Pensions - LGPS

[vilamoura2003]

Can anyone tell me how this works 🤷‍♀️

I have always had a works pension in the private sector and have paid a percentage of my salary and the employer has paid a percentage of my salary.

I have recently changed jobs and now get the local government pension scheme - everyone keeps telling me it's a great scheme, but I can't seem to work it out. All I can see is that they contribute 1/49th of my annual salary 🤷‍♀️ That's peanuts 😱😱 As I'm only part time, that is only about £200 per year they contribute - about £16 per month, which is only them contributing 2% of my salary 🤔 That's less than auto enrolment 🤷‍♀️

Can anyone explain it to me?

That doesn't make sense. I am in LGPS and my employer contributes 16 % and then I contribute another 6 %

@NeverTwerkNaked hhhhmmm - I have tried to screen shot it 🤔

I am not an expert but I think it is like this. the text in the image is badly worded but I believe they mean that each year you work you accrue 1/49th of your salary into your pension entitlement. this isn't the same as a fixed contribution scheme where the employer puts in a fixed amount (usually more like 10%) and it is down to the stock market to determine how much pension you get - in this kind of pension the amount you will get is defined and the scheme is promising you that income level without you risking a massive loss if the stock market crashes.

so once you have worked there for 30 years you will have accrued a pension entitlement of 30/49ths of your salary - c61%. the amount of fixed contribution pension payments that would need to be accrued to guarantee that pension level would be very large indeed.

that is a pretty good pension.

I have 15 years of membership in a scheme that accrued 1/80th and thought that was pretty neat. 1/49th is better.

What it means is when you retire you’ll get 1/49th of your salary in an annual pension.if we use 1/50th for ease...
Say you earn £10,000 per year, each year will give you an extra £200 income every year when you retire. So if you work for 20 years when you retire at 67/68 your pension will be £200 x 20, so £4000 per year. If you have worked 25 years by retirement you will get £5,000 pension per year.

Thank you so much for explaining 🙏🏻