Two LGPS AVCs with different employers

saucer

My wife is currently in the process of getting estimates from her employer in preparation for flexible retirement from LGPS early next year. She has two AVCs, one that is a ‘with profits’ through a previous LA employer that she seems to have opted to leave with them (there was a tick box to this effect from 10 years ago). She has second larger AVC that she is currently contributing very significantly to in order to benefit from the max tax free allowance that the LGPS allows. Both are hosted by the Prudential and clearly together on their webpage. It never occurred to us that different LGPS employers would be relevant at retirement given she has remained in LGPS throughout. 

Her current LGPS pension provider (West Yorkshire) are saying that they will not be taking account of the original AVC when calculating her max TFLS as it is with another employer. This situation is confusing us. 

Can anyone (Silvertabby?) please let us know how this will be dealt with at retirement. Will the original ‘with profits’ be taken into account when determining the maximum TFLS, and will it be treated as such. Does she need to do something now or at retirement to indicate her preference in relation to the earlier AVC?

We’re in a back and forth with West Yorkshire who have not been particularly helpful thus far. 

Many thanks

Silvertabby

Are the previous LGPS benefits also with the previous employer?  If not, then I'm somewhat at a loss as to why your wife would have transferred her LGPS benefits but not her linked AVCs.......unless she had planned to transfer these funds to a private pension and then use them as a form of pension drawdown while still working for WYPF?

Back to today, WYPF can't include the earlier AVCs in their own calculations as the Pru have them as being allocated to XXPF.  What happens at retirement is that the AVC fund is paid to the LGPS, not directly to the member.  The LGPS then runs the maximum tax free cash/convert AVCs to pension benefits calculations and then makes the total tax free cash payment to the member.  WYPF will ask the Pru to disinvest and pay the AVC fund linked to them, but they can't ask for the funds linked to XXPF.

Unless the Pru are willing to combine both AVC records, your wife's only option will be to treat the first AVC as a separate DC fund, and use it to buy pension benefits direct from the Pru or transfer it to a more modern personal pension plan.

Yes, the amount of any tax free cash taken from the first AVC will count towards the total HMRC tax free cash limit.

saucer

Thank you so much Silvertabby for your most helpful reply. It is very much appreciated.

The West Yorkshire have sent a copy of a tick box letter that my wife replied to back then where she opted to not link the old AVC to the current pension.  Neither she nor I know why, but in fairness, it wasn't clear what the advantages or otherwise was of doing so on the letter and she might have thought leave it where it is. Apart from that link all other LGPS benefits are with the current employer so the annual pension and newer LGPS should all be straightforward. 

Thankfully the 1st AVC is much smaller and these as 1st World problems.

Thanks again

AlanP_2

I would query what you are being told.

My wife is in a similar, but slightly different, situation. She worked in a LA and had an AVC pot alongside her normal DB pension.

Changed to a different employer, charitable trust, that was a member of the same LGPS scheme.

Opted to spilt DB pensions so has two separate pensions available to her. By mistake, either at LGPS admin end or the AVC provider end, her AVC pots have been kept together.

She requested that her old LA pension started into payment in April this year and that's where the fun started. Not particularly relevant but she is still working and contributing to the Trust CARE pension, but not adding to AVCs for now.

At the moment we are in dispute with both LGPS and AVC provider as we can't access original AVC pot separately as they never split them. Both of them agree that the rules DO NOT allow for DB benefits to be separated and leave AVCs joined.

Apparently the fact the AVCs are in a lifestyle profile means they can't work out what the split should be 6 years down the line.

Total AVC pot is too high to be taken tax free in its entirety against the newer CARE pension.

Reccomend to raise formal complaints and get the Internal Dispute Resolution Procedure underway.

As you say 1st world problem but frustrating as there is a 6 figure pot that is in limbo at the moment.

Silvertabby

AlanP_2 said:

I would query what you are being told.

My wife is in a similar, but slightly different, situation. She worked in a LA and had an AVC pot alongside her normal DB pension.

Changed to a different employer, charitable trust, that was a member of the same LGPS scheme.

Opted to spilt DB pensions so has two separate pensions available to her. By mistake, either at LGPS admin end or the AVC provider end, her AVC pots have been kept together.

She requested that her old LA pension started into payment in April this year and that's where the fun started. Not particularly relevant but she is still working and contributing to the Trust CARE pension, but not adding to AVCs for now.

At the moment we are in dispute with both LGPS and AVC provider as we can't access original AVC pot separately as they never split them. Both of them agree that the rules DO NOT allow for DB benefits to be separated and leave AVCs joined.

Apparently the fact the AVCs are in a lifestyle profile means they can't work out what the split should be 6 years down the line.

Total AVC pot is too high to be taken tax free in its entirety against the newer CARE pension.

Reccomend to raise formal complaints and get the Internal Dispute Resolution Procedure underway.

As you say 1st world problem but frustrating as there is a 6 figure pot that is in limbo at the moment.

The difference here is that your wife's two AVCs appear to be linked to separate LGPS records, but the two employers are part of the same LGPS (do correct me if I've misread this...)

In OP's wife's case the current and deferred AVCs are linked to two separate LGPSs.  Different rules apply.

AlanP_2

Silvertabby said:

AlanP_2 said:

I would query what you are being told.

My wife is in a similar, but slightly different, situation. She worked in a LA and had an AVC pot alongside her normal DB pension.

Changed to a different employer, charitable trust, that was a member of the same LGPS scheme.

Opted to spilt DB pensions so has two separate pensions available to her. By mistake, either at LGPS admin end or the AVC provider end, her AVC pots have been kept together.

She requested that her old LA pension started into payment in April this year and that's where the fun started. Not particularly relevant but she is still working and contributing to the Trust CARE pension, but not adding to AVCs for now.

At the moment we are in dispute with both LGPS and AVC provider as we can't access original AVC pot separately as they never split them. Both of them agree that the rules DO NOT allow for DB benefits to be separated and leave AVCs joined.

Apparently the fact the AVCs are in a lifestyle profile means they can't work out what the split should be 6 years down the line.

Total AVC pot is too high to be taken tax free in its entirety against the newer CARE pension.

Reccomend to raise formal complaints and get the Internal Dispute Resolution Procedure underway.

As you say 1st world problem but frustrating as there is a 6 figure pot that is in limbo at the moment.

The difference here is that your wife's two AVCs appear to be linked to separate LGPS records, but the two employers are part of the same LGPS (do correct me if I've misread this...)

In OP's wife's case the current and deferred AVCs are linked to two separate LGPSs.  Different rules apply.

Yes that's right, 2 records, 1 AVC and same LGPS area.

Silvertabby

AlanP_2 said:

Silvertabby said:

AlanP_2 said:

I would query what you are being told.

My wife is in a similar, but slightly different, situation. She worked in a LA and had an AVC pot alongside her normal DB pension.

Changed to a different employer, charitable trust, that was a member of the same LGPS scheme.

Opted to spilt DB pensions so has two separate pensions available to her. By mistake, either at LGPS admin end or the AVC provider end, her AVC pots have been kept together.

She requested that her old LA pension started into payment in April this year and that's where the fun started. Not particularly relevant but she is still working and contributing to the Trust CARE pension, but not adding to AVCs for now.

At the moment we are in dispute with both LGPS and AVC provider as we can't access original AVC pot separately as they never split them. Both of them agree that the rules DO NOT allow for DB benefits to be separated and leave AVCs joined.

Apparently the fact the AVCs are in a lifestyle profile means they can't work out what the split should be 6 years down the line.

Total AVC pot is too high to be taken tax free in its entirety against the newer CARE pension.

Reccomend to raise formal complaints and get the Internal Dispute Resolution Procedure underway.

As you say 1st world problem but frustrating as there is a 6 figure pot that is in limbo at the moment.

The difference here is that your wife's two AVCs appear to be linked to separate LGPS records, but the two employers are part of the same LGPS (do correct me if I've misread this...)

In OP's wife's case the current and deferred AVCs are linked to two separate LGPSs.  Different rules apply.

Yes that's right, 2 records, 1 AVC and same LGPS area.

That makes sense, even though it stymies your plans.  When your wife re-joined the same LGPS and re-started her AVC contributions the Pru will have just re-activated her AVC fund.  Her reason for not combining her LGPS records (not always advantageous) wouldn't have applied to her AVC savings.

AlanP_2

It's Standard Life in this case but principle is the same.

Technically I suppose she "rejoined" even though she went straight from Employer A to Employer B without a break.

Didn't join LGPS records as salary was lower and not expected to get back to previous level (and it hasn't). It was a job interest and attraction move as opposed to a financial one.

AVC payments carried straight on without a break.

Silvertabby

AlanP_2 said:

It's Standard Life in this case but principle is the same.

Technically I suppose she "rejoined" even though she went straight from Employer A to Employer B without a break.

Didn't join LGPS records as salary was lower and not expected to get back to previous level (and it hasn't). It was a job interest and attraction move as opposed to a financial one.

AVC payments carried straight on without a break.

Even more reason for the AVCs to be in one fund.