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?

Echt what a nasty reply to some super sensitive info from the the op

I don't know why people are being so brittle towards op it's confusing subject she just wants kind and helpful thoughts.

I had a teacher's pension for 15 years but changed jobs and now am on a L.A. Pension. I was a bit gutted as I'm still teaching but not enough to qualify as a proportion of my role. It's still worth it though compared to private pensions. I don't think the retirement age will stay at 67 so fully expect not to retire for a long while after that. I hope I have invested enough to be able to work very part time.

Personally I think OP is winding people up because she sounds so entitled. One of the best pensions available and she still wants more

The reductions seem huge but as it's an actuarial reduction, it will have been calculated to be neutral to the individual and the scheme i.e. the lower pension paid for longer is calculated (based on various assumptions) to be equal in value to the standard pension paid at state pension age.

Let's look at the extra pension payments alone as an example. If state pension age is 67 and average life expectancy is 87, then the scheme expects to pay 20 years of pension. But if you retire 5 years early, the scheme has to pay the pension for 25 years. As 20/25 is 80%, the early retirement pension needs to be 80% of the standard one just to allow for the extra payments. So if the standard pension was £10,000 then the early retirement one automatically has to be £8,000 to be equal in value. Because £10,000 for 20 years is the same value as £8,000 for 25 years. So that explains 4% per year just by looking at the extra years of payments.

Once they start allowing for other factors like having less time to invest the assets, more pension increases being applied in total if it's paid earlier etc. they get to the final early retirement factor.

@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? yeah, you're right, I'm tired,not long off shifft and I'm confusing myself. Maybe I should retire now!!!

Just seen the message about your ill health Worth reading up what the scheme offers in the case of ill health as it may be quite generous e.g. retiring early without a reduction being applied.

Echt what a nasty reply to some super sensitive info from the the op

Not at all. The OP could have said this from the start and elicited more nuanced replies. But they didn't.

Our IFA fully recommended staying in the work pension scheme - teaching/local authority (I have both, first was for about 10 years, then latter one since.) I do have a private pension too which will cover me between when I want to retire and when the authority and state ones kick in.

Perhaps op didn't want to shared this, as is every posters right, it was an unpleasant response.

You certainly can transfer a local government pension into a private one. I know this for a fact because I've done it as it suits my personal circumstances - it's certainly not the best thing for everybody. The biggest problem you will encounter is finding an appropriate IFA to do it for you, and there will be a charge.

But OPs health has absolutely no bearing on the way the pension fund operates so isn’t relevant

@Throwa thank you, I'm your age and have no pension.

I've opened up a sipp, and I have lgp starting now

@throwa

I already get the tax relief through Hargreaves and. L.

Eg put 3 grand into sipp and get around 800 tax relief (roughly off top of head)

Phew glad I read this
Was going to decrease my pension contributions

Shamefully have no Clue about pensions 🤭🤭🤭😕😕

@CornishYarg except it is 25% for taking it 5 years earlier, so much more than in your example.

@CornishYarg It is very hard to get early retirement on grounds of ill health, I have looked into it. I already can not work full-time but the LA pension scheme does not accept this.

Hi OP. Please get specialist advice from a qualified adviser. There are too many factors at play to take advice from lay people on the internet. Avoid St James Place like the plague, but other than that, look for a chartered adviser (the most qualified). A good one will not help you transact a transfer if they think its wrong.

Can I just toss into this discussion, because it might be useful to some on here, that even if you have zero income ( e.g. SAHM) you can still contribute up to £2,880 pa into a pension scheme, to which the taxman will add a further £720.

Normally you are not allowed to put more than you earn / £40k pa into a pension every year, but everybody is entitled to make this level of contribution. Well worth doing if you can afford it.

A final salary scheme?

You would be fucking insane not to thank your lucky stars every day for access to it. I, and most people, and all young people, literally cannot buy anything close in terms of value.

If you don't understand that, you clearly know nothing about pensions..!!

DennisMailerWasHere all very well and good, your sentiment is accurate for a good deal of people. But what if you have a shorter life expectancy with no spouse, but children you want to help? A decent CETV can mean that children are provided for free from IHT, and the potential secured pension wouldn't die with the holder.

Or;

The pension holder is filthy rich and receives and income already within the higher rate bracket from their vast and IHT assessable property portfolio. They have no need for a poultry £20k p.a. but the £750k CETV transferred to a personal pension could provide a very nice IHT free nest egg for the kids.

I know what you're saying here, but its not always cut and dry. Thats why OP needs advice, not ill/half informed soundbites from randomers on the internet.

@fragalino Thanks.
I know it partly comes from jealousy. All my friends who work for private firms are now all talking about retiring at 50. Most are in better health than me and talking about how they will enjoy their time when they retire. Some of their plans are being funded through company pensions, some through inheritance.

I am finding it difficult to know that I will be working till at least 67 and when I do eventually retire I will not be well off. I know that is life. But I guess that bitterness comes across.

And before anyone says as people tend to on MN that they would rather have their loved parent etc rather than an inheritance, so would I. I have had a lot of bereavements in the last 5 years, including younger people like a brother. But my family are poor so the issue is always paying for the funeral, not about inheritance.

I’d quite like to know who these 50 year old retirees are. Even the Big 4 pension schemes - which are, not only gold plated, but jewel encrusted, don’t pay out until 65.

OP needs advice, not ill/half informed soundbites from randomers on the internet.

Totally agree. My statement was driven more from the personal pov of having relatives with gold plated final salary scheme access who moan about their contribution levels... You're right that they don't suit 100% of people.

But when they do, there's a lot of misunderstanding about how lucky you are to be able to access one.

@Alsohuman 60 not 50. And yes some are in company pension schemes and retiring at 60.

I’ve never heard of a pension scheme paying out at 50 either