Another pension panic

[addies]

Hi all

I've paid into a nhs and then LGPS now since 2006. I have only had admin roles and have worked part time for the last 10 years, so not much I guess. If I go on my projections for both, it'll only be £6500 a year. (My LGPS is closing). My husband is a civil servant but only for the last 5 years (we are 40) so his pension pot won't be mega bucks either. We've increased his contributions by 3% starting now, but what else can we do? I was looking at a SIPP but no idea what I'm doing with stocks / shares etc. We don't have lots to invest because we want to buy a forever home in the next few years. We don't have any debt. What would people recommend? I have seen others post about their pension pots and ours is nowhere near at all and it's got me panicking. Any advice??

First thing to do is check your state pension forecast as that will be worth around 12k a year in today's mo ey and rises each year.
Once you are sure that you are on track for the full pension with no gap years then you can look at other alternatives. If your LGPS is closing what is your employer putting in place instead.

Your husband will potentially have 32 years in the civil service pension scheme, which is really good.

Civil service accrual rate is 2.32% so if he’s there 30 years he’ll have about 70% of his average salary. Not bad. Is the extra added pension or AVCs?

£6.5k per annum is not bad either for 40 so don’t panic, especially if you are going to be entitled to state pension.

when people post about pension pots they are generally referring to a defined contribution scheme. It’s very hard to compare this meaningfully to entitlement in a defined benefit scheme like yours so please don’t panic.

But he’s only worked there for 4 years so where have you got 32 years from?

Does your husband have no pension from his previous job?

You need to work out whether it would be better to top up your existing pensions or set up a SIPP. For low cost SIPPs have a look at Vanguard.

You're 40. You have another 28 years of working. There is plenty of time to build it up (but get started asap)

She means he will have 32 years by the time he retires

6500 is equivalent to a pension pot of £200000

But he’s only worked there for 4 years so where have you got 32 years from?

Because he's 40. 35 to 67 is 32 years.

Look at AVCs with NHS pension. Great facebook group for NHS pensions.

Why is your LGPS closing?

It's added pension rather than AVCs, which felt like the better choice? Thanks so much for your reply, I'm panicking less now.

Hi all, to clarify, I should be entitled to state pension. I've got 13 more years until my 35 years. 5 of those years are stamped due to child benefit but I'll have to earn a bit more after that to get a full stamp or make up the rest. All my stamps are full except for 2 years where I was in full time education and they are too long ago to pay for now.

Have a listen to the meaningful money podcasts - there are some really helpful ones to choose from. But I’d echo a previous poster and say don’t panic - you are both in defined benefit schemes and are paying more than the minimum into these, with plenty of time to go. There is so much focus now in ‘pension pot size’ but that’s only relevant to defined contribution schemes so I’d not worry too much about that. It would be worth doing your research on the merits of paying more into your pension vs starting your own SIPP.

Good. I actually think you sound in a very good position if you’re planning to keep working for a while.

Added pension is great and the security of an index linked DB scheme is a real asset. One thing to consider is the difference it will make if he decides to retire early- there are various calculators on the CSP site and it’s quite an eye opener what a difference it makes, even just a year or two. So I think you’re wise to be thinking about a sipp or similar for yourself (and consider a S&S ISA as well) - you may end up in a situation where the additional flexibility will be useful and allow you both to retire a few years early without taking a big hit on your income in future.

Most providers offer “ready made” investments which you can hold in either an isa or a sipp. Vanguard is a popular one but there are lots of others, meaning you can invest sensibly without really knowing a lot about it.

@WeirdSponge thanks again!

As my DB is closing, my employer has given me 3 options to choose from. 2 are DBs and 1 is a DC. As I have a good amount in DBs to bump up my state pension, I'm seriously considering taking their DC option for more flexibility and to be able to take earlier than the DB and state pension. I might do this instead of a SIPP for now and put the max I can afford in order to get the max contribution from my employer, which I believe is 10%
We both opened LISAs but only put a very minimal amount in at highest risk, maybe we'll be able to put more in within the next 10 years!
Something about that 40th birthday really makes you want to get those ducks in a row 😂