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?

Yes it’s until you die

Yes Fragalino the pension would be payable for life. And I suspect ten years service would give more than £1k p.a.

Fragalino you’ve just disappeared on me even though I really tried to answer your questions....

@pettycontractor I don;t have the money to pay into a LGPS pension plus save on top of that so I can retire early. I am also well aware that state pension can increase. Women have been caught out with that thinking they were only self funding 5 years till retirement only to find out that they don't get their state pension for another 9 years. But even to retire 5 years earlier than state pension could mean saving up £75k and would only give me £15k a year to live on. Remember I would not be entitled to any top up benefits that I would be entitled to on a state pension.

@lepigitty No problem

I work for a LA and I contribute 5.8% whilst my employer contributes 19% - my contribution is before tax so reduces my tax bill.

Currently my annual salary is £20K and my pension per annum would be £13K.
So I pay £1160 pension per year, for 30 years. That's £34,800 contribution in total.
If I retired at 68 (which would be 30 years contribution for me), I would averagely live to 83 which is 15 years x £13K = £195K.

@trixymalixyreally? A pension that you can only take at whatever the state pension age is when you reach it?

Another (former) actuary here saying yes, like a shot! As you know, you are able to take it before state pension age, but it gets reduced. Which is reasonable as you will receive extra pension payments if you retire early, and the scheme won't be able to invest the money for as long.

Obviously, if the contribution is unaffordable or you have better uses for the money, that's a different argument. As long as you're aware that the employer contribution into your pension that you'll be giving up will be around three times whatever you put in.

Passthecherrycoke

I’m a bit confused- why are you expecting to retire before state pension age anyway? Surely you retire then along with everyone else?
Seriously?
I work for a LA and as much as I love my job now at the age 53 I do not want to carry on being assaulted and sworn at by teenagers or searching the streets at 2 in the morning because they've gone missing and there are reports they were last seen getting into a car in a dodgy area of town when I'm into my late 60s tbh. Ok. It doesn't happen every shift and there is loads of good stuff but I do want to retire from that before I collapse on the job!!!
Not all jobs are plain sailing!

@Fragalino

Yes. Join it. You have to pay a fixed % of your salary pcm - you can't pay more and get more benefits.

You could pay additional contributions into a SIP - but you would have to make sure you get the additional tax relief through doing a tax return. How old are you? I'm 40, and my personal pension is invested in relatively risky areas (4/5 and 5/5 on risk, as I'm happy with this level of risk), but it was generating me around 13% annual return before Brexit started to happen... If you're older it might not be prudent to go for this risk level. If you're younger, it would be worth it, as you have more time in which to make back any stock market losses.

You could also look into a stocks and shares ISA, and using the income rather than the capital from it.

If you want to retire before state pension age (whenever that may be in the future for you), you need to have income to bridge that gap. It could be drawdown from cash ISAs or a personal pension, or it could be income from investments from shares / personal pension / stocks & shares ISA, or cash savings.

LGPS pension lasts until you die, as do annuities. As does the state pension. If you use drawdown from a personal pension, then that will only last until the money runs out.

@notacooldad why would you need to be doing the same job? Many many people (anecdotally, every over 60 I know) change jobs later in life to something lighter- once the mortgage is paid off and they don’t need as much income.

I mean seriously, can people not think that up for themselves? You think builders, nurses, air stewards, cleaners, anyone with a physical job routinely keep doing exactly the same thing until they’re 67?

It seems so obvious that you wouldn’t. Not sure why you didn’t realise that

Not only does LGPS last until you die but your spouse gets a survivor pension if you outlive them.

OP could also bridge the gap working part time in Waitrose.

@SheDoneAlreadyDoneHadHerses I am amazed that it is £13k for 30 years, 40 years in my scheme. Are you sure that is correct?

Living off the state pension alone is something that people only do if they have no alternative, OP. You're being offered a very, very good alternative yet are going to turn it down?!

So, maybe I should put it another way. Suppose you earn £18k a year. Would you like to save 10% (ie £1800) per year into an ISA, which, unless it's invested on the stock market, is currently guaranteed to lose value due to inflation - and if it is invested in the stock market, would be subject to the ups and downs thereof and could lose some (or even all) of its value?

Or would you prefer to save the same amount into a pension that guarantees you an income in retirement, that holds its value and rises with inflation, regardless of what happens to inflation during the time you're working and paying in?

And in a timely manner, thanks Alsohuman.

My late DH worked for LAs at time when there was no opt-out. My survivor pensions (all bundled up as he worked for a number of LAs) means I am comfortable.

Though I'd rather he wasn't, like, dead.

LA pensions are gold.

Okay all the actuaries are saying I should pay into it.
Although it does stink that I have to work until whatever state retirement age is then before I can retire in spite of having a pension. The actuarial reductions for retiring early would make any pension totally worthless as they are so massive.

On the pay out until death point- The pension fund have to keep paying the OP and that’s where the gamble is. Some pensioners will die at 68 with no spouse but some will die at 103. OP wants the pension fund to allow her to take her pension early AND take the risk she’ll outlive the average woman. You can’t have it all ways, the pension fund wouldn’t be making enough money to pay out.

@notacooldad why would you need to be doing the same job? Many many people (anecdotally, every over 60 I know) change jobs later in life to something lighter- once the mortgage is paid off and they don’t need as much income.
.My mortgage wont be paid off until I'm 65. I'm on a good income so I'm not going to want to reduce that for my final salary.All the lighter work jobs would be at least 15k less than I'm on. We had a pension/ workers option type day looking at this earlier in the year and unless I leave the LA or something drastic changes I'm here for the long haul.

@jennymanara - I joined LGPS at 37, so can only contribute for 31 years based on a current retirement age of 38.

No I do not want to take the risk I will outlive the average woman @passthecherrycoke. I have chronic health problems that mean I am unlikely to live till average life expectancies.

@shedone you may be reading your pension forecast wrongly then.

I have chronic health problems that mean I am unlikely to live till average life expectancies

Drip feed much?

@jennymanara - nope, just had it for this year and my projected pension at normal pension age is definitely just over £13K.

OP it doesn’t matter if you’re terminally ill right now, the pension fund have thousands of pensioners and don’t pay attention to individual circumstances, they use incredibly complex models based on odds.

Anyway no offence but if you’re not likely to live long why the angst? Don’t bother with a pension of any sort.

@notacooldad in that case you will be doing that job until retirement age so your 1st post protesting how impossible it would be doesn’t make any sense?

Pass cherry 🍒 I'm trying not to swamp ops thread (unsuccessfully) sorry op

I don't really understand the pension.

But throw post helped enormously. I'm viewing it in the wrong way.

I just wonder if it's worth buying more of it though or paying into sipp.

Although it does stink that I have to work until whatever state retirement age is then before I can retire in spite of having a pension. What makes you think you could afford to retire any earlier with a private pension?