LGPS & AVC - redundancy and rejoining LGPS on a much lower salary

collins74

Good evening everyone

Been in LGPS since 1999 and been paying AVCs since 2017 (current value is £30k)and contributing to this regularly via salary sacrifice.  Salary £46459.

Could be facing redundancy from 1.4.23 and am under 55 so would not be able to get unfettered access to my LGPS.

I believe that you can rejoin LG at another authority after a month to avoid forfeiting your severance payment and would be interested in doing this.  However the chances are this would be on a much lower salary as jobs in my area are quite specialised and may need to take a role on between £22 to £25k.  Not sure I want the pressure of another senior role so may stay on the reduced salary until I retire.  Under these circumstances I would retire slightly later than intended and this would be in 14/15 years time.

I was always under the impression that under these circumstances it was generally best not to link your final salary pension element with the new service due to the drop in salary reducing the pre 1.4.14 final salary pension and losing the TFLS for the pre 1.4.08 service.

So my questions are:

i) in these circs would it be best not to join any previous LGPS service linked to my previous higher salary?
ii) in the event of starting AVC contributions on any new lower paid role, would I have to transfer the AVC built up on my former role or could I start a new one?  I want to take any AVCs as a TFLS.

Hope this is enough information to give some views and thanks for reading this.

Silvertabby

collins74 said:

Good evening everyone

Been in LGPS since 1999 and been paying AVCs since 2017 (current value is £30k)and contributing to this regularly via salary sacrifice.  Salary £46459.

Could be facing redundancy from 1.4.23 and am under 55 so would not be able to get unfettered access to my LGPS.

I believe that you can rejoin LG at another authority after a month to avoid forfeiting your severance payment and would be interested in doing this.  However the chances are this would be on a much lower salary as jobs in my area are quite specialised and may need to take a role on between £22 to £25k.  Not sure I want the pressure of another senior role so may stay on the reduced salary until I retire.  Under these circumstances I would retire slightly later than intended and this would be in 14/15 years time.

I was always under the impression that under these circumstances it was generally best not to link your final salary pension element with the new service due to the drop in salary reducing the pre 1.4.14 final salary pension and losing the TFLS for the pre 1.4.08 service.

So my questions are:

i) in these circs would it be best not to join any previous LGPS service linked to my previous higher salary?
ii) in the event of starting AVC contributions on any new lower paid role, would I have to transfer the AVC built up on my former role or could I start a new one?  I want to take any AVCs as a TFLS.

Hope this is enough information to give some views and thanks for reading this.

Aggregation is automatic, unless you actively elect not to combine your two records.  In theory, you've got 12 months in which to make your election -  but would be less aggro all round if you were to make your wishes clear before the transfer can be carried out.

Note that once you have made this election, it can't be reversed.  Even if you are promoted to a much higher paid job and/or made redundant after age 55/56.  And if you are made redundant from your new job, then you won't be able to access your first, deferred, pension under redundancy terms.

AVCs could be a little more of a problem if both your old and new LGPS use the same AVC provider.  Do you know if that is the case or not?

collins74

Thanks so much @Silvertabby. 

The point about the redundancy is one I had not considered.  

 If I stayed on the lower salary will this impact my higher salary LGPS I have built up if I aggregate them?  If so I may just take my chances re redundancy and keep it separate.

Currently with Prudential for the AVC.  At this stage I am not sure which LA I would be joining but if it’s in an area close to me then it would be the same pension scheme and AVC provider.  

Silvertabby

collins74 said:

Thanks so much @Silvertabby. 

The point about the redundancy is one I had not considered.  

 If I stayed on the lower salary will this impact my higher salary LGPS I have built up if I aggregate them?  If so I may just take my chances re redundancy and keep it separate.

Currently with Prudential for the AVC.  At this stage I am not sure which LA I would be joining but if it’s in an area close to me then it would be the same pension scheme and AVC provider.  

Yes.  If you aggregate, then your pre 2014 pension (and pre 2008 lump sum) will be re-calculated using your new, lower, pensionable pay figure.  Based on the salaries you have quoted, that would make a considerable difference.

You could join the scheme in respect of your new job and then investigate the question of AVCs.  ie, if they both use the Pru, then ask the Pru if current rules allow them to set up a second, separate, account for you.