.25 which equates to an annual salary of £51,770.88.  Therefore surely my pensionable earnings on the row 1/10/14 should be £51,770?  

Possibly.  Have you checked your annual benefit statement for 31 March 2015 to see if your higher rate has been reflected in your pensionable pay for that year?  But note that your benefit statement won't say £51,770 as your pensionable pay for 2014/2015 will be based on £41,040 for 1 April 2014 to 30 September 2014 and your new salary for 1 October 2014 to 31 March 2015.  

Alternatively, was your new role just on a higher grade?  In the case of the LGPS I worked for, grade advancements in the same job weren't paid immediately - I had to wait until the following April for mine (and, yes, it still stings!)

MX5huggy

Take the gross pay figure from your P60 for 2014/15 divide by 49 this should be the pension input amount (before any CPI uplifts) , this was how I checked mine last year it was near enough for me (£3 out I think). But the LGPS did not show my correct current salary because I had been in another role then back to the original role within the year. 

OldBeanz

SarahB16 said:

OldBeanz said:

SarahB16 said:

OldBeanz said:

Your AVC is most valuable when you take it at the same time as your main benefits as within very high limits it will all be tax free. You can draw the funds any time after 57 but subject to pension withdrawal rules and tax.

Thank you that's very helpful to know. 

I believe AVC's are defined contributions - do you know where I can see what the options are for the investments in terms of which funds I wish to invest in?  Do you know what I need to ask HR so that I can see this choice of funds?    

Each local authority can chose their own provider. Prudential are one of the largest (going by the posts on here). Like most providers they  offer low to high risk options with derisking options over the years prior to claiming. Google is your friend for your LA provider or worth looking at the pru as they check if you are with a relevant LA. They admit their service has been appalling but do sort things out eventually along with compensation.

I have checked and I am in the Westminster City Council LGPS and this pension fund is administered by Hampshire Pension Services but looking on their website I can't seem to find details of which funds are available to invest in for AVC's.   

On a slightly separate topic I presume AVC's are far more preferable compared to making APC's (additional pension contributions)?   

Thank you very much for the replies so far I really do appreciate the help.  

Additional Pension Contributions buy you extra pension.
Additional  Voluntary Contributions allow you to build a linked pension. The main  advantage in the LGPS is that if taken at the same time as your main pension then a large amount can be taken tax free.

OldBeanz

SarahB16 said:

OldBeanz said:

SarahB16 said:

OldBeanz said:

Your AVC is most valuable when you take it at the same time as your main benefits as within very high limits it will all be tax free. You can draw the funds any time after 57 but subject to pension withdrawal rules and tax.

Thank you that's very helpful to know. 

I believe AVC's are defined contributions - do you know where I can see what the options are for the investments in terms of which funds I wish to invest in?  Do you know what I need to ask HR so that I can see this choice of funds?    

Each local authority can chose their own provider. Prudential are one of the largest (going by the posts on here). Like most providers they  offer low to high risk options with derisking options over the years prior to claiming. Google is your friend for your LA provider or worth looking at the pru as they check if you are with a relevant LA. They admit their service has been appalling but do sort things out eventually along with compensation.

I have checked and I am in the Westminster City Council LGPS and this pension fund is administered by Hampshire Pension Services but looking on their website I can't seem to find details of which funds are available to invest in for AVC's.   

On a slightly separate topic I presume AVC's are far more preferable compared to making APC's (additional pension contributions)?   

Thank you very much for the replies so far I really do appreciate the help.  

Googling 'Hampshire LGPS AVC' suggests they are in cahoots withe the Pru. I would think your authority, if outsourced to there, will be the same.