Some people have no idea how lucky they are LGPS

SarahB16

I have received the application form (three pages and very easy to fill in) from the pension provider re my AVC enquiry however in the covering e-mail from the pension provider they talk about the benefits of AVC's which I am aware of however the last bullet point reads:  

 - However, AVCs delay paying pensions.  

I am really unsure what they are referring to.  Does anybody know what this could mean?  

Before e-mailing the completed application form back to my pension provider I will clarify what is meant by the above but thought I'd ask on here first in case anybody may know?  

Thank you 

Silvertabby

SarahB16 said:

I have received the application form (three pages and very easy to fill in) from the pension provider re my AVC enquiry however in the covering e-mail from the pension provider they talk about the benefits of AVC's which I am aware of however the last bullet point reads:  

 - However, AVCs delay paying pensions.  

I am really unsure what they are referring to.  Does anybody know what this could mean?  

Before e-mailing the completed application form back to my pension provider I will clarify what is meant by the above but thought I'd ask on here first in case anybody may know?  

Thank you 

Yes.  Post Covid delays aside, your LGPS can't pay your benefits until they have received your final pay details from your employer and, if applicable, your disinvested AVC funds.

Assuming that you had made your option decisions and supplied your bank details before your retirement date:

Retire 31 March without AVCs.   Earliest possible payment date would be 30 April, subject to timely receipt of final pay details.

Retire 31 March with AVCs.  Payment date subject to receipt of final pay details AND disinvested AVC funds.  31 May would be pushing it.  Could well be later.

That said, you could speed up the process by terminating your AVC contract a month or so before your retirement date.  Then your AVC provider would be able to start the disinvestment process as soon as requested, instead of having to wait for the final month's payment to trickle through.

Albermarle

Silvertabby said:

SarahB16 said:

I have received the application form (three pages and very easy to fill in) from the pension provider re my AVC enquiry however in the covering e-mail from the pension provider they talk about the benefits of AVC's which I am aware of however the last bullet point reads:  

 - However, AVCs delay paying pensions.  

I am really unsure what they are referring to.  Does anybody know what this could mean?  

Before e-mailing the completed application form back to my pension provider I will clarify what is meant by the above but thought I'd ask on here first in case anybody may know?  

Thank you 

Yes.  Post Covid delays aside, your LGPS can't pay your benefits until they have received your final pay details from your employer and, if applicable, your disinvested AVC funds.

Assuming that you had made your option decisions and supplied your bank details before your retirement date:

Retire 31 March without AVCs.   Earliest possible payment date would be 30 April, subject to timely receipt of final pay details.

Retire 31 March with AVCs.  Payment date subject to receipt of final pay details AND disinvested AVC funds.  31 May would be pushing it.  Could well be later.

That said, you could speed up the process by terminating your AVC contract a month or so before your retirement date.  Then your AVC provider would be able to start the disinvestment process as soon as requested, instead of having to wait for the final month's payment to trickle through.

A few weeks delay in a pension starting is not a big deal in the great scheme of things. It can take months to get a private DB pension into payment, if you are unlucky enough to have to deal with certain large pension administrators, who work at a snails pace, and are prone to making errors.

Stegor

Albermarle said:

Stegor said:

Morning everyone. My wife works for the local council and has a small LGPS pension. She earns £590 a month so is well below the tax threshold and pays 5.5% into her pension. She is hoping to retire in the next 3 to 5 years, would she be better looking at buying extra years, paying for the in-house AVC, increasing her S&S Isa or opening a SIPP. We are so confused about all of the different options, thank you.

Most likely that all the pension options will be better than investing in a S&S ISA.

Regarding which option it will depend to some extent on what she wants  post retirement.
For example the LGPS pension will be paid regularly each month for the rest of her life. would it be desirable if these monthly lifetime payments were bigger? Or would it be preferable to be able to access more funds when she retires/or in the following few years?

Thanks for the quick reply Abermarle. We would be looking to utilise the funds between retirement and state pension to try and keep our tax burden down. She is 52 at the moment so depending when we retire it would be used to top up our savings and my pensions/earnings until we reach 67.

Albermarle

Stegor said:

Albermarle said:

Stegor said:

Morning everyone. My wife works for the local council and has a small LGPS pension. She earns £590 a month so is well below the tax threshold and pays 5.5% into her pension. She is hoping to retire in the next 3 to 5 years, would she be better looking at buying extra years, paying for the in-house AVC, increasing her S&S Isa or opening a SIPP. We are so confused about all of the different options, thank you.

Most likely that all the pension options will be better than investing in a S&S ISA.

Regarding which option it will depend to some extent on what she wants  post retirement.
For example the LGPS pension will be paid regularly each month for the rest of her life. would it be desirable if these monthly lifetime payments were bigger? Or would it be preferable to be able to access more funds when she retires/or in the following few years?

Thanks for the quick reply Abermarle. We would be looking to utilise the funds between retirement and state pension to try and keep our tax burden down. She is 52 at the moment so depending when we retire it would be used to top up our savings and my pensions/earnings until we reach 67.

So probably better to make contributions to the LGPS AVC ,  or a completely seperate DC pension/SIPP.

As you can read earlier in this thread the AVC can bring some advantage in how much cash lump sum you can take with the LGPS/AVC combined. Suggest you read around the subject before deciding anything.

marycanary

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'm told it's because they expect the world to end soon so a pension isn't needed. 

[Deleted User]

I'm sorry to jump on the thread but I wanted an answer to a question.
Someone I know has an lgps pension. They said they pay in by the 50/50 section of the scheme.
They've read this to mean that their employer pays 50% more than they should do.But they pay a lower percentage???
 I've read this as the employee is paying only half of the contributions they should  be because they themselves are also paying half of the contributions they should be.
They're adamant they are right and I am wrong. 

NoMore

ImDoingItForMe said:

I'm sorry to jump on the thread but I wanted an answer to a question.
Someone I know has an lgps pension. They said they pay in by the 50/50 section of the scheme.
They've read this to mean that their employer pays 50% more than they should do.But they pay a lower percentage???
 I've read this as the employee is paying only half of the contributions they should  be because they themselves are also paying half of the contributions they should be.
They're adamant they are right and I am wrong. 

Paying less :: LGPS (lgpsmember.org)

I don't think it matters what the employer pays, the important thing is the employee pays half the contribution for half the benefits.

As ever in a DB pension, the actual contributions by employer are largely meaningless to the employee unlike in a DC scheme.

daveyjp

Employee contributions are a moot point and the amount paid can be ignored by the individual employee.  The amount is calculated by actuaries every few years and is based on future liabilities of the scheme.

If your friend is on 50/50 they are paying half the contribution and will receive half the pension on retirement.

Lemon_dr1zzle

The employee pays 50% of their normal rate, they then accrue pension at 1/98th rather than 1/49th. 

What their employer pays is irrelevant