LGPS and AVC questions

aloe_vera

Newbie here so please be gentle!
I am a member of the LGPS and considering taking early retirement at 58 with annual (reduced) pension of around £12k pa. I also have £50k in AVCs and am unsure whether to use these to buy an LGPS annuity or a SIPP or to add to my ISAs. Partner has retired and has sufficient DB pension of around £30k pa plus state pension. We also have around 100k in ISAs.
Thoughts on what I should be considering at this stage, particularly for AVCs would be welcome.

DRS1

Can you get all the AVCs out as a tax free lump sum?  It shouldn't take too long to get it into an ISA.  That may be better than getting it as taxable income.

collins74

I think you would be able to get the AVC out as a tax free lump sum based on figures provided.

Buying a scheme annuity through LGPS - numbers may be available from whoever runs your scheme.  The benefit is that it’s an index linked pension with survivor benefits.  I have never been able to get the factors they use so think you will need to speak to them directly.

Others better qualified on here than me to give you some pointers and views. 

Good luck

Silvertabby

When did you join?  If before 2002/2003 (ish) then you may have age 60 R85 protections in respect of your pre 2008 benefits.  But these protections don't kick in until 60, so opting not to take your benefits until then may be worth considering.

On the subject of AVCs, most people take these out for the benefits of tax relief in, tax free (up to HMRC limits) out.  Or you could use or all of your AVCs to buy additional fully index linked LGPS pension benefits.  

Transferring your AVCs to a SIPP is possible - but would be a very - unusual - choice.  Apart from anything else, your tax free option would be limited to 25% instead of the (probable) 100% if taken as part of your LGPS benefits.

Albermarle

As a more general comment.

As a couple you will have plenty of guaranteed income in the form of two DB's and two SP's ( later) .
In this case it might be better to have the flexibility of more cash/investments/ISAs, rather than more guaranteed income.

aloe_vera

Thanks for the comments. Unfortunately joined the scheme in 2003 so don't have R85 protections so there would be limited value on holding off until 60. The only reason I was thinking of buying additional pension would be to reduce the differences between us in terms of pension income, but the TFLS probably the best option.

Kernowshep

I believe the relevant R85 joining date in the LGPS is before Oct 2006?
https://www.lgpsmember.org/your-pension/planning/taking-your-pension/the-85-year-rule/

Silvertabby

Kernowshep said:

I believe the relevant R85 joining date in the LGPS is before Oct 2006?
https://www.lgpsmember.org/your-pension/planning/taking-your-pension/the-85-year-rule/

It is - I said 2003 because that was a best guess based on OPs service and age. ie, 2003 to 2028 = 25 years membership + age 60 = 85.

Silvertabby

aloe_vera said:

Thanks for the comments. Unfortunately joined the scheme in 2003 so don't have R85 protections so there would be limited value on holding off until 60. The only reason I was thinking of buying additional pension would be to reduce the differences between us in terms of pension income, but the TFLS probably the best option.

The qualification was must have joined before 1 October 2006.  As you joined in 2003, you would have enough service to qualify for R85 at 60.  ie, 2003 to 2028 = 25 years service, plus age 60 = 85.