Some people have no idea how lucky they are LGPS

Silvertabby

OldBeanz said:

SarahB16 said:

Silvertabby said:

You are right in saying that the AVC pension purchase factors are age related, but they have always been very favourable - at whatever age - when compared with an open market annuity.

There are too many variables to make an accurate comparison some years before retirement.  Just a point, but are you aware that even if you bought a specific amount of pension through an APC contract, and retired/took your benefits before SPA, then your APC benefits would be reduced for early payment?

Are you able to hedge your bets by paying both?

Just a point, but are you aware that even if you bought a specific amount of pension through an APC contract, and retired/took your benefits before SPA, then your APC benefits would be reduced for early payment?

I hadn't really considered that but that's a really good point and definitely something that I need to bear in mind, thank you as I do hope to retire before the SPA.  

Are you able to hedge your bets by paying both?

Yes, I believe I am able to do both.

Thank you very much @Silvertabby that's all really helpful.  

I would have thought that buying into an APC now would lock in the approximate 10%ish uplift coming in April.

Yes, but only the amount that has actually been bought, not the amount contracted to be bought over X months.  

annabanana82

marycanary said:

I'm a manager in local government responsible for just over 200 members of staff. Of these 2 have opted out of the pension scheme, so about 1%. Of these, one is a Jehovah's Witness and another told me her parents are millionaires so she expects to inherit a substantial amount.

Not a representative sample but it does give some information on the reasons people opt out of an excellent person scheme.

What reason would a Jehovah Witness have for not having a pension? 

Krakkkers

"thou shalt not take a local government index linked pension"

Andy_L

annabanana82 said:

marycanary said:

I'm a manager in local government responsible for just over 200 members of staff. Of these 2 have opted out of the pension scheme, so about 1%. Of these, one is a Jehovah's Witness and another told me her parents are millionaires so she expects to inherit a substantial amount.

Not a representative sample but it does give some information on the reasons people opt out of an excellent person scheme.

What reason would a Jehovah Witness have for not having a pension? 

Possibly seeing a DB pension as a form of gambling? Those who live a long time in retirement "win" at the "cost" of those who die early?

Silvertabby

Andy_L said:

annabanana82 said:

marycanary said:

I'm a manager in local government responsible for just over 200 members of staff. Of these 2 have opted out of the pension scheme, so about 1%. Of these, one is a Jehovah's Witness and another told me her parents are millionaires so she expects to inherit a substantial amount.

Not a representative sample but it does give some information on the reasons people opt out of an excellent person scheme.

What reason would a Jehovah Witness have for not having a pension? 

Possibly seeing a DB pension as a form of gambling? Those who live a long time in retirement "win" at the "cost" of those who die early?

I've heard of very strict Muslims refusing to join the LGPS, due to the way funds are invested, but never Jehovah's Witnesses. 

kinger101

marycanary said:

I'm a manager in local government responsible for just over 200 members of staff. Of these 2 have opted out of the pension scheme, so about 1%. Of these, one is a Jehovah's Witness and another told me her parents are millionaires so she expects to inherit a substantial amount.

Not a representative sample but it does give some information on the reasons people opt out of an excellent person scheme.

Admit it.  You're secretly wishing the inheritance goes to the donkey sanctuary so you can say "told you so".......

barnstar2077

marycanary said:

I'm a manager in local government responsible for just over 200 members of staff. Of these 2 have opted out of the pension scheme, so about 1%. Of these, one is a Jehovah's Witness and another told me her parents are millionaires so she expects to inherit a substantial amount.

Not a representative sample but it does give some information on the reasons people opt out of an excellent person scheme.

There is a manager where I work who said he isn't in the pension either because his parents are wealthy, and he expects to inherit.  There are three issues off the top of my head that would make me at least put the minimum 5% into the pension to get the companies 10%.

Firstly, he is already in his fifties and his parents could live another twenty years or more, so not exactly an early retirement plan! (Also, who wants to look forward to that day anyway!)

Secondly, what if said parents decide to spend most of it, or never had what he thinks they had in the first place.  Going on holidays and buying boats, or even a hidden gambling problem, anything is possible.

Thirdly, problems with the estate after death, hidden debts or disagreements with family members over what happens to the house etc.  Okay, probably just delays, but still, I would rather have my destiny in my own hands.

I know it isn't very Christian of me, but the chap at work is a real Mr Brittas total jobsworth kind of a manager, with a real vicious streak, so who am I to convince him he is making a mistake...

Silvertabby

barnstar2077 said:

marycanary said:

I'm a manager in local government responsible for just over 200 members of staff. Of these 2 have opted out of the pension scheme, so about 1%. Of these, one is a Jehovah's Witness and another told me her parents are millionaires so she expects to inherit a substantial amount.

Not a representative sample but it does give some information on the reasons people opt out of an excellent person scheme.

There is a manager where I work who said he isn't in the pension either because his parents are wealthy, and he expects to inherit.  There are three issues off the top of my head that would make me at least put the minimum 5% into the pension to get the companies 10%.

Firstly, he is already in his fifties and his parents could live another twenty years or more, so not exactly an early retirement plan! (Also, who wants to look forward to that day anyway!)

Secondly, what if said parents decide to spend most of it, or never had what he thinks they had in the first place.  Going on holidays and buying boats, or even a hidden gambling problem, anything is possible.

Thirdly, problems with the estate after death, hidden debts or disagreements with family members over what happens to the house etc.  Okay, probably just delays, but still, I would rather have my destiny in my own hands.

I know it isn't very Christian of me, but the chap at work is a real Mr Brittas total jobsworth kind of a manager, with a real vicious streak, so who am I to convince him he is making a mistake...

Anything could happen.  In our case, sis-in-law is dropping hints about giving our niece some of her inheritance (from us) now, when she really needs it.  Assumptions and expectations....  

We are fit and healthy 60 somethings, so giving away money now is a non-starter.  Tried to shut her down by saying that we were keeping money in reserve just in case one or both of us need care in the future.  Her reply to that was that we didn't need to worry, as it would be 'free' for the first one as the house couldn't be touched as long as the other spouse lived in it.

None too pleased with our plans to, if the worst happened, to take maximum equity release in order to pay for a decent, local, nursing home rather than 'over my dead body grove' miles away.

Perhaps your colleagues parents have similar plans.

Or, as we have read about more than once on these boards.... one parent dies, and the other re-marries and leaves the lot to their new spouse.


 

sammyjammy

People should make their own way in life ,relying on an inheritance that may never come is madness.  I have no children and if my brother started suggesting I gift my nieces/nephews in advance of dying it would definitely make me donate it all to the donkey sanctuary!

SarahB16

Silvertabby said:

Although most people who pay LGPS AVCs do so with the intention of maximising their tax free cash, it is also possible to use some or all of your AVC savings to buy additional  LGPS pension benefits at very favourable rates.

You don't have to declare your intentions when you first take out an AVC policy - it's something you decide when you eventually retire.  You never know, your requirements may change by then.

@Silvertabby    Thank you so much for your wonderful advice.  I do like to read the various threads on here and I remember a little while back reading that AVCs seemed to be less popular these days.  Are my circumstances different (due to being in the LGPS) in that the LGPS lets you take the AVC as a 100% tax free lump sum and my DB pension is left untouched to be used just for an annual pension? 

The pension contributions I make via salary sacrifice to the LGPS takes me from being a higher rate tax payer to being a basic rate tax payer.  This year I was unwell and had to take quite a bit of sick leave from work which will mean my salary this year will all be taxed at 20%.  From 6th April next year after my salary sacrifice pension deductions I think will be into the 40% tax band hence why I am thinking of making AVCs and think it would be sensible to reduce my gross earnings to ensure I am not taxed at 40%. 

This isn't a question but more confirmation that what I am planning on doing makes sense and is the right thing to do as I am not by any means an expert when it comes to AVCs.

I did enquire as to who the AVC pension provider is and it is Aegon.  I presume dependent on my risk appetite I can select the funds I wish my money to be invested in?  Does anybody know if Aegon publish which funds can be selected to be invested in from the AVCs and can I literally pick whichever ones I wish?   

Thank you in advance for any help with my query.