Advice needed LGPS, AVCs and APCs

allyouneedisless

Hello Forumites, 

I have a LGPS pension, and have been paying in since 2001. I set up an AVC with £50 per month and a APC with £50 per month. I am 48, and recently went part time - to 30 hours per week. 

I am a bit confused to whether I should increase the monthly amounts to the AVC and/or the APC to build up my pension and whether its worth it as I only have £3,900 in the AVC fund at present.... I am also looking to bridge the gap if I retire before my Statutory Pension Age, and have opened a new Stocks and Shares ISA along with building my assets in my Cash ISAs. 

So my question is, do I continue to pay small amounts monthly into the AVC/APCs or should I increase this or focus on building up a bridging gap so that I have an option to retire earlier should I wish to do so?

Any advice, support would be much appreciated. 

Thank you!

Silvertabby

Your £50 AVC payment is flexible - you can stop/decrease/increase it at will.  But your APC payment is a contract to buy X amount of pension over X months.  You can stop it at anytime but increasing it will mean taking out another contract, and will be subject to the maximum purchase limit.

APCs are good value if you don't intend to take your benefits before NRA, perhaps not so good if you want to retire early, as the amount bought will be reduced for early payment.

AVCs are more flexible.  Most people take them out with a view to maximising their tax free cash (within HMRC limits) but all or just some of the AVC can be used to buy additional index linked LGPS benefits.

allyouneedisless

Thank you for your advice @Silvertabby

Silvertabby

allyouneedisless said:

Thank you for your a........... @Silvertabby

You are very welcome - but please don't use the A word - the mods don't like it!

SarahB16

allyouneedisless said:

So my question is, do I continue to pay small amounts monthly into the AVC/APCs or should I increase this or focus on building up a bridging gap so that I have an option to retire earlier should I wish to do so?

Based on what you have shared it seems to me that you would benefit from having a personal pension that you can draw on from age 57 (or when you wish to retire) which you could use your personal tax allowance against.  Tax savings going into the SIPP and if this is your only source of income from say age 57 to 65 (or a few years earlier if you draw your LGPS sooner) and potentially no tax to pay when drawing it down if taking c.£17k per annum (the 75% taxable amount equalling the personal tax allowance).  You do want to ensure you use your personal tax allowance each year.  

On a separate note as you are unlikely to overshoot your AVC allowance and each to their own I know, but wouldn't you prefer to just contribute to the AVC pot rather than the APCs? The reason I say this is in case you were wishing to take your LGPS pension before your normal retirement age.