LGPS - Effect of salary sacrifice AVCs on main defined benefit?

CraggyRockFace

I just had a thought I wanted to check. I'm currently inquiring as to whether my employer will offer a salary sacrifice arrangement for AVCs with my LGPS pension. 

Obviously I have to reduce my base salary by the amount I want my employer to pay into my pension for me. This will means my official salary is lower right? Will this not reduce the defined benefit amount of my main LGPS pension? As it is calculated from my salary? Which will now be lower? 
Have I got this right? 

If so, I'm hoping the value of the salary sacrifice AVCs will far outweigh the loss of defined benefit from my lower base salary? Would that be correct? 

Or am I misunderstanding? 

Many thanks for any insight. 

Dazed_and_C0nfused

I think other people have posted saying their current CARE DB accrual is not impacted by this type of salary sacrifice.

But not so sure anyone has said the same about any final salary element of the older version of LGPS.

Either way you want to be 100% certain about something like that!

CraggyRockFace

Dazed_and_C0nfused said:

I think other people have posted saying their current CARE DB accrual is not impacted by this type of salary sacrifice.

But not so sure anyone has said the same about any final salary element of the older version of LGPS.

Either way you want to be 100% certain about something like that!

Many thanks for your comment, I joined in 2015, so I presume I'm in the current version of the scheme... Do you happen to know if there is an official source of this information? 

MX5huggy

Salary sacrifice for LGPS AVC’s does not reduce your main benefit contribution rate or accrual rate. They still put your notional salary on your pay slip. Your gross salary on your P60 is reduced. 

See point 17 https://staff.derbyshire.gov.uk/site-elements/documents/pay-benefits/avc-wise-faqs.pdf

note other Salary Sacrifice arrangements (cars, cycles, child care) may not be treated the same. 

 

Ebeneezer9

Hi CraggyRockFace, I currently pay 30% of my salary in to a shared cost salary sacrifice AVC scheme with a local authority employer and can confirm it has no effect on my LGPS pension contributions which are still based on my full salary. Details can be found on the AVCWISE  web site.

CraggyRockFace

Thank you so much for that information @MX5huggy and @Ebeneezer9
That is great, so there is no downside at all. 

Random47

MX5huggy said:

Salary sacrifice for LGPS AVC’s does not reduce your main benefit contribution rate or accrual rate. They still put your notional salary on your pay slip. Your gross salary on your P60 is reduced. 

See point 17 https://staff.derbyshire.gov.uk/site-elements/documents/pay-benefits/avc-wise-faqs.pdf

note other Salary Sacrifice arrangements (cars, cycles, child care) may not be treated the same. 

 

I would confirm this. Your DB pension is all based on your Notational (original) Salary. I do a AVC and also car lease - both SS. Only the car lease annual costs reduces my DIS - its a cheap lease at  <£6K pa so I'm not overly concerned with DIS as I  don't intend to die anytime soon..