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  1. #1

    Transfer? How to use it if transferred?.

    Salary 36,200 pa with standard LGPS contribution each month.

    Nett Salary = 2,100 pm with tax paid of ~350 pm.

    Will have enough guaranteed DB pension from LGPS & wife’s DB pension plus 2 state pensions for retirement plans.

    Deferred DB scheme with an estimated CETV of ~165k based on last 2 annual valuations from Oct 15 (150k) & Oct 16 (173k) so have allowed for a potential reduction due to Gilt Yields.

    Can take annual pension of 8,800 in couple of years at Age 60 which would all be taxable at BR going forwards. If not taken at Age 60 it increases by ~7.5% pa whilst still deferred.

    Annual pension is not eligible for increases once in payment, although part of the GMP may be, so say a maximum of 1% pa increase once I start taking it.

    1) Take annual pension or transfer?

  2. #2
    If transferred one idea I have, and would like opinions on, is to withdraw 36k pa for 3 years with 9k pa tax free (which will be given to 3 children to kickstart LISAs for them with a view to future property purchases).

    I would offset my annual tax allowance against this 27k taxable income (and for ease of calculation I have used a flat 12k pa for the 3 years as it should average out at about this). This would leave 15k pa taxable so I would pay 3k in tax.

    Result is 24k pa after tax so almost the same as employment nett income.

    I will still be working full time so propose to set my tax allowance for this to Zero, making everything taxable but pay 2,500 per month into my LGPS AVC (so approx. current take home + tax paid on salary) which will reduce my Nett Pay to almost 0.

    The AVC can then be taken tax free when I start my LGPS.

    I have calculated that I would effectively pay no tax for the 3 years as what I pay on the pension will be offset by what I am gaining on the AVC contribution.

    I have Ignored any investment growth / reduction on either the AVC pot or the SIPP in my calculations.

    A) Leave SIPP of 165k plus 3 years employment nett salary of 25,200 = 240,600

    B) Withdraw 3 * 36k from SIPP (gives 57k left after 3 years) less tax paid so 3 * 24K = 72k plus AVC pot of 90k = 246,000 (of which I would have gifted 27k)

    2) What have I missed?

    3) Any better ideas?

  3. #3
    Sounds like your pension would be drawn down to nothing a few years. What would you live on after that?

  4. #4
    LGPS pension plus wife's LGPS pension plus two SPs at Age 66 which will be more than enough annual, guaranteed, index linked income for us.

  5. #5
    One quick thought. If you haven't done so there would be merit in you better understanding your outgoings if / when you retire and how these could change change over time. You will probably find that they are less than current levels which it turn means your retirement income requirements could be lower too.

    There are many posts that can give you pointers on this on this forum including "The Number" thread which has alot of useful information.

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