Page 6 | Concerned that my pension pot is on the lower end of what it should be...

hyperbole001 · 2021-07-04T11:23:12+00:00

I'm 36 and have to be honest, I haven't given a great deal of thought to my pension. I probably started paying into one from 2009 onwards, but have had various jobs over the course of my employment history, and until recently hadn't put any effort into trying to track them down. Naively, I had assumed that the govt would be able to do this by simply using my NI number but doesn't seem to be a straightforward as that. Anyway, from those I've been able to track down and have contacted, I've estimated that my pot is currently sat at around £26k. Does this see on the low side for my age, and should I be consciously trying to increase my contributions?

HandlebarLadyTash · 06/07/2021 18:26

With no mortgage, as home owners there are still maintenance costs, gutters, boiler services.... My house will need a new roof in the next 15- 20yrs, a boiler & a kitchen as a minimum. Is there a benifit to help with house maintenance for the home owners .. nope

I work in the private sector & I dont have a high salary, I will have some money in my pot but nothing nr the 300k. I just cant save enough from my salary (& live) over the next 20 yrs to get near. & that's me assuming I will have a job in my current line of work & I remain healthy enough to work. &.. I'll jam in another point.. what if I have to reduce hours to support my aging parents.

I think I will fall into a bracket where I should have spent everything I earned , rented & then been eligible for pension credits, & money for rent.

Theres no incentive to save (yet I do)

The state pension should be enhanced for people who have paid in or the basic pension needs to be increased give people a basic standard of living. Pensioner often miss out on top ups / benifits because they dont know about them. Just give people a half decent payment in the first place (cut the admin) No one in their old age wants to scrap around with no heating or wondering how to pay for healthy food

If the retired have money they can be out & about spending their pensions - feeding the cash back into the economy.

Iamthewombat · 06/07/2021 19:09

To make clear, a cash isa (or Lisa), u get back what you put in. Stocks and shares ISA (or Lisa), you could lose it.

This is why it’s important to use clear language. A cash ISA, or LISA, is not an investment and should not be described as such. It is savings. Investments can go up and down.

Which isn’t to say that nobody should invest, because you can spread the risk and it’s the best way of accumulating wealth long term, but it is absolutely misleading to say that with an ISA investment you will always get back at least what you put in.

FinallyHere · 06/07/2021 19:39

@hyperbole001

still confused by what the benefits of a final salary pension are

I'd really encourage you to get in touch with whoever is running or administering the scheme now and get them to confirm what the terms are and what benefits you will eventually receive.

DH has a final salary pension, even though it was from a long time ago, it will pay out a small ish sum for the rest of his life. That means that he doesn't have to buy any annuity with his other pension pot. He can reply on the final salary element to pay his costs and use the other pension pot to fund special things.

You may find that yours is similar.

Polkadotties · 06/07/2021 21:13

@hyperbole001

You have an element of final salary pension and that is very valuable so you’re probably in a better position than you think

I'm still confused by what the benefits of a final salary pension are. What do they base your final salary on? Is it your final salary at the employer who offered the scheme (if you have now left that employer), or is it final salary before retirement?

It will be your final salary up to your date of leaving the scheme. Apart from people who wish to take big chunks cash I don’t know why anyone would want to transfer out a DB pension which guarantees an income for yourself and your dependents after you die.

TolkiensFallow · 06/07/2021 21:19

I’m also totally freaking about my pension. I just don’t understand it. Been paying into the local government one for years but it seems crap.

Polkadotties · 06/07/2021 21:20

@TolkiensFallow

I’m also totally freaking about my pension. I just don’t understand it. Been paying into the local government one for years but it seems crap.

It’s not it’s a very good one.

titchy · 06/07/2021 21:25

@TolkiensFallow

I’m also totally freaking about my pension. I just don’t understand it. Been paying into the local government one for years but it seems crap.

Why does it seem crap? It's a final salary. You should know exactly what you'll be getting when you retire

BeyondMyWits · 06/07/2021 21:57

I have a tiny local government pension from my time as a dinner lady...5 hours a week, term time only, for 6 years...

£7 per month... pays for cake...

TolkiensFallow · 06/07/2021 22:10

@titchy @Polkadotties

I’m the first to admit I don’t fully understand the scheme…even having read the information but from what I can see I currently earn £44k and if I retire at 68 (in 30 years) then my pension would be £20k annually and no lump sum without pension sacrifice. Which doesn’t seem much to live off…

Polkadotties · 06/07/2021 22:18

If you currently earn £44k and have 30 years to go then just based on this time period the pension you accrue between now and 30 years time is £26,983.
44,000/49 =897.95.
897.95 x 30 = 26983.00
This excludes any CPI increases which will be added to your CARE pension each year.

Polkadotties · 06/07/2021 22:20

There isn’t an automatic lump sum accrued in the 2014 LGPS scheme but there is if you have pre 2008 benefits.
If you wish to commute pension to lump sum the commutation rate is £1 pension to £12 lump sum.

TolkiensFallow · 06/07/2021 22:22

The pension calculator says £20049 on their website, which might be because I’ve been part time for a couple of years, though going full time soon…

titchy · 06/07/2021 22:24

@BeyondMyWits

I have a tiny local government pension from my time as a dinner lady...5 hours a week, term time only, for 6 years...

£7 per month... pays for cake...

Cake's good!

TolkiensFallow · 06/07/2021 22:26

I’m in the 2014 one. I have a tiny one from pre 2008 but literally it’s worth £200 per year. I’m also a bit annoyed as I started paying into another local authority one in 2012 but changed local authorities in 2018 and merged the pensions to the new one which makes me the post 2014 scheme…

I guess I just really don’t want to work until I’m 68 to receive a small pension! Would love to retire sooner but the stats don’t look good if I do!

Do LGPS get the state pension aswell?

Polkadotties · 06/07/2021 22:26

Your post 2014
pension is accrued based on what you actually earn so if you’re part time it’s accrued on your part time salary.
My calculation still stands though. 30 years at £44k will be £26983.

titchy · 06/07/2021 22:29

@TolkiensFallow

I’m in the 2014 one. I have a tiny one from pre 2008 but literally it’s worth £200 per year. I’m also a bit annoyed as I started paying into another local authority one in 2012 but changed local authorities in 2018 and merged the pensions to the new one which makes me the post 2014 scheme…

I guess I just really don’t want to work until I’m 68 to receive a small pension! Would love to retire sooner but the stats don’t look good if I do!

Do LGPS get the state pension aswell?

£20+k a year isn't bad! You won't have a mortgage presumably. You'll get £180 a week state pension on top. You'll be better off as a pensioner than the average working person is now!

Polkadotties · 06/07/2021 22:29

@TolkiensFallow

I’m in the 2014 one. I have a tiny one from pre 2008 but literally it’s worth £200 per year. I’m also a bit annoyed as I started paying into another local authority one in 2012 but changed local authorities in 2018 and merged the pensions to the new one which makes me the post 2014 scheme…

I guess I just really don’t want to work until I’m 68 to receive a small pension! Would love to retire sooner but the stats don’t look good if I do!

Do LGPS get the state pension aswell?

If you moved from one to authority to another in 2018 with your old service 2012-2018 you are classed as a scenario b aggregation and you would have maintained your final salary pension and retained your final salary link. You will still have care benefits from 2014 onwards.

Iamthewombat · 06/07/2021 22:29

if I retire at 68 (in 30 years) then my pension would be £20k annually and no lump sum without pension sacrifice. Which doesn’t seem much to live off…

Not asking for much, are you? A guaranteed £20k per year, index linked (actually £26k, corrected by a PP), and you are disappointed because (1) it doesn’t seem much to you and (2) you also want a lump sum?

Check annuity rates to see how much it would cost you to buy a £20k index linked annuity to see you through until the end of your life. Spoiler: it will be a shedload more than you would have ever paid into the LGPS. Your contributions won’t even touch the sides!

TolkiensFallow · 06/07/2021 22:29

@Polkadotties thank for explaining. I’ve only been part time a couple of years (childcare) and so if I’m full time at the point of retirement will it be based on being full time?

Polkadotties · 06/07/2021 22:31

[quote TolkiensFallow]@Polkadotties thank for explaining. I’ve only been part time a couple of years (childcare) and so if I’m full time at the point of retirement will it be based on being full time?[/quote]
Do you have any pre 2014 service?

TolkiensFallow · 06/07/2021 22:34

Yes, from 2012 but when I moved local authorities in 2018 they moved my pension to the new local authority.

Polkadotties · 06/07/2021 22:37

@TolkiensFallow

Yes, from 2012 but when I moved local authorities in 2018 they moved my pension to the new local authority.

It’s the same scheme, regardless of what authority it is. You should still have your final salary pre 2014 service ‘banked’ and when you retire your final salary up to your date of retirement will be used to calculate the benefit linked to this.

titchy · 06/07/2021 22:46

[quote TolkiensFallow]@Polkadotties thank for explaining. I’ve only been part time a couple of years (childcare) and so if I’m full time at the point of retirement will it be based on being full time?[/quote]
Think of your pensionable salary as being your full time equivalent salary. But while you're part time you're accruing part years of service, rather than full years if that makes sense. I don't know how LGPS does the calculations - clearly the PP knows far more, but it might make it clearer in your head.

3luckystars · 06/07/2021 22:47

I think I a stupid.

I have no idea how to work out a ‘pension pot’

I hear people talking about these ‘pots’ and have no idea where they are getting these huge figures from.

I have a work pension, they send me a statement every year. It says ‘you have a gratuity of 50,000 and will get 10,000 a year’

Those are not the real numbers but they never change either, do I multiply the 10,000 by x number of years after I retire? It seems mad to me because how does anyone know how long they will live. Is this ‘pot’ just like the magic porridge pot, does it even exist? As I said I must be stupid.

For the OP, I think it’s a balancing act, if you are feeling that it is not going to be enough then seek financial advice and review things regularly. All the best.

Polkadotties · 06/07/2021 22:52

You no longer accrue service in the lgps, that changed in 2014.
You now accrue CARE pension. In every financial year you accrue a ‘slice’ of pension which is 1/49 of your earnings. These slices all get added together to make your final pension.
If you’re full time and earn £40k in one financial year you will accrue £816.00 of pension. If you’re part time with a full time rate of pay of £40k but you actually earn £20k as you work half hours, you will accrue £408 of pension in one financial year.