Looking to further optimise my financial position

Silvertabby

MX5huggy said:

Are you actually 40? If you have any days left in your thirties open a LISA before you turn 40. (You say you’ve just turned 40 so forget that). 

I think you’re over estimating the LGPS ill health retirement benefits, there’s at least 2 levels but I don’t think either would give you £29k per year now or in the next few years, I’m going to call on @Silvertabby the resident LGPS expert. 

Don’t dismiss or even start planing to take your LGPS early the reductions for early payment (ignoring that you will not build up so much benefit) are not penalising, basically you have to live to 84 (which is average) for you to “win” by delaying taking your pension at 68. Add in your state pension (check your SP forecast to check your on course) then you’re looking at good income at 68. 

Does your LA off Salary Sacrifice AVCs for additional pension saving? 

These are the cherry on the LgPS cake if they do and I would (and do) look at putting the £1000 a month into AVC’s. If it’s not available then I would be putting it into a Global Index tracker (which is broader than the S&P500 proposed). Probably in a SIPP wrapper. 

Investing for the next 15 to 20 years should see you able to retire early. 

Strictly speaking, there are 4 levels.

Tier 1 = pension accrued to date (without any reduction for early retirement) plus 100% of assumed pension to SPA - but note that only applies to main scheme benefits.  Additional pension contracts that are still ongoing won't be enhanced .

Tier 2 = pension accrued to date (without any reduction for early retirement) plus 25% of assumed pension to SPA.  Again, no enhancement to ongoing APCs.

Tier 3 = pension accrued to date (without any reduction for early retirement) with no enhancement.  Only paid for, typically, 2 years then reviewed.  If the ill health no longer applies, then payment will cease and the benefits will be deferred until SPA (or may be taken earlier subject to full reductions for early payment).

4.  Not classed as a Tier, but dismissal on ill  health grounds with no access to pension benefits (or full reductions for early payment if past the minimum access age of 55/57.

Access to ill health benefits is subject to an assessment by an Occ Health approved medic.  The younger you are (and 40 is young in pensionspeak) the harder it would be for the Dr to confirm entitlement to Tier 1 - ie, unlikely to be fit for appropriate work before SPA. 

OP - please don't base your financial planning on Tier 1, as it is no means guaranteed.   

ADD. Note that the 'assumed pension to SPA' enhancement is based on your pensionable pay as at your date of leaving,  and doesn't include any future anticipated annual pay rises or revaluations. 

Upbeat_84

MX5huggy said:

Are you actually 40? If you have any days left in your thirties open a LISA before you turn 40. (You say you’ve just turned 40 so forget that). 

I think you’re over estimating the LGPS ill health retirement benefits, there’s at least 2 levels but I don’t think either would give you £29k per year now or in the next few years, I’m going to call on @Silvertabby the resident LGPS expert. 

Don’t dismiss or even start planing to take your LGPS early the reductions for early payment (ignoring that you will not build up so much benefit) are not penalising, basically you have to live to 84 (which is average) for you to “win” by delaying taking your pension at 68. Add in your state pension (check your SP forecast to check your on course) then you’re looking at good income at 68. 

Does your LA off Salary Sacrifice AVCs for additional pension saving? 

These are the cherry on the LgPS cake if they do and I would (and do) look at putting the £1000 a month into AVC’s. If it’s not available then I would be putting it into a Global Index tracker (which is broader than the S&P500 proposed). Probably in a SIPP wrapper. 

Investing for the next 15 to 20 years should see you able to retire early. 

I suspect you're correct and I've been slightly misadvised by a well meaning colleague. I'll have to clarify this week directly when I'm more awake but an initial skim read after working 18 hours suggests there's some sort of 3 tier structure for medical retirement.

The top tier does indeed pay out as if you retired at NPA (68) but not sure of the criteria required beyond not likely to ever be able to return to work. My condition is such I'd be highly unlikely to return to work at any point if my condition worsens but evidently I do need to look further into it so thanks for pointing that out. I certainly don't want to wish for my health to worsen, though.

I believe AVCs are available up to 100% of my pensionable pay. I'll look into that, too and the SIPP as mentioned. I could do £1k AVC and then the remainder of my net side income into the SIPP.

I'm on track as far as state pension goes AFAIK. Recall checking last year but the tool is down at the moment.

Thanks again!

Upbeat_84

Silvertabby said:

MX5huggy said:

Are you actually 40? If you have any days left in your thirties open a LISA before you turn 40. (You say you’ve just turned 40 so forget that). 

I think you’re over estimating the LGPS ill health retirement benefits, there’s at least 2 levels but I don’t think either would give you £29k per year now or in the next few years, I’m going to call on @Silvertabby the resident LGPS expert. 

Don’t dismiss or even start planing to take your LGPS early the reductions for early payment (ignoring that you will not build up so much benefit) are not penalising, basically you have to live to 84 (which is average) for you to “win” by delaying taking your pension at 68. Add in your state pension (check your SP forecast to check your on course) then you’re looking at good income at 68. 

Does your LA off Salary Sacrifice AVCs for additional pension saving? 

These are the cherry on the LgPS cake if they do and I would (and do) look at putting the £1000 a month into AVC’s. If it’s not available then I would be putting it into a Global Index tracker (which is broader than the S&P500 proposed). Probably in a SIPP wrapper. 

Investing for the next 15 to 20 years should see you able to retire early. 

Strictly speaking, there are 4 levels.

Tier 1 = pension accrued to date (without any reduction for early retirement) plus 100% of assumed pension to SPA - but note that only applies to main scheme benefits.  Additional pension contracts that are still ongoing won't be enhanced .

Tier 2 = pension accrued to date (without any reduction for early retirement) plus 25% of assumed pension to SPA.  Again, no enhancement to ongoing APCs.

Tier 3 = pension accrued to date (without any reduction for early retirement) with no enhancement.  Only paid for, typically, 2 years then reviewed.  If the ill health no longer applies, then payment will cease and the benefits will be deferred until SPA (or may be taken earlier subject to full reductions for early payment).

4.  Not classed as a Tier, but dismissal on ill  health grounds with no access to pension benefits (or full reductions for early payment if past the minimum access age of 55/57.

Access to ill health benefits is subject to an assessment by an Occ Health approved medic.  The younger you are (and 40 is young in pensionspeak) the harder it would be for the Dr to confirm entitlement to Tier 1 - ie, unlikely to be fit for appropriate work before SPA. 

OP - please don't base your financial planning on Tier 1, as it is no means guaranteed.   

ADD. Note that the 'assumed pension to SPA' enhancement is based on your pensionable pay as at your date of leaving,  and doesn't include any future anticipated annual pay rises or revaluations. 

Only just seen this after posting my previous reply - thank you very much for the clarification. I'm certainly not banking on ill health retirement nor do I want it but it's always in the back of my mind as my condition worsens. My last flare up happened in the office incidentally and I was bedridden for almost a month. My colleagues watching me hit the deck was quite embarrassing! The flare ups are increasing in both intensity and frequency unfortunately so I try to remain optimistic but I know all too well the chances of me being able to retire at 68 are highly unlikely the way it's going.

Thank you once again!