AVC option A/B/C

Baldytyke88

West Yorkshire Pension Fund: I only have around £750 but I guess buying more pension is the best option. I joined in 2007

Does it operate on the same 12/1 ratio? So if I claim the pension for longer than 12 years, it will be the best option?

daveyjp

How much extra annual pension you can buy from AVCs is subject to a calculation based on your age, it is not a straightforwards 12:1. The younger you are the less annual pension you will be able to buy on the expectation you will receive the extra pension for longer.

The link to a estimate calculator is below:

https://www.lgpsmember.org/help-and-support/tools-and-calculators/buy-extra-pension-calculator/

Silvertabby

That link is for buying additional pension, not using AVCs to buy additional benefits. Different factors will apply in the case of AVCs, but they are age related.

OP - you joined in 2007, so don't have any R85 protections. Also, your pre 2008 service automatic lump sum will be minimal. Is this all you want to take as tax free cash, or would you be looking to take more by commuting some of your pension? If so, your AVCs would be used as cash first.

Baldytyke88

https://forums.moneysavingexpert.com/discussion/comment/82172962#Comment_82172962

I don't want to commute any cash, because it's a poor rate at the West Yorkshire Pension Fund.

I have £1,736 lump sum and £8,298 per year. I have £40k(for the next 2 years) in shares in a SIPP and I may do a little work, undecided.

I would put the £700 AVC into WYPF, if it was possible and good value.

Marcon

What do you plan to do if you don't want to commute and you decide putting the money into the WYPF isn't good value?

Baldytyke88

https://forums.moneysavingexpert.com/discussion/comment/82173281#Comment_82173281

I will sell some shares in my SIPP, I have one in drawdown, but I expect to take the 25% tax free from my other SIPP before April next year.

I will be taking the £8K per year from the WYPF from April. So I need a little more until state pension age in 2 years time

Silvertabby

https://forums.moneysavingexpert.com/discussion/comment/82173243#Comment_82173243

Agree that the LGPS commutation rate of 1:12 is p. poor value - but over 90% of pensioners go for it!

Yes, it will be possible to use your AVC to buy additional LGPS index linked benefits and, yes, the rates are pretty decent (age related). But £750 is unlikely to buy you more than £40 a year (taxable). Possibly less if you retire early. Do you have time to add to your AVC funds to make any LGPS purchase more meaningful?

ADD. Just in case anyone chips in with the suggestion that OP increases his pension by inverse commuting his lump sum, that isn't an option here.

Marcon

https://forums.moneysavingexpert.com/discussion/comment/82173378#Comment_82173378

But what will you do with the avc?

Baldytyke88

https://forums.moneysavingexpert.com/discussion/comment/82173393#Comment_82173393

I did think it had to be taken as a lump sum, but it seems that I have options. All the more important, as my retirement income will be modest.