How do you view pension pot

[coffeeandteav]

I have a local government small pension and a teachers pension. Having searched through both sites I can find quotes what it is worth for me in retirement, but no total pot.

On here I have seen threads with people say my pot is worth 9k or 500k or whatever.

I am probably being dozy.
Why doesn't the the website tell me?

Confused.

Db pensions don’t have a pot

What type of pensions are they? Defined benefit ones "just" give you a regular pay out for life, not a total pot. Defined contributions gives you a pot to do with as you please (I think I've got that the right way round)

Is there any way to equate the two? So a DB converted to what the equivalent would be as a DC?

Or does it depend on how long you live?

There is no pot. It's a defined benefit pension. The closest thing would be to request a cash equivalent transfer value (but you can't do that if you are still an active member of either scheme).

For max pension allowance purposes the estimation used to be 20x the yearly amount. I'm not sure why, I guess they assume you might live 20 years after starting to take your pension? I think! I'm not sure why I'm answering this as I'm really not an expert, it's just I've been looking at pension stuff as well recently!
Hopefully someone who knows what they are talking about will join in soon.

Log onto the teachers pension website for your annual statement. Look on Facebook for the teacher to teacher group - lots of good support and advice. Dave Fountain has some great videos on YouTube.

So, if you had a pension that pays £30k per year, time that by 20 years and that would give you £600k - plus possibly a consideration for any lump sum payment in retirement. Not sure if both DB and DC offer this.

Then if you have £600k in a DC you're stuffed after 20 years, but the DB person is ok as they will continue to get their £30k for every year until they die even if that's over 30 years later.

I'm the same as the last poster. In no way an expert but trying to get a bit of an understanding myself!

Thank you all.

So my government one was only paid in for 2 years 20 years ago. So can I couldn't take this out as a lump sum at 55?

One of the reasons the DC person in your example is stuffed is because, whilst the £30k/annum DB pension equates very roughly with a £600 transfer value figure (using the typical 20x "fag packet" estimation - YMMV), a £600k DC pension pot will in no way purchase an annuity with a starting value of £30k, plus index-linking and spouse's pension!

Are you able
To change you're projection so your retirement date if from the age of 55 - this should show the calculation of any lump sum and annual pension payable to you. I think the reduction is around 18% if taken that early though.

Could be wrong on this!

Only if you transfer it out. Contact the scheme administrators and they should be able to give you a quote. If the transfer value is over £30k you will need to take independent financial advice.

Thank you all that makes sense.

I really didn't know there was a difference. It is scary how little I know.

@AKettleOfDifferentFish Good point. So DB keeps up with inflation but DC is deducted due to inflation.

So the £600k DC may get you 20 years but instead of paying out £30k per year could end up being £25k per year. Down then £5k per year for 20 years when comparing to the DB. (I have no idea in reality what a £600k DC pot will get you on an 20 year annual basis). Just used these figure to illustrate the point.

The OP is asking about an overall "pot value", which doesn't really exist for DB pensions. This is different from the tax-free cash sum she could take on retirement.

You could transfer it to a DC pension and do that. Only for LGPS, you can't transfer TPS. BUT transfer values for LGPS are low and you would have to find a financial advisor to agree it was a good idea, which would be expensive. 100% not worth it.

Oh yes, totally get that your figures ate just illustrative 😊

The DC person is affected by future inflation risk and longevity risk, as well as annuity markets (if we are using annuities for comparison purposes withe the DB - it all gets even more complicated once your add drawdown to the mix as most of the £600k stays invested). But the point I'm making is that the DB person will usually be much better off than a DC person with a pot the same starting value as the DB person's cash equivalent (i.e. most DB members are better off staying put rather than transferring)

Thank you.

My LGPS says its worth £700 annually and 2k lump sum.

I wouldn't ever want to cash in TPS as thats my retirement plan.

Public sector pensions are ‘defined benefit’ pensions. You don’t have a pot, you have a guaranteed pension income once you reach the stipulated age.

Private pensions / workplace pensions in the private sector are ‘defined contribution’ and save into a ‘pot’. This can either be drawn down at will (subject to policy / some regulation) or used to buy an ‘annuity’ that gives a guaranteed level of income for life.

I had a very smallNHS pension from a PT job. When I hit 60 I was allowed to have it as a lump sum known as trivial commutation as the amount to be paid monthly was extremely small so it maybe worth asking LGPS if that is an option. I think the total value had to be less than £10000. It paid for new windows. It was taxed

@grannycake You are right it's less than 10k for trivial commutation. Given OP's pension is 2k lump sum and £700pa, it is highly unlikely to come in under 10k. And if it did, it would be a very bad deal.

Not quite. There's an assumption that the pot will grow by 5% each year (hence x20) so whilst it will shrink as you'd have to take £30k plus an assumed 5% each year, it would last longer than 20 years. If you die before it runs out, your estate has a residual pot. A DB pension dies with you (or is paid to a spouse at a reduced rate).

There's no pot on a dB pension but on my NHS one they gave you a "pot value" so they can tax you when it is over the £1m (life time allowance roughly can't remember exact figure) that's why nhs consultants stopped doing extra sessions as their virtual pots were going over the life time allowance (and the annual allowance) so they were effectively paying the government in order to work more.

You will be able to take the £2000 lump sum from it at the appropriate age. You will see on your statements when this can be.

She can only take the lump sum when she takes the pension. It will be the same age. You can’t take the lump sum separately in the LGPS.

Life Time Allowance was abolished in April 2024.
https://www.gov.uk/government/publications/rates-and-allowances-pension-schemes/pension-schemes-rates