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!!!

Public sector pensions genuinely are very good (although not as good as they used to be). I think people often don't understand them (see pp talking about compound interest in the context of the NHS scheme) and find it hard to compare the value of an index-linked annual payment for life to a pot in a DC scheme.

Are you sure you haven't been on auto-enrol? Even in error.

Is this state pension or civil service,
the gov website won’t know your employer pension.
Your civil service pension information is held elsewhere?

Definitely a miscalculation.

Is it not the lump sum?

HMRC website can’t help you with your civil service pension.

Alpha even has a modelling tool that tells you roughly what you will get as of the moment, did you not go on that?

As mentioned, there’s no “pot” in a DB pension scheme. If it says £9k on an Alpha statement then that’s your annual payment as of your state pension age if you don’t contribute anything further.

Surely your pension is online and you can log in anytime you want to see how much you would get per month?

The online version is very much more user friendly than the paper edition. You can go on and put a future date to see how much you would get per month if you retire in 2028 on 21 September for example

I have a couple of LGPS pensions. One is quite old and states I have a lump sum and how much it is. The other doesn't say anything at all...which means there is no lump sum.

https://www.civilservicepensionscheme.org.uk/memberhub/

this online portal for civil service

https://www.lgpsmember.org

local government pension portal

For the civil service pension you get an annual benefit statement- they don't give you a live running total (although it's fairly easy to work out roughly).

At the moment you can't even get your old ABSs because the website isn't working.

More likely to be when it matures which may well be 65 not the current retirement age if the scheme is closed

DB final salary schemes in the private sector were very lucrative. You would struggle to find a DB never mind a final salary pension in the private sector now, but yes it could be that your older pensions are worth more. Thats partly why they dont exist outside of the public sector anymore. They are just unaffordable now.

So once more for the people at the back:

Public sector pensions are based on defined benefits, so your pension statement never shows you what has been put in; it shows you what, on the basis of the contributions which have been made, what your annual pension payment would be as of now. Talking about a total value of the pot is meaningless as those apply to defined contribution schemes.

You will also have the option of taking a lump sum, which is tax free up to a certain percentage.

Your statement no longer includes a projection of what your pension might be worth when you retire, but if in the PCSPS, you can do this calculation on the website (whatever the new one under Capita is called, used to be MyCPS until just now).

On the basis of what the OP says about her length of contributions into Alpha (presumably Nuvos before the introduction of Alpha) the £9k annually sounds about right.

OP - there will be guidance with your statement - all the stuff on the reverse of the main pages - explaining exactly what the statement does and doesn’t mean.

You can also find loads of info of the scheme website, which has useful videos etc explaining how it all works.

9k per year is pretty good

The state pension is currently about 12k per year

They don't deal with defined benefit pensions like the public sector ones.

If you are NHS then compiundninterestvhas nothing to do with your pension. You are guaranteed an amount 1/54th of your salary each year added to your pension. When you retire all those amounts added together with inflationary increases are what you get every year that you are retired. Our of interest how much is your current amount and how many more years till you reach state retirement age?

Usually in local govt you get a lump sum AND a monthly pension - and a variation of the two - might be worth a re read

I know a little about pensions and if we assume that you’re on the new career average pension then you might well have £9000 per year - if you don’t draw it until state retirement age.

It works by 1/60 of your annual gross salary (plus overtime, bonus etc) being placed in a pot, this pot is your annual pension and is added to every year.

for example, if you were earning £30k a year before tax, your pot would grow by £500
per year, more if you had overtime or shift allowance. So after working for 10 years you would have 10x £500 making £5,000 which would be the yearly pension at state retirement age.

You can take the pension any time after you are 55, but if you do it’s reduced by 5% for every year before you are 55. So if your state retirement age is 65 and you opt to take your pension at 60 you would lose 5x5% or 25% of the total value. On a £5000 annual pension you would lose £1250 per year.

I hope this helps.

.

it works by adding

If you're alpha pension, surely you have an accrual rate of 2.32% of your salary per year I.e. if you worked 13 years and earned an average of £35000 for those years, that would be £10556 per year, increasing by inflation each year. There must be some mistake (unless you opted out of the pension).

Is that based on retiring early as well? You would have an actuarial reduction for years retired early, i.e. for the above £10556 per year, you might lose e.g. 5% for each year you retire early. For example you might get £6891 per year if you retire now?

Compound interest is irrelevant to the NHS scheme.

Your trust will run pension-explaining sessions - may be called something like 'preparing for retirement' but you should do them long before that. Find one and go on it.

It's important that you understand your pension, and it's really not that complicated (it seems it because there are a lot of variations, but you only need to understand the parts that apply to you).

I don’t understand how the OP has even accessed her pension statement. Since Capita took over no civil servant can access their statements haven’t been able to for months. It’s a right royal fuck up. You cannot check it on the HMRC webpage so none of this makes sense.

Returning? I think.you mean retiring. Is it low because it's reduced for taking it early ... that would make sense.

I wonder whether OP will ever come back. I'm also laughing at myself and all the rest of us who carefully calculated how she accrued her £9k when she found the £9k figure on the HMRC website 😂

They will definitely be helpful in telling the OP how to read her statement and also where she can look for more information. She'll need to consider her state pension, this pension, and they will also tell her how to look for any AVCs or where to find out about any potential entitlements.