A quick question about pensions

[rowlandellis]

because googling the answer is not proving to be easy!

I am in a local authority pension scheme and likely to remain so until I retire.
I am 35. I have done an extremely rough calculation using an online calculator and if I were to keep earning my current salary for the next 30 years I look set to get something in the region of £27,000 a year.

Now what I’d like to know is, will this figure increase with inflation? I’m fairly sure that I could live reasonably comfortably on 27,000 today. But I am pretty certain that it won’t be very much at all by 2056!

So if it isn’t going to go up with inflation, I think I need to be getting another pension or something.

Thanks

Is it a career average scheme? Or final salary? It’ll be based on that if so-and your salary is likely to be increased with inflation. Once you start drawing your pension, there will be an inflationary uplift each year-check your scheme details to show how much.

Thanks. It’s career average, that’s the calculator I used.
Thing is, my salary now is higher than 27,000, and I used the calculator assuming that it would stay the same. Maybe I used the calculator wrong.

You would hope that your salary will rise during the next 30+ years due to some cost of living payments, and possibly promotions, which will increase your pension.

Don't forget that when you come to retire, if you buy a house, you'll likely be mortgage free by then. You'll also have your state pension, which will be worth over £10k pa by April this year. You'll also not have commuting costs, or DC to pay for if you have them now, so you won't need to fully replace your salary. A pensioner today who has a £27k pension, plus the state pension and a home outright, will be pretty comfortable financially, unless they expect quite a lavish lifestyle.

Also, I have a public sector pension and it does increase with inflation to a degree, so the £27k is likely to be at today's prices, and it will be higher than £27k once you come to retire.

Roughly, if you stay in a local gov pensions scheme your whole career your pension will be about half your average salary.

Thanks @BarbaraofSeville and @helpfulperson. I’m not really in a position to put away any extra money at the moment anyway, so hopefully it will work out okay in the end. Although I am not banking on state pension still existing by the time I come to retire!

Your pension is basically an investment, the pension aspect is just a tax efficient wrapper sit on the top, another example of a tax efficient wrapper is an isa.

who is your pension provider, they will have fund options? But be aware, all investments can go up and down. The lower risk funds tend to be managed funds, you typically pay a fee for that.

can you ask for a statement and see how your pension has performed over the last 5 years, past fund performance isn’t indicative of future Performance but without a crystal ball it’s the best you have

If it’s the LGPS scheme it rises with inflation

Misread the local council bit, ignore me. My response was too generic pensions

it's a better deal than you'd get if you self invested the same amount of money in a private pension.

You can probably do salary sacrifice into AVCs though as well if you want to

Lgps is adjusted every year for inflation. I have now left the scheme but my annual pension still increases due to this adjustments.

@Fluttershyy's advice isn't relevant to a defined benefit scheme such as lgps but good info for anyone in a DC scheme.