Pension and mortgage worries in my 50s

[awishes]

Does anyone have some sound advice for a late middle aged divorcée please!
I traded off my share of ex DH's pension for a bigger share of equity 6 years ago to allow our DC some stability at crucial stages of their education.
Of course I'm now regretting it as the years are flying past and my mortgage is relatively high.
Public sector type but not final salary pension, 7% ee contribution 17% employer.
Do I try to overpay my mortgage which has another 17 years to go or put more in to pension via AVCs? I did the calculator but it seemed to show little benefit from paying AVCs. Could it be because of my age?
I work 35 hours per week term time plus some so about 90% fte.
Does anyone have any knowledge, I'd be really grateful as it's keeping me wake at night.

I think you've answered my query around AVC/P it must be my age as when I use the model calculator I barely benefit at all. Thank you

@polkadotties - do you not think it's worth me paying AVS for the next 8 years considering the tax advantage?
£50 per month will cost me £41 per month and buy me £32 per year extra pension - that surely can't be correct ? So I pay c£500 per year to give me potentially £32 a year for however long I live.

@Polkadotties

I work for an LGPS fund. As you have said that you don’t have final salary then you must be in the post 2014 CARE scheme. APCS are a good way of increasing your pension, however they are expensive and they get more expensive the older you are when you start the contract. On average you have to receive your pension for 14 years to ‘break even’ on paying the additional contributions. There is advice on this thread which is not relevant to the LGPS

Whether or not it’s worth it also depends on how much tax you pay.

I pay enough into APC’s to bring me below the 40% tax band so for me it’s quite cheap as if I didn’t put the money into the pension a lot of it would be taken by the taxman.

I would try to overpay the mortgage so it's paid off before you retire. Nothing worse than struggling to pay a mortgage in your retirement years unless you are confident you can downsize.

Check your entitlement to fill state pension. If you were contracted out you may have something called COPE payments. That means some of your state pension is already included in your private one. I will get £27 less that figure on top of page (full pension if £175) scroll down a bit and it tells you if you have COPE or not.

You are in a defined benefit scheme. That is really good. If you work full time and just keep paying in your set contributions, if will grow and give you an index-linked (inflation proofed) pension, but it probably won’t pay out without some kind of reduction before state retirement age.

If it’s at £10k now, if you keep working, it will grow to a decent size by retirement.

For a single adult, £18k can give a decent retirement, so with the state pension too, you are beyond this.

Personally I’d focus any spare money into the mortgage rather than additional pension. It would be really good to be mortgage free or almost there by retirement, so mortgage doesn’t suck up your pension income.

You are in a much better position than many people and that defined benefit, career average pension will give you far more than most private pension plans.

Even with COPE on your state pension statement, it is often still possible to get to full state pension ....that’s because you still have years to work. Your statement mentions COPE but it will also say what the MAX state pension you could receive is and how many more years you need to work to get it. For lots of people who aren’t that close to retirement age, even with quite hefty COPE from being contracted out, they will still get to full state pension (currently £175 per week) as each extra year you work between now and then adds approx £5 per week to the state pension figure you will receive.

CaringCarer...you might still get full state pension too. The key thing to look at is what the MAX figure mentioned is. You do not need to deduct COPE from that. As long as you work the number of years the statement mentions are required for you to get to the max mentioned, you will get that max amount...which might well be the full state pension if you don’t reach state retirement age for some years to come. It is not a clearly worded document and has confused an awful lot of people.

And finally, it is possible to take a career average pension early...but as you will draw it for longer, you will get reduced payments. It can be taken from 55 currently, soon to be increased to 10 years before state retirement age.

Your career average, defined benefit pension is a massive benefit to have. If you were in the Civil Service version which accursed at 1/43 per year, if you earned £43k, your pension would be growing by £1k per year. To have a pension pot grow by enough to give you an extra £1k in an annuity or via drawdown would require vast sums of money going in over a year.

People often don’t realise just how brilliant the final salary and career average pensions are. They might not have all the flexibilities of how much you pay in, but they provide a certain income i retirement (no reliance on stock market) and crucially its index linked so increases with inflation, which can be a killer for other forms of saving.

If you remain in your current job and keep contributing, even if not on a vast salary, your pension provision should be pretty good.

Focus on the mortgage now.

@caringcarer

Check your entitlement to fill state pension. If you were contracted out you may have something called COPE payments. That means some of your state pension is already included in your private one. I will get £27 less that figure on top of page (full pension if £175) scroll down a bit and it tells you if you have COPE or not.

Is the COPE figure not in addition to the state pension figure?

There is the state pension forecast, and the COPE figure which tells you roughly how much per week your additional 'contracted out' pension is worth.

Raining, yes you’re right...the way it’s worded confuses loads of people.

The COPE shows how much from contracting out (as a minimum) will have been added to your career pension.

It can mean that you haven’t YET accrued as many years full state pension credits as the time you have worked, BUT it always gives two figures....what you have up to this point, it also the max you could get if you keep working and adding years to your state pension. For lots of people in their late 40s and early to mid 50s, even with lots of years in streets which contracted out, because they will still work another 10 to 20 years, they will keep adding to their state pension and reach the max.

As an example, I think I have COPE of about £40 on my statement. My current state pension entitlement is about £130. I am told the max state pension I could get is £175. (This is the max state pension) and if I work another 10 years I will achieve that. As I still have longer than that before I reach state pension age, I should easily reach it, even if I retire early. Of course you keep paying NI until you do stop work, even if you’ve more than earned the full state pension.

@Polkadotties

I have a LGPS pension & am paying AVCs. Am in my 30s though.
I thought it was useful as I could take my AVCs as part of my lump sum & have more pension in the pot so to speak.

@iveturnedintoachip AVCs are different to APCs.
AVCs are where you decide an amount or percentage to come out of your pay and then it gets invested with a provider such as Prudential.
AVCs can be used to increase tax free cash, up to a limit.

Apologies I didn't notice it was a P rather than a V.
Would you recommend AVCs?

@WombatChocolate
Thank you you've helped me stop panicking now. And everyone else who has taken the time to reply.
It's so long since Ive worked in private companies I have lost touch with what is of benefit and it seems public service pensions are still exactly that. The downside is the lower salary but you don't get everything in life!
Thanks again