Lump sum

Timetoretire

Hi ,
Thanks for all your help. 
You have all been very helpful on my previous posts and I wondered if anyone could help me understand this.... 
LGPS have sent me my details...retirement starts 1/9/25
AVC £5000
3 options given..
1) add to pension and take retirement grant at min amount
2) normal pension amount and add AVC to min retirement grant. 
3) smaller pension and maximum retirement grant... 
I understand options 1 and 2.. and part of 3!! 
But..
The pension and retirement grand for option 3 shows the same amount as it does on the online calculator (which says it does not include any avc if you have them) 
SO
with option 3 .. I understand the maximum retirement grand but where is my AVC amount? 
Could someone make sense of it for me please, before I call them up and ask? 
Hope that makes sense. 
Thanks again

SarahB16

I'm sure @Silvertabby will be along soon to reply to you.

Marcon

or @Lemon_dr1zzle

Silvertabby

Timetoretire said:

Hi ,
Thanks for all your help. 
You have all been very helpful on my previous posts and I wondered if anyone could help me understand this.... 
LGPS have sent me my details...retirement starts 1/9/25
AVC £5000
3 options given..
1) add to pension and take retirement grant at min amount
2) normal pension amount and add AVC to min retirement grant. 
3) smaller pension and maximum retirement grant... 
I understand options 1 and 2.. and part of 3!! 
But..
The pension and retirement grand for option 3 shows the same amount as it does on the online calculator (which says it does not include any avc if you have them) 
SO
with option 3 .. I understand the maximum retirement grand but where is my AVC amount? 
Could someone make sense of it for me please, before I call them up and ask? 
Hope that makes sense. 
Thanks again

Option 3 is the maximum tax free cash option which, in your case, would mean giving up some of your pension for extra cash at the p. poor rate of 1:12 (give up £1 of annual index linked pension for life for £12 cash).

Some LGPSs are using a new, convoluted calculation, but the old one will give you a close enough idea:

20 X annual pension plus 1 X automatic lump sum (from pre 2008 accruals) plus 1 X AVC fund.

Total X 25% = maximum tax free cash.

But the Option 3 on your written estimate shouldn't be exactly the same as the pension and maximum tax free cash option on the online calculator as, as you say, that doesn't include your AVCs.  I can see the two maximum tax free cash figures being very similar, as the online calculator will commute more annual pension to cash, but the annual pension should then be lower than the Option 3 pension figure quoted in your letter.

If this is not the case, and both pension and lump sums are indeed the same, then you will need to ring your LGPS to ask them to check the figures for you, as I don't have enough information (access to your pension records!) to be able to give you an exact answer.