how to top up our public sector pensions?

[Liz79]

I am nhs, dh is a teacher. Currently we should retire at 60 with quite good final salary schemes. Latest talk is of them changing it to a career average scheme with retirement at 67. I don't think so. If the changes happen we will need some sort of top up fund. I have tried Googling private pensions today & I'm well confused. Can someone tell me what to do? We're 32 with 2 small dc. We would like to pay maybe £80 a month. That is an arbitrary figure.we do not want to work past 60 [ confused]

Any number of companies have private pension products that you could contribute to. Scottish Widows' 'Stakeholder' Pension is typical link here with contributions from as little as £20/month, tax relief on contributions and a low management charge.

If you have £80 there are other things you could do if you broaden the task to 'early retirement planning'. You could put your money in tax-free savings like Cash ISAs, for example. You could invest your £80/month in unit trusts and hope the stock market picks up. £80/month grossed up over the next 28 years with 3% tax-free compound interest means you'd have a pot worth about £40-£50k when you're 60. Trade that in for an annuity age 60 and you'd have a pension income of £2000-£2500/year. Or about £6-£7k/year taken as a lump sum until your public sector pension kicks in. Obviously, the more you set aside, the bigger these numbers get.

You may even find that, once you get to 60, you don't find the prospect of doing nothing all day quite so appealing as it seems now. :)

Thank you! Will have a look

Vote 'no' in all ballots to accept reduced schemes

[Grin] Julia. I can't help wondering if its legal for them to change it for existing members. Breach of contract? Sure if it were a private pension Scottish widows etc couldn't just change the terms.

It's legal when your union agrees to it because they are the ones that negotiate your terms and conditions collectively. Existing members over a certain age aren't affected and members on low incomes won't have to pay extra into the scheme. Even if you can't retire until 67 and have to pay a little more in it's an excellent scheme and one that people outside the public sector would love to have.

This is very true, we are lucky & I hope it can be protected as much as possible. Hopefully we'll be able to go at 60 on reduced pensions, hence planning a top up fund now. Instead of buying an annuity could we add that amount to our lump sums from work & get a but to let property & use the rent as a pension? Would this have different tax implications for the survivor/dcs when we die?

NHS have already changed the terms of the pension without the unions' agreement afaik. My NHS contributions go up by 1.5% from April and I'm sure the unions didn't accept it, which is why we had the strike last year.

Can you pay in AVCs, I know we can in the NHS one. The AVCs are invested in other funds, you have a choice of a few I think.

Not sure specifically on NHS/police pensions, but you should still be able to take the pension you've already built up at 60. The changes are coming in 2015 I think so if you have 10 years built up by then you can take that at 60 based on your final salary. Then take the rest at 67 (it's 68 for me and. I'm 32?). Also factor in to budgeting the increased contributions. Mine will be £40 a month more from April and I think that its going up about the same for the 2 years after so will be paying an extra 120 a month eventually.

It is 68 not 67.

Totally confused
So we need to think about:
AVCs
ISAs
Stakeholder pensions
Annuities

What happens if the unions vote differently? Eg RCM say yay but RCN say neigh? & unison? Would it be by unions with greatest membership?

The unions will agree eventually because the choice (such as it is) is a stark one. Either the changes don't go through and the money is saved by severely reducing the number of public sector workers.... or the changes are agreed and they save more people's jobs.

Thanks. We have seen an IFA & he is sorting us out with quotes for family income benefit life assurance because I have realised we need more than just mortgage protection, especially whilst the dc are young. We will probably get one to cover us until youngest dc is 21 & independant. He will get paid by the provider.

Retirement wise he did a risk assessment & our attitude comes out as low/medium risk & he recommended investing in stocks & shares ISAs. These seem to be seperated into groups by how risky they are, there were 5 in each of the risk groups & they are £50/month each. We are thinking of buying 2 ie investing £100/month into our isa, more as nursery fees reduce/disappear. We will not touch this money until we are wrinkly. We will also try & put some into a cash isa for everyday events like holidays & unexpected big bills. I THINK he is going to charge 0.75%/month commission & an initial 3%, obviously I will clarify this.