Do I need another pension?

[Timetoread]

Hi, I have a very good defined benefit workplace pension but I have worked part time for most of my working life so obviously that has impacted my contributions and what I am set out to get. Should I be pitting money into a different pension fund?

Well, it depends on what you want your retirement to look like (but you probably do) -

www.retirementlivingstandards.org.uk/

This website is quite helpful. Remember to include your state pension as well.

Can you buy additional pension in your current scheme? That would be a tax efficient way to do it and probably give a good result.

This is quite depressing actually.

My workplace pension is considered excellent, final salary civil service scheme. Despite working part time (never less than 30 hours a week at junior management grades) it is predicted to be worth around £22k per annum when I reach retirement age, that’s after paying in for over 40 years. That plus my state pension won’t be anything close to what they suggest will be ‘comfortable’.

Do you have anything else coming to you like an inheritance, or would you downsize a house to release capital?

Make extra contributions to your work pension, With DB pensions you can usually choose AVC’s or APC’s. I’ve been doing this & it’s really boosted my pension forecast.

@mymumwouldntapprove, I agree actually, it is a bit dis-heartening, but I'm choosing to take it as useful information, and to invest more of my salary now while I can.

I guess, I will need to check

There should be some inheritance

Surely you have a lump sum too? My civil service pension isn’t a huge amount monthly but comes with a large tax free amount. I’ll have done 40yrs too when i retire. You can vary whether you take the lump sum or have more annual payment but you’ll definitely have a lump sum too. You can play around with is on My CSP retirement modeller.

And £33.5k won’t be comfortable for you? Once (hopefully) you are mortgage free and have no commuting costs?

My pension will be about 20k and I reckon I’ll manage.

no mortgage. Bills will be about £500. That allows about £1k a month for food etc, which if it’s just me will be plenty.

i’ve upped my hours and am putting the extra into AVC’s as pp mentioned, that should give me a nice lump sum in 5 years for holidays etc.

i am not factoring in state pension as I want to retire at 60 as my nhs pension will kick in then. Not waiting for 67!

It staggers me what pension providers claim you need to live a ‘comfortable’ life. DH and I retired early. Our DCs are adults and settled, our mortgage is paid off. We live very comfortably on £40K between the two of us. This year we’ve had two 3-week holidays and we have a weekend away most months. We don’t even get state pension yet. Our financial advisor told us we’d need £80K p.a. God knows what he’d expect us to spend it on!

The website linked to above says you need over £43k Pa to be “comfortable”.
My 40 year civil service pension (with no lump sum - it’s worth even less if I take a lump sum) is projected to be worth £23k, plus my state pension, so maybe £34k in total.
that sounds great, but I will be honest and say I don’t understand it really. is that taking inflation into account, as £22k will be a pittance in 2050 when I get to retire, no doubt the “comfortable” expectation will be more like £75k Pa by then. I don’t know how to plan it.

@mymumwouldntapprove

No that's not with inflation factored in, that's what you'd get in today's money, so it'll be more when you get to that age.

The civil service pension is very good by today's standards, I can only assume the posters getting less than £25k are quite junior grades still? If you are still climbing the ladder you'll get more, obviously. I was G6 by my early 30s so my projection is very healthy, if you want a bigger pension you either need to earn more by upping hours or grade, or you're going to need to subsidise with an additional pension. It's career average now, not final salary, so if your earnings are average, your pension will be average.

@mymumwouldntapprove plus I think that £43k figure is for a couple isn't it? So if you're single you won't need as much as that, or if you're in a couple you can add their pension.

The PLSA retirement living standards aren’t necessarily representative of your lifestyle.

How much do you spend now? Start there (use actual spending from bank statements, not what you think you spend). What will change in retirement? Take off commuting costs, mortgage if it will be paid off or whatever. That’s a much better place to start than someone’s version of ‘average’ spending.

For me one of the main reasons for additional saving alongside a defined benefit scheme would be if I wanted to retire earlier - to bridge the gap, rather than get a reduced DB pension - you’ll lose nearly 5% per year for taking most public sector pensions early, so I’d rather try and use defined contribution savings in the meantime

Yes you're right. That's for a couple.