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    • Wentthedaywell?
    • By Wentthedaywell? 4th Jan 18, 7:29 PM
    • 464Posts
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    LGPS AVC as tax free sum
    • #1
    • 4th Jan 18, 7:29 PM
    LGPS AVC as tax free sum 4th Jan 18 at 7:29 PM
    I think I may be getting confused with converting pension to a lump sum and taking a AVC as cash and would appreciate if anyone could clarify please.

    I recently took LG flexible retirement and I took all my benefits to date. These included a pre-2008 lump sum and an AVC as 100% tax-free cash.

    I am now working part time in the same job and have set up a new pension and AVC. Iíll only work for a couple more years so these arenít major considerations. The AVC is only £200 pm, as I understood I will only be able to take that as 100% tax free again if I keep it below 25% of my new pension value (capitalised by multiplying new pension by 20).

    I have just read, ďThe lump sum must not exceed £250,000 (25% of the lifetime allowance 2017/18) less the value of any other pension rights in payment.Ē Is this just referring to converting pension to a cash sum, or to AVCs?

    If the latter, do I need to take into account my existing pension (capitalised by multiplying x20) and previous lump sum and previous AVC? Must I keep ALL of this, plus the capitalised new pension and new AVC to below 25% of the grand total? Or have I misunderstood, and it is simply that I must keep my new AVC to <25% of my newly set up pension?
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