Explain my pension!

[LeSquigh]

Hi all

Not really used the money board before but there seems to be lots of useful info here so I hope to stick around a bit.

I have a (what I suspect will be straightforward) question regarding my pension. Nothing is or has ever been explained regarding my pension and what information I have been given is always really confusing.

When I get my annual pension statement, the figure it gives, is that what I will get per annum when I retire? I haven’t paid into a pension for very long, only 4-5 years, so the figure is low at the moment.

The pension is the LGPS if that makes a difference.

Also, is there any way to top it up?

Thank you.

Well you've kind of explained it yourself really It gives you a figure that you will get per annum when you retire.

Yes you can top up your pension you just pay money into it. How much will you need to live on when you retire and are you on track to get that?

Scrap that. The figure it gives is the TOTAL figure in your pension, not the amount you will get per year. Who is it with.

I won’t be on track with it at all because I didn’t start paying into it until I was 37. It’s local government and my annual statement says under £3k so I’ve definitely paid in a lot more than that plus the employer adds more than I do. I pay about 6.8% and they pay more but even that I’m not sure how much, it’s never really been explained.

Sorry, not meaning to drip feed....

I earn about 35k and pay in 6.8% (I think!). My annual statement this year showed just under £3k so I’m assuming that’s an annual figure rather than a total one. If it’s a total I may as well not bother paying into it as I’m getting out less than I’m paying in.

And I wouldn’t even know HOW to pay into it! I would possibly like to increase my contributions to say 10%, if it was worth doing that.

I think the 3k is the annual amount of pension that you have accrued to date. If you were at your normal retirement age that is the amount that you would get annually.

If the statement comes from civil service pension at the top, then see if you can book onto a mid career MOT course run by myCSP. It's really good at explaining the various features of the scheme and how you can boost it. The answer to your question depends on which scheme you're in. But the statement should give links to help you understand the product.

You should have a projected annual income for your retirement if you keep up the payments and how also much you’ve accumulated so far.

For example I’ve accumulated 11k per year so far and if I keep paying in I’ll get 36k per year.

I also buy Additional Pension Contributions (APC) each month so I’ll get a bigger pension.

I pay about 6.8% and they pay more but even that I’m not sure how much,

I would expect your payments (and theirs) to appear on your payslip each month?

Have you had a look https://lgpsmember.orgg*?

There might be some useful explanations there. Good luck

Thanks all. It’s LGPS and whilst I have looked at the website I feel like it almost presumes you have a basic understanding which I really don’t. I’m not normally dim with stuff but pensions just flummox me.

My annual statement goes up by around £7-800 each year so I’m presuming the figure when I retire (which will likely be never!) will be what I get every year but no one has actually told me.

I will attempt to call the pensions department but they are all working from home and to be honest aren’t great at the best of times. And I feel a bit stupid for asking what are probably very basic questions.

I could never afford a pension before I started paying into it and quite honestly can’t really afford it now. However I do realise that I need one so have to swallow it.

I have also had to make nominations for my pension in the event of my death. I don’t know what this means either - that my pension will still get paid out if I don’t end up drawing it myself to whoever I nominate? Or something else?

nominations for my pension in the event of my death

From https://lgpsmember.org/key-features.php

Peace of mind
your family enjoys financial security, with immediate life cover and a pension for your spouse, civil partner or eligible cohabiting partner and eligible children if you die in service or if you die after leaving having met the 2 year qualifying period . If you become seriously ill, and you've met the 2 year qualifying period, you could receive immediate ill health benefits.

The contacts page https://lgpsmember.org/contactfund.php

provides a way to get an email address for your specific fund. Might be worth emailing your list of questions. Formulating those questions might be helpful , too.

Yes OP, the amount is the annual figure I have an old LGPS pension too.

If you die your pension would go to those that you nominate on your beneficiaries form.

phone or email the people that administer the pension
they will explain.
probably safer than asking the internet when we can't see statement nor the letter.
it may take a couple of requests but they will be motivated to explain.

The main two pension types are Defined Benefit and Defined Contribution.

LGPS is defined benefit. Essentially, the amount you pay into is is not connected to the amount you will get out.

Most pension schemes are Defined Contribution. You out money in, it is invested and the amount you get back is related to how well the investment performs.

If you want to contribute more, I would recommend getting financial advice. As putting money into a defined contribution scheme might not be the best use of your money.

Thanks for your replies, especially @FinallyHere for all your responses. I will contact our pensions team and try and get some answers.

Hi OP

Your annual statement will probably have two sections on it. One section will show the amount you have accrued up to 31 March 2020. This will tell you the amount of pension you have built up and the figure quoted is the amount you would receive every year when you retire If you didn’t build up anything else.

The second section will then tell you what you are likely to build up if you carry on working until state pension age - again the amount quoted is the annual pension that you will get every year.

They may also tell you that you could give up some of the quoted pension amount to get a one off lump sum and you would then get a lower annual pension.

The figure of around £3k sounds about right for the annual pension you have built up so far - on a salary of £35k you are building up around £700ish of annual pension each year you work so if you’ve been paying in for around 4.5 years that comes to around £3200ish. So that means if you left the scheme now and didn’t pay anything else in, you will get a pension of around £3k every year when you retire. However, if you carry on paying in that amount will continue to go up.

Agree that the best thing is to get in touch with the council that administers your benefits for them to confirm it for you - their contact details will be on your statement.