My pension is worth NOTHING

[RosieBright]

I had a job for 13 years in Government and kept thinking it was a great pension as folk kept telling me. I looked at my pension paperwork when the annual statement came through and I have £9000.
I thought that was A YEAR!!! But no, it's worth about £30 a month 😱
How can I boost this? I need anoth £100K to even have half a decent pension

Help!!!

Please, google ‘defined benefit’ pension! This is getting painful.

Her mouth would hit the floor if you were to put the amount you’re contributing now, into a defined contribution pension and seeing where that go you in your retirement!

An annuity is not the most common way to access a DC pension now. Drawdown with the capital remaining invested is a better option a lot of the time.

Well, it's not very user friendly is it? How many people have enough knowledge of pensions to work out what they mean (as we can see by this thread)

Same as filing in your self assessment tax return. They want to confuse us.

DH (phd mathematician) spent a couple of hours trying to complete mine - after I had also spent hours trying to do it.

I thought the thread was about OP not knowing this?

And you’d divide it by 25 and then 12 to get your monthly income?

No (as you now know) the £9000 per annum you get from a defined benefit pension scheme is calculated from what 1/49 (or whatever) of your salary has been every year for 13 years all added together.

So for simplicity sake

If your salary was around £34,000 a year every year for 13 years then 1/49 of that salary would be about £693 per year

So your annual pension after 1 year of work would be
£693

After 2 years of work your annual pension would be £1,386 (£693 + £693)

3 years
£2,079 per annum

4 Years
£2,772 per annum

5 Years
£3,465 per annum

6 Years
£4,158 per annum

7 Years
£4,851 per annum

8 Years
£5,544 per annum

9 Years
£6,237 per annum

10 Years
£6,930 Per annum

11 Years
£7,623 per aannm

12 years
£8,316 per annum

13 years
£9,009 per annum (13 x £693)

Of course people don't earn the same wage every year for the rest of their lives so a different amount will get added to the accumulated annual amount every year - but this is just an example.

Almost entirely separately to that is your employee contributions

If your employee contribtion to your pension is e.g. 6.7% of your salary then on £34000 you will have been paying what is essentially a £189 a month 'subscription' to be able to access your annual pension of £9009 a year in the future based on only working/subscribing for 13 years.

On £34000 a year your £189 a month 'sub' from your salary (£2268 per year) will have meant you will have been operating at a loss for the first 3 years as your annual subscription to the scheme fot those years was more than your annual future pension will be.

But after year 4 the amount you will get back as an annual pension in the future is above what you are paying in annually from your salary as a sub currently and by year 13 you are only paying £2268 a year as a subscription from your wage whilst in work in return for £9009 a year hard cash pension when eventually you retire if you've only worked 13 years.

No i was replying to your statement that she would buy an annuity to point out that it is not the case these days that you have to do so. It is quite clear that OP was struggling to understand what she had thinking that the 9k was it so she divided by 25, presumably expecting that 25 years would be how long she would be retired. She then divided by 12 and thought she would only have that a month. She now understands that is not the case thanks to the helpful replies she received. Your reply just mocked her with your rolling about laughing emoji.

A 35k pa pension shouldn’t be brag-worthy, it should be the minimum women should plan for, and is actually on the lower end of the scale on pension calculators.

OP, have you not received pension statements in previous years?

I work in the public sector and get yearly statements telling me how much pension I’ll receive after state pension ahe. It’s made very clear on those statements that the pension sum is what I’ll receive yearly.

A £200k lump sum is not the minimum that people should plan for though!

Unless that was a typo and it was meant to be a £20k lump sum, @Itsmyyear ?

I think mentioning the £200k lump sum was insensitive, as it’s more than what most people will ever see from their earnings or from a pension lump sum.

I've only read the OP posts, so I'm not sure if anyone else has mentioned this. If you're returning in 3 months you need to check whether the rules of the pension scheme have changed since you were last a member. You may be offered the opportunity to transfer your previous contributions into the new scheme, but I have a feeling that may not be a good idea. However I'm not up on the details of the LGPS scheme these days, so it's best to get advice on what difference it would make to keep your existing pension and the new scheme separate or combining them.

Op, would you consider organising a call with the pension advisor/trustee?

It sounds like it may be very helpful for you.
Ask them about potential to buy back yrsrs or make voluntary contributions if that possible in your circumstances.

Secondly, have you ever worked out what you need to live on post retirement - fully cost everything from grocery, insurance, accomodation, petrol, electricity etc.

Give yourself best estimates and see if you can get some peace of mind. Not knowing what you are likely to have available and what you will need is likely causing stress.

Inspired me to log into my teachers’ pensions account to check if I’m still poor. I am. Gave up teaching and now have a company pension that will no doubt also be worth feck all. Why is state pension so shite in the UK?

There should be as people are not getting their pension paid and we have been told it’s taking a lot longer right now. I am annoyed the retirement modeller and ABS are not on the new website, but that’s nothing compared to finally retiring and getting no pension payment.

A 200k lump payment is quite common once you have saved for a pension of £35k pa. It’s one of the benefits of paying into a pension and should be seen as normal. I wish someone had explained this to me when I started working.

More women need to save into a pension as soon as they start work.

My private DB pension from very large multinational was also took on by Capita, and was one of those affected by the hack, really annoying. They seem to have most of the pensions

If you have worked part time for 13 years that would affect your pension as they only take a percentage based on your earnings.

Thus you need to work for 40 years to earn a pension.

I have a CS pension (15 years, from 1986, full time, final salary £30k) took it early and have £8k pa (would have been £9.2k)

I also have a local government pension (10 years, from 2002, very part time, final salary, c£2k)and have £94.00pa.

Pensions will vary for soooo many reasons.
Glad you have worked out it is annual, not pot based.

I just wanted to say that it made me smile to hear that you do have a pension after all. What a lovely surprise 😀

Teachers pensions are probably the best of public sector workers, they’re considered very valuable

On £34000 a year your £189 a month 'sub' from your salary (£2268 per year) will have meant you will have been operating at a loss for the first 3 years as your annual subscription to the scheme fot those years was more than your annual future pension will be.

This is wrong. In y1 op will have contributed £2268 (or whatever) in order to receive an index linked £693 every year post retirement. With normal life expectancy that might be 15-20 years of payments. Very much not operating at a loss.

But she can't get the 12 K state pension until she's 67 long way away

I’m getting a £40k lump sum and I’m absolutely thrilled. I feel like I’ve won the lottery. £200k would be bloody amazing and life changing. I wish I had given thought to my pensions but I never did. I’m going to be absolutely fine, but I could have been so much better off if I had educated myself. My excuse being I didn’t have Google for the majority of my life and could not understand financial jargon. I also had to cash in a private pension when my ex left me in debt, which still really stings.