To think local authority pensions are a waste of money to join?

[jennymanara]

A local authority pension is final salary, so you can not cash it in. If you take it 5 years early you get an actuarial reduction of 25% in your pension. But local authority pensions are tied to state pension age. So you don't actually get your pension until you get your state pension. At the earliest this will be 67 but is likely to be a lot older.
AIBU to think there is absolutely no point in anyone joining this pension scheme?

YABU.

My LA pension isnt tied to state pension age. I can take it at 55.

You dont have any option - you're auto enrolled in a pension scheme.

Final salary pensions are like gold dust! Why would you not join?!?!?

Final salary? Grab it with both hands!

It's one of the few final salary schemes left, these are always positive to join. A guaranteed return on your investment compared to risks, underwritten by the tax payer. You'd be daft not to join.

What? It’s one of the best pensions you can get. Yabu

iasktoomanyquestions you can easily opt out by informing your employer

It depends. I left my LA job to teach. When I left the scheme, I could take my benefits at 60, and that is still the case. I have accrued more pension over the years, and get my lump sum and pension in 6 and a bit years when I'm 60. Same with my teacher's pension.

My state pension doesn't kick in til I'm 67. I thus have an optin when I return to the UK this year to only need to work til I'm 60 and my last few years of NICs are made up. I can then retire at 60 and take my pensions, if I choose.

IAsk you can opt out of any auto-enrolment. You'll be auto-enrolled back in in 3 years, but you can opt out again.

OP if you are really being offered the chance of a final salary pension then grab it. They're all closed to new entrants now and that's for a reason.

Even if you can't cash it in early, you'll be getting a significant amount more than the state pension at age 67!

If you take a pension 5 years early, don't forget that's a 10 year hit. You'll be paying in for 5 years less, and claiming for 5 years more. So 25% seems about right, based on 40 years of work.

Also, you get tax relief on what you pay in, so a 20% tax payer only pays £80 to get £100 into the scheme. That's a 25% increase on your investment on day one. When most of us get 1.5% a year on our savings.

So in short, you're being completely unreasonable.

If you have the option of a final salary pension you would be a fool not to take advantage of it. You will be getting masses of money from government towards your pension. If you retire at 67 you'll have another 16 years of life (average female life expectancy is 83), how do you think you'll afford that without a pension?

Are you joking?

Madness. It’s one of the best schemes going. My public sector pensions are way better than any of my friends’ private pensions.

If you are in England then your local government pension is tied to the state pension retirement age of 67. In theory you can retire from 55 but you would 1. Need the employer's agreement to this and the closer you are to 55 the more expensive you are for the employer (as they have to top up contributions for people under 60) and 2. Your pension would be reduced by roughly 3% for each year between 55-67. Despite that, it's still worth having, but not as good as pensions for teachers or health service where the retirement age is lower and subject to different rules.

I think you're getting a bit of a hard time here @jennymanara.

I understand your frustration. If it was any other occupation scheme apart from Government sponsored ones then you could transfer your benefits into your own personal pension & then under the new pension freedom rules withdraw it all out.

As pp have said, you dont have to stay in it if you dont wish. You can elect to come out anytime you like. All I would say is that if you ever dud do so then you HAVE to be saving that money somewhere An ISA would seem the best bet - tax free growth & then on retirement (on your terms - any age) you could take tax free income out of it.

Don't usually state my job on these threads, but fuck it - I'm an ex pensions actuary, and you would be certifiable not to join.

Definitely worth having.

DH was in a final salary scheme for 18 years in his first job. He can't take it until he is 65 but that will be 18/60ths of what he was earning when he left which was a pretty decent salary. Add on the state pension which he will be entitled to at 66 and that pretty much has him covered.

In addition though, for the last 20 years he has been working in other jobs and building up other pensions. These, we hope, will fund him if he decides to retire before he is 65 and can draw from the final salary scheme.

YABVU It's an incredibly valuable benefit, worth many multiples more than the amount you pay in. Unless you are in significant debt or financial hardship, it would be madness not to participate!

Unreasonable would be a huge understatement. Or what Mindy said above. I'm private sector and have a decent and quite generous defined contribution employer scheme but would very happily swap with you.

Clearly you know nothing about pensions.

I understand your frustration. If it was any other occupation scheme apart from Government sponsored ones then you could transfer your benefits into your own personal pension & then under the new pension freedom rules withdraw it all out.

And pay 40% tax on 75% of it. Genius idea!

All I would say is that if you ever dud do so then you HAVE to be saving that money somewhere An ISA would seem the best bet - tax free growth & then on retirement (on your terms - any age) you could take tax free income out of it.

If she's a 20% tax payer, her pension contribution is upped by 25% on day 1. £100 into the scheme only costs her £80. Plus the employers contribution.

Can you let me know an ISA that pays 25% interest the next day, and the bank who runs the ISA pay in a load of money for you too?

I have a civil service pension for 20 years of working there, and now a LA pension. Both final salary schemes (I refused the option to change schemes when in the CS so remained on the old Classic scheme).

These pensions shouldn't be turned down, they are worth so much more than you think, OP.

I also have a standalone AVC from before I joined the CS, that I'm still paying into. Thank god I never married my ex or put his name down on them, he'd have made sure he had some of it, the grasping git.

I’ve got an old style LG pension which has been deferred for the best part of two decades. The nine years service won’t give me a huge amount but it’ll pay out enough at age 55 to either retire or reduce hours while I’m waiting for state pension. It’s very very tempting.

It’s a good pension scheme. Even if you move to the private sector as I did it just sits there happily until you want to take it out.

Everyone who is older saying their LA pension is good are missing the point. The old scheme was better. Now everyone is in the new one. But if you are only in the new one you can not retire until state pension age without massive actuarial reductions. 3% reduction a year - I wish! It is just over 6% reduction in pension for every year early you retire under state pension age. That is a massive reduction.