Pension v property

Fireflyaway · 27 November 2017 at 7:34PM

Thanks everyone. Maybe my calculations were wrong or too simplistic. My contribution is £177 per month. To me that's quite a bit of deducted money a month to only have £550 a month pension.
Dodgy tenants, gaps in occupancy and fees do sound off putting. I know someone who was caught out twice. Once went through a lengthy eviction process and another time the place was trashed!
In reality I could do both. I'd just like another £177 in my bank but I suppose that's short sighted.

JoeCrystal · 27 November 2017 at 7:50PM

Fireflyaway wrote: »

Thanks everyone. Maybe my calculations were wrong or too simplistic. My contribution is £177 per month. To me that's quite a bit of deducted money a month to only have £550 a month pension.
Dodgy tenants, gaps in occupancy and fees do sound off putting. I know someone who was caught out twice. Once went through a lengthy eviction process and another time the place was trashed!
In reality I could do both. I'd just like another £177 in my bank but I suppose that's short sighted.

Sorry but I just can't get my head around your calculation. If you mean net then you are earning £39k salary, if you mean gross then about £32k/ If you work for 29 year at that salary then you can expect £18,800 (if based purely on £32k) or £23,000 (if on £39k) pension.

I am confused as it can be £6600 a year income unless you are only working for a certain period of time, only 8 or 10 years??? If you are thinking that you only get £6600 if you work for 29 years at £39k salary then your calculation are way out!

It may cost you £177 but you are getting a worth of £1760 per month out of it, even more if you want death in service and ill health into account.

Oh, it is even better when you enrolled into LGPS with a great starting salary!

Silvertabby · 27 November 2017 at 7:57PM

I'd just like another £177 in my bank but I suppose that's short sighted.

The £177 shown on your payslip is before tax relief. If you opt out, your pay will only increase by £141 per month (assuming you are a standard rate taxpayer).

You'd also be saying 'shove it' to your employer's contribution of at least £500 per month.

Fireflyaway · 27 November 2017 at 8:29PM

JoeCrystal wrote: »

Sorry but I just can't get my head around your calculation. If you mean net then you are earning £39k salary, if you mean gross then about £32k/ If you work for 29 year at that salary then you can expect £18,800 (if based purely on £32k) or £23,000 (if on £39k) pension.

I am confused as it can be £6600 a year income unless you are only working for a certain period of time, only 8 or 10 years??? If you are thinking that you only get £6600 if you work for 29 years at £39k salary then your calculation are way out!

It may cost you £177 but you are getting a worth of £1760 per month out of it, even more if you want death in service and ill health into account.

Oh, it is even better when you enrolled into LGPS with a great starting salary!

Yes my salary is just under 33k. I'm 38 so I guess yes I could potentially pay in for 30 years yet ( depressing!) So maybe it is a better deal than I first thought. Certainly better than the private scheme I had anyway.
I like the idea of property but maybe need to investigate a less risky way if there is such a thing. Or land could be an option.

Happier_Me · 27 November 2017 at 9:02PM

Do your future self a huge favour and stick with the LGPS. If you are on £33k per annum then you are adding around £670 a year to your pension pot...and you'll continue to add a similar amount every year that you are in the scheme. So keeping it simple and ignoring pay rises that's an annual pension at 68 of 30 X £670 = £20,100 assuming you stay in the scheme until your SPA. It is inflation proof(so this represents the value of your pension in today's money) and let's not forget the 50% spouse pension among other benefits of the scheme. Add in your state pension and you are close to achieving your annual salary in retirement!

You can retire earlier than SPA but you will need to factor in actuarial reductions. It's still a very very good deal.

Fireflyaway · 27 November 2017 at 9:21PM

Thanks everyone. Numbers are not my speciality if you hadn't guessed! I'd not factored in any tax relief etc.
My salary should grow too. I'm at the bottom of my salary band so all being well will be on £36k in a couple of years. I had thought 38 was a bit late to start but 30 is a decent amount of contributions.
I'm going to stick with it, thanks everyone.

justme111 · 27 November 2017 at 9:26PM

Does not have to be depressing. I do not see why you woud want as much in retiremnt as you would not pay NI , mortgage , make savings then so the obvious course of action would be to retire earlier rather than to slog on for 37 years more so all good news.

Triumph13 · 27 November 2017 at 11:03PM

Okay, now we have enough information to do the numbers. If we assume your salary just goes up with inflation and work in terms of today's money then your contribution of £177 a month pre tax costs you £141.60 post tax which is £1,700 a year or £51k total over the next 30 years. In return you then get a pension of £20k pa for the rest of your life. Good luck trying to beat that with BTL.

Nitram29 · 27 November 2017 at 11:09PM

I read the title Pension v Property and was expecting a Harry Hill TV burp type ..FIGHT!!!

Leaving disappointed with the thread and my Russian roulette DC pot.

kidmugsy · 28 November 2017 at 12:38AM

Fireflyaway wrote: »

I'm also a tax payer and ....

Why do people insist on using this piffling argument?

Pension v property

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