To ask someone (or lots of people) to explain the pensions and rise in retirement to me?(22 Posts)
I am an LSA. My union not striking (yet!)but talks are they may propose for Autumn strikes.
I pay a pension. Where does this money go and do they pay it back or government?
I am totally in support of teachers striking (I am training to be one and beggining to wonder how long my career may be).
Thing is I'm obviously ignorant but actually more confused. My retirement age for my pension has been raised to 68. I was under the belief that my pension from my wages went to private company who paid it to me on top of my state pension.
My teacher friend says her pension she pays is compulsory (mine isn't) and that if the government don't make these cut backs we could be in a worse situation as a country by then anyway. She says the money has to be made from somewhere. (although she is supporting the strike )
So please someone explain it to me.
It's hard to tell from the brief description you have given.
What's an LSA?
There are two basic types of pension, the type the teacher's have is a defined benefit or final salary pension scheme where they know how much pension they will have at retirement.
The other type is defined contribution where you pay your contributions and usually your employer also contributes, the money is invested and you will not know until you retire exactly how much you will get, although you should get projected statements.
Do you get such statements? If so dig them out and it will give more info?
Ah yes, I get projected statements (I think )
Get letters saying if I retire at x time I should get x per week/ month/ year/ lump sum and then etc.
LSA = learning support assistant. So employed by county council as are teachers which is why I wondered if it is the same scheme. Although it seems mine are voluntary and teachers are not?
I know I sound totally thick but I have always paid this knowing my projected payments on top of state pension.
Its now I'm confused about where the money goes and how getting the payments will affect me.
I think the more threads/ articles I read the more I get.
If you are an LSA you are probably not in the Teacher's pension scheme, but the LGPS one.
The Teacher's scheme is an "unfunded defined benefit" scheme.
Which means that the deductions from Teacher's pay are not invested in a specific fund out of which pensions are paid.
Instead there is no "fund" - the current pensions are paid out of current tax revenues.
The liability on the Government for expected pensions to teachers is £233 BILLION
The MOD scheme works like the Teachers scheme
The LGPS (Local Government Pension Scheme) is a "funded defined benefit" scheme which is run on a county basis where each scheme invests the employees and employers contributions in the stock market and produces the funds to pay pension. The deficits in these schemes are not 'real' but do need to be dealt with.
In the LGPS, moving from final salary to career average will be A good thing for low paid workers.
Most private pensions are "defined contribution" which means you know how much you have to contribute but have no idea what it will pay out and whether that is enough to live on.
If that makes sense!
It does sound like you will be in the LGPS. Basically you pay your contributions, the county council will also pay contributions, the money is invested to hopefully be enough to pay out your pension, if it's not the county council will make up the difference, they guarantee it. It's a very good pension to have because of this guarantee.
The amount you get at retirement will depend on either your final or career average salary and the number of years you have contributed. For each year you will get 1/80th (I think) of your final or career average salary in retirement. If you stay in the scheme for 40 years then you will retire with a pension of 40/80ths or 1/2 your final or career average salary.
Yes, THANKYOU it is the LGPS.
So when I qualify and start teaching I'll change schemes then and have to take whatever pension scheme is being ffered to teachers at the time?
Yes. The pension you have built up in the LGPS will stay yours and you may even have the option to transfer it into the TPS.
and the years that you have paid into the LGPS will pay you a small pension eventually
and the years that you pay into the Teachers scheme will pay out a pension accordingly
basically you end up with several pensions
Basically, yes. But there are few things you will need to think about - and you should get proper financial/pensions advice at the time you are contemplating change.
You will need to consider whether you stay in the public sector schemes. Everyone can opt out. But that would mean taking total responsibility for your retirement planning, and there are many options. Specialist advice definitely needed.
You need to understand the pension that is on offer in your new position. It seems some teachers don't, as provision for variable (read "increase to") contributions is one of the existing terms. If it remains a final salary or career average scheme, then you will be able to predict with much greater certainty what your retirement income will be than a scheme under which you have to buy an annuity from you "pot". Despite the lower income for career average and the lower index linking (CPI not RPI), it is likely to offer a much better, and much more secure, income. But it is up to you to check thus.
Finally, you need to decide whether to leave the pension you have accrued so far as a preserved award in your current scheme (ie it sits there until you reach the pay out age, then you get income based on what you paid in), or if you transfer it to the new scheme. There will be rules about the terms of the transfer (which will vary depending on how the terms of the two schemes in question marry up). Again, this needs to be done based on your specific circumstances at the time of the transfer.
It is ALMOST NEVER worth leaving a public sector scheme for a private one.
Guidance on this issue has recently been tightened up.
TalkinPeace2: I agree. But OP needs to check her own circumstances, take advice, and make her own decision.
God no, do not opt out of a Public sector pension!!!
Thanks everyone. Its much clearer now.
I have spoken to my friend and basically said the reason we both thought differently and that we are right is we have different types of pensions so are both right iyswim?!
I will definatly look into my options when I change my career - can my Union give me pension advice? (as they seem to right for the rights of pension holders?). If not I will ask independent advice. It may be worth the investment of a consultation compared to the loss of chosing the wrong option?
a private pension adviser will get you to buy his products
speak to your union but stay in as long as you can
defined benefit ALWAYS trumps defined contribution
Thanks. Am copying this thread for when the time comes - I'll never remember all this.
If it changes to 'career average salary' does this mean that, if you take time out to have children, your pension is badly affected due to the years where salary is £0?
If you are on mat leave, then your pension accrual will be at your normal salary level, not your mat pay and you will still accrue a year of service assuming you take a year off. If you actually leave and then go back then those years won't be counted in your average salary and you won't accrue years service.
Career average is a lot less than final salary for those whose salaries increase dramatically over their career i.e. someone who starts at the bottom and works their way up. Unfortunately it has been abused by some, I know of several people within the NHS who worked part-time but increased their hours for the year or two required as a qualifying period before retirement to get a much bigger pension.
I have also heard of boards of governors inflating pay of head teachers to increase their pension.
Career average is likely to be worse for women who take time out of work depending on how they define career average, women in general have much lower pensions than men because of taking time out or going part time.
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