Retirement advice, Local Gov pension AVCs

tricky145

Hello All

Looking to retire from Greater Manchester LGPS at end of September. (date not fixed)

GMPS Pension planner indicates pension value £11,332 P.A. ( no lump sum ).

Also have AVC with Prudential value around £150,000.

Looking at Maximum AVC lump sum calculator on LG website, this indicates maximum as £75,546 based on pension value £11,332.. I am also drawing a GMPS pension valued at £18,000 P.A. from a previous employment (85 Year rule made it worth drawing). What figure do I enter in the calculator – the current pension value or do I add both together.

Looking at options. If I can only draw £75 K from AVC what are the options for the balance? Don’t fancy leaving with Pru / M&G as I don’t think their AMC is competitive. Are GMPS annuity worth looking at (anyone got any examples?

Realize I will need financial advice but wanted to do my homework first.

Anything else to consider, Any info appreciated, Thanks in advance

Tricky

collins74

I get your max lump sum to be in excess of £94k. Have a look at this

https://www.lgpsmember.org/help-and-support/tools-and-calculators/lump-sum-calculator/

others better placed to comment on what to do with the residue.

good luck

Silvertabby

Only input your current data into the calculator.

In my day, the LGPS annuity rates were very favourable when compared with Pru, etc. May not be quite such a difference now, but still worth asking for quotes - you can choose between own benefits only, or with spousal benefits. Either way, the LGPS benefits you buy are fully index linked, whereas Pru etc annuities are usually capped.

daveyjp

https://forums.moneysavingexpert.com/discussion/comment/82067067#Comment_82067067

OP hasn't explained well what that £75,500 relates to. I'm assuming that's the quote to buy the maximum extra annual pension of about £9,500 a year. That lump sum figure is calculated using date of birth and membership section. whether full or 50:50.

For any advice you need someone who understands LGPS, AVCs and other investment types, so ask that question specifically. AVCs in LGPS have nuanced rules which some IFAs may not come across regularly.

tricky145

Hi All, Again just getting my head around this.

Collins 74, I got a different calculator https://www.lgpsmember.org/help-and-support/tools-and-calculators/maximum-avc-lump-sum-calculator/

Yours has an additional field and does give 95K lump whare as mine gives 75K lump which leaves me with 75K to do something with. Is yours for calculating a lump from the pension ?

Silvertabby, Point taken about only using current, I was pushing my luck thinking i can add the two together, just unsure what, if any difference already drawing a pension made..

Daveyjp, Thanks for your comments, admit tried to dumb down the original post.

I was working on total AVCs = 150k and my ' maximum calculator' stating max lump sum of 75K leaving 75K to do what with. Trying to understand what's the popular option, drawing it all will send me into super tax bracket for the year so ruling that out. didnt fancy leaving with Pru as their charges are % based. and quite high. Will look into the option of buying extra pension via GMPS as you say its index linked - no idea if its VFM but once i have figure i can decide.

Are there any other options i should consider?

Again thanks for your patience.

Aylesbury_Duck

I believe the difference between the calculators is that the one that collins74 linked to takes into account the full "denominator", i.e. it sums the value of the annual LGPSx20years and the full value of the AVC. The TFLS can be up to 25% of that aggregated amount.

£11,332 x 20 = £226,640

+ the AVC = £376,640, 25% of which is £94,160

I have a similar situation, in that my AVC has grown substantially (thanks to some strong fund growth and admittedly, me over-contributing to it versus my SIPP). I've stopped contributing and have some years of work left which will grow the LGPS part of the overall value, but I'll still have what looks like it might be in excess of £40k above the maximum TFLS. Nice problem to have of course, I just need to decide how best to use it!

The other thing to consider is the impact on your overall TFLS allowance if you have any other pensions. £94k will take quite a bite out of the current maximum of £268k.

collins74

thanks all yes it’s as Aylesbury Duck says - you need to factor the AVC in to get the total tax free lump sum.

tricky145

Thanks Aylesbury. for including the calculation, as you say its a nice problem to have - so many problems……..

Will contact GMPS and see if they confirm, then i might be back with a bag full of questions.