Additional Pension Contributions LGPS

LookingForwardToRetiremet

Please can I have thoughts : 
I think I can by additional pension of up to around 7,000 a year but either a lump sum or by a regular payment off my salary . 

What if any contribution would my employer make? 

If I became ill and had to retire early would my pension be based on with or without my additional pension .

Thank you 

la531983

It doesn't matter if the employer makes any contribution or not, it's a DB pension anyway. There is a calculator on the Lgps website that lets you work out how much extra you would need to pay in yourself and what it would amount to. 

Can't answer the last bit. Maybe this will - https://www.lgpsmember.org/your-pension/paying-in/paying-more/

hyubh

LookingForwardToRetiremet said:

Please can I have thoughts : 
I think I can by additional pension of up to around 7,000 a year but either a lump sum or by a regular payment off my salary . 

What if any contribution would my employer make?

Very likely (*) nil (notice how APC contributions don't get you anywhere the equivalent of standard scheme benefits for the same standard employee contribution £? That's because there's no employer contribution by default). However the employer, backstopped by the fund (and ultimately, local council tax payers) guarantees the investment.

If I became ill and had to retire early would my pension be based on with or without my additional pension

It would be included. In fact, if tier 1 or 2 ill health, and the APC contract is incomplete, it will be treated as complete (reg. 16(14)): https://lgpsregs.org/schemeregs/lgpsregs2013/timeline.php#r16.

(*) The concept of a 'shared cost APC' is in the scheme regulations. However in practice a shared cost APC is likely only granted when it is forced (e.g. a timely election to buy back unpaid maternity leave).

collins74

I looked at APCs but was put off as there are no survivor benefits and if you retire early they get reduced.  I would like to retire at 60/61 and therefore chose the AVC route which is also salary sacrifice and I will draw this as a tax free lump sum. If I die before my retirement date the full AVC is paid to my nominee as per my LGPS scheme records.  Worth considering your own circumstances before going for APC/AVC.

hyubh

collins74 said:

I looked at APCs but was put off as there are no survivor benefits and if you retire early they get reduced.  I would like to retire at 60/61 and therefore chose the AVC route which is also salary sacrifice and I will draw this as a tax free lump sum. If I die before my retirement date the full AVC is paid to my nominee as per my LGPS scheme records.  Worth considering your own circumstances before going for APC/AVC.

Yes - also as an alternative/in addition to the lump sum option, you can use an AVC to purchase an APC that does include survivor benefits.

collins74

@hyubh - that’s interesting thank you.  I thought you could use the AVC to purchase an additional pension from LGPS with survivor benefits but this was separate from the APC arrangements.  Do you know if the APC would pay more/less than the scheme annuity from LGPS or are they the same?

Silvertabby

collins74 said:

@hyubh - that’s interesting thank you.  I thought you could use the AVC to purchase an additional pension from LGPS with survivor benefits but this was separate from the APC arrangements.  Do you know if the APC would pay more/less than the scheme annuity from LGPS or are they the same?

Very different factors apply.  In the case of APCs and your planned retirement age of 60/61, the amount of additional pension you have bought would  be reduced for early payment in line with your main scheme benefits.  An annuity purchased from AVCs, however, uses age related factors - so £XX amount of AVCs at age 61 will buy a lower annuity than the same amount of AVCs at age 67.

LookingForwardToRetiremet

hyubh said:

LookingForwardToRetiremet said:

Please can I have thoughts : 
I think I can by additional pension of up to around 7,000 a year but either a lump sum or by a regular payment off my salary . 

What if any contribution would my employer make?

Very likely (*) nil (notice how APC contributions don't get you anywhere the equivalent of standard scheme benefits for the same standard employee contribution £? That's because there's no employer contribution by default). However the employer, backstopped by the fund (and ultimately, local council tax payers) guarantees the investment.

If I became ill and had to retire early would my pension be based on with or without my additional pension

It would be included. In fact, if tier 1 or 2 ill health, and the APC contract is incomplete, it will be treated as complete (reg. 16(14)): https://lgpsregs.org/schemeregs/lgpsregs2013/timeline.php#r16.

(*) The concept of a 'shared cost APC' is in the scheme regulations. However in practice a shared cost APC is likely only granted when it is forced (e.g. a timely election to buy back unpaid maternity leave).

So if you start paying APC and have to retire early because of ill health your pension is made up to include  the annual sum you planned to buy . Is there age or timescale  restrictions.  

Thanks 

hyubh

collins74 said:

@hyubh - that’s interesting thank you.  I thought you could use the AVC to purchase an additional pension from LGPS with survivor benefits but this was separate from the APC arrangements.  Do you know if the APC would pay more/less than the scheme annuity from LGPS or are they the same?

Just semantics. The CARE scheme regulations talk of "purchas[ing] additional pension under the Scheme" with an AVC as distinct from "purchas[ing] an annuity from one or more insurance companies". The 1997 and 2008 scheme regulations had similar wording. But conceptually 'additional pension under the Scheme' and a 'scheme annuity' is the same thing.