How to Boost a Local Government Pension, is it worth it?

[Topfmine]

Hi Everyone, not sure if i have put this in the right section.

 

 

I have just reached 60 and have a Local Government Pension which i have paid into over 15 years.

 

My recent planned outcome would be to semi retire so my pension would pay the mortgage and i would get a part time job to make up the other income that would give me the same wage i am getting now, hopefully, by doing this i would have some free time to enjoy the rest of my life. My pension would cover the most important bill, a roof over my head until its paid off.

 

i managed after faffing about with passwords and account names had a look at my LGP pension pot, not very good, pretty crap, which means i would have to wait till the age of 67 to near get half i am earning now. It seems that quite a lot of people at my works have had the same disappointment with their LGP and its only good for high paid management.

 

So my next plan was to boost my LGP with a floating pension i took out years ago and stopped paying, that is sitting in a floating pension gaining some interest every year. I thought about spending it on machinery to boost my income but by the time i have taken it out i will be taxed to death especially hearing about horror stories from friends who have not only been taxed, but the value they have taken out has been added to their current income which had put them in a much higher tax bracket like 40%. in some cases.

 

Usually in the past my works had a LGP man turn up every year so you could have a chat about your pension but that has stopped, apparently not enough people take up the service, not everyone is thinking of retiring so it was dropped. So i contacted Hampshire County Council who run this LGP, they said they no longer advise you have to get an independent financial advisor which can cost a fortune and can be very dodgy in the process and the outcome may not give you the answers you need.

 

I only need to ask a couple of question yes or no and if so what next.

 

I only need to find out if i can boost my LGP with the other floating pension pot i have and see if the outcome would be worth the effort to semi retire. My pot is around £10,000, just wondering  if that amount would boost my LGP by a lot or it would barely touch plus are there restrictions on amounts to up pensions, i heard that moving one pension into another is tax free.

 

I have tried to enquire and get other advise with Pension Wise etc but they cant give me a simple answer i want, they talk about pensions in general but they whole thing just goes over my head. The whole pension section has become a very complicated system ruined by government hands who want to tax you to death to grab every penny they can, a system that is now a mine field.

 

 

Can any one advise?

 

[honeybee13]

Hello, welcome to CAG. I've moved you to our Pensions forum and left you a link to follow.

 

We'll do our best to help you, but please bear in mind that we aren't authorised to give financial advice. I hope you still have your LGP member's booklet?

 

So you're 60 now and still in the local government scheme, with an index-linked pension. Is their pension age really 67, the same as pension age? I'm not clear if you still work there.

 

Normally, if you want to transfer a previous pension into an employer's scheme, I thought you had to be working for them at the time. I could be wrong. But you would ask the scheme administrators whether they would accept the transfer of this other pension and if so, how much it would add to your monthly/yearly pension.

 

Transferring in doesn't attract any tax but the company releasing it may or may not make a charge, depending on their Ts and Cs.

 

I'm not clear what you mean by a floating pension. Is it with an insurance or investment company? If so, can you tell us which one and what the name of the plan is please?

 

If you could let us have that information, we can start to advise you. I expect there will be other questions.

 

Best, HB

[Ethel Street]

Are you in a union? They may be able to advise you.

 

We aren't really set up here as financial investment advisers but someone may be able to share their experience. So your union may be your best bet. Or they may be able to direct you to a reasonably priced IFA.

[Topfmine]

Floating pension, i mean a pension i took out years ago paid it for a year or so and stopped, just left it. Over the years its just accumulated interest. Its with Aviva. I looked into cashing it in but the tax man would have his share plus what i took out would be added to my yearly income. I think it can be transferable with another pension, so i believe. 

 

I spoke to a friend today about this and he said I could take out small sums of this old pension over time and maybe avoid being taxed, i could then put it in another account make use of it in a high interest account or invest into something that makes me money like buy machinery ???

[dx100uk]

i will guess you mean LGPS or 6% of wages super annulation (before tax) as it used to be levied.

 

when did you start the with LGPS?

 

you do know you can boost by £7579 yearly?

 

Additional Pension Contributions

If you are in the main section of the LGPS, you can pay additional contributions to buy extra pension. The most that you can buy is £7,579 of extra yearly pension. You can pay for the extra pension by paying Additional Pension Contributions (APCs) over a number of complete years or by paying a lump sum.

 

The cost of buying extra pension depends on your age, how much yearly pension you buy and how you choose to spread the payments. The cost of buying extra pension is reviewed every few years. If you buy extra pension by paying regular contributions, the amount you pay each pay period may change in the future.  

 

 

[honeybee13]

So is the friend you mention in post no 4 talking about some kind of drawdown plan?

 

Your pension with Aviva sounds as if it could be an FSAVC or a personal pension plan. Have you asked Aviva what your options are with them? I think it could involve moving the current plan into a drawdown one if it's right for you, but Aviva should know about their own products. 

 

You need to ask them if there would be any charges involved. I also think there could be a minimum fund value for moving into a drawdown plan. 

 

HB

[Topfmine]

I think a drawdown plan is what he is talking about. I will have to look into that.

So if i put £7,579 into my pension what would that amount roughly boost a pension by, a lot, an very small amount  or not worth the bother. If i were to to that amount in, how quick could i draw my pension, do i have to wait a few years.
 

[honeybee13]

Which pension are you thinking of putting the money into, the local government one? You would need to ask their administrators to do you a quote for what £7,579 would buy you at retirement age. It's likely to be in the form of how much annual pension it would add.

 

But I don't think you've said whether you're still paying into the LGPS. If you've left local government then you'd need to ask the scheme if it's prepared to accept a transfer in.

 

A drawdown plan lets you take out the 25% tax-free cash a the money goes into the plan. After that, my understanding is that you can draw on it each year but that money counts as income and would be taxed like any other pension or salary. If you earn below the tax threshold of £12,750 then you might be able to draw on the plan without paying tax as long as the withdrawal doesn't take your total income over £12,750.

 

HB

[honeybee13]

Here's some information from the CAB on deciding whether a drawdown plan is the right thing for you.

 

Pensions - income drawdown

WWW.CITIZENSADVICE.ORG.UK

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What income drawdown (pension withdrawal) means, how it works and who it's suitable for.

 

HB

[honeybee13]

Are you getting anywhere with this?

 

HB

[Topfmine]

At the moment i am paying into the local government pension scheme.

Every year i get a annual pension statement, this pension i stopped paying in years ago.

Although its now under Aviva, this pension was owned by many companies before who were bought out by other companies until Aviva took over.

I haven't contributed for many years it just the interest that accumulates.

It states on the annual statement my transfer value that could be paid to another pension scheme which is the current plan value. It looks like it saying that it could be paid to another scheme, not sure if the LGPS is flexible to accept it to bump the current paid in pension.

[dx100uk]

LGPS will know talk to them!! and they don't favour themselves either.

i ported a 4 yrs private pension that was from 77-81 over 20yrs ago in the max lump sum i could each year.

i got far greater int in future years by doing that than by leaving it where it was or taking it then.

 

dx

 

[Topfmine]

Big re think.

[honeybee13]

How do you mean, please?

HB

[Topfmine]

Well i seem to getting nowhere.

i was thinking about using the money to reinvest in my self  such as doing something i like, to make money as a extra income when i retire hopefully before.

i am a local historian in my area which i have a passion for, also a member of the local heritage society. The area has such diverse history that no one promotes it. 

 i want to learn how to make my own videos  for Youtube and learn how to better myself in public speaking, i have done local talks at the schools nearby but could be better. I have been asked to do history talks for old folks home. I also want to do drone work to promote the history videos i will make.  there is potential there.

Trouble is its money for training.

I was wondering if i could use some of my pension pot money by investing i could avoid tax so it doesn't get added to my yearly job income.

Otherwise i will seek  free funding.