NEVER THOUGHT I'D REACH PENSION AGE - I'm confused and scared !

Dick_here

bendix wrote: »

Precisely. I find it bewildering to read on here so many people seem to be under the illusion that paying in a paltry 40 pounds a month for 30 years seems to lead to people innately believing they will have a huge income in their retirement years, and then howling in outrage when the pittance they will actually get is revealed to them.

Well said :T

People are likely to live for 20-25 years past retirement these days. To receive a decent income for that long from a pension, you need to contribute a lot.

If you put £100k as a lump sum into something you'd not expect more than 6-8k back (in the good times) each year as interest from it. But people want to drip feed a tiny contribution for years and get more than that back as a pension...

EdInvestor

kindofagilr wrote: »

Yes I have an idea, I got a State Pension forecast last year, and at todays rates I would be entitled to about £5000 State Pension (this includes Basic Pension and Additional Pension)

Because you are contracted out, this forecast contains virtually no additional pension.If you were contracted in, your additional state pension would possibly be as much as 5k, for a total state pension of 10k.

And my private pension forecast for 2008 based on 2008's rates gives me a lump sum of £45,000 and a yearly pension of £8000

How much is being paid into your private pension?I assume you are making your own contributions in addition to the contracted out rebates?

You need to deduct those contributions (and the tax relief and growth on them) from the totals in order to compare with the additional state pension you are giving up.

kindofagilr

EdInvestor wrote: »

Because you are contracted out, this forecast contains virtually no additional pension.If you were contracted in, your additional state pension would possibly be as much as 5k, for a total state pension of 10k.



How much is being paid into your private pension?I assume you are making your own contributions in addition to the contracted out rebates?

You need to deduct those contributions (and the tax relief and growth on them) from the totals in order to compare with the additional state pension you are giving up.

The Additional Pension is not affected by the Contracted Out at all as I dont have any Pre 97 Additional Pension, I am 27 years old and started working in 1998 so all Additional Pension is payable to me.

I pay £49.12 into the scheme a month and my employer pays £269.24 a month (thats what it says on my payslip: Employer Pension Conts 17.1% 269.24)

EdInvestor

kindofagilr wrote: »

The Additional Pension is not affected by the Contracted Out at all as I dont have any Pre 97 Additional Pension, I am 27 years old and started working in 1998 so all Additional Pension is payable to me.

You won't get any additional pension (S2P) because the NI money which would go to provide your additional S2P pension is being paid instead into your personal pension as an annual NI rebate.

I pay £49.12 into the scheme a month and my employer pays £269.24 a month (thats what it says on my payslip: Employer Pension Conts 17.1% 269.24)

These monies are irrelevant.You have to compare the NI rebate money which comes from the DWP every year (and the growth on it) with the value os S2P additional state pension you are giving up.

kindofagilr

How can you know that when you dont know what pension I'm on?? I think its great your so clued up on Pensions

I do still believe I will have Additional Pension as I had two jobs for a while (about 2 years) I had my full time job I have now, and I had a part time job that was 20 hours a week (I know I prob should have mentioned that before)

I always though anything you earned over the earnings threashold went to Additional Pension?

And I have no idea to work out the calculation in the second paragraph of yours lol

I stilll believe I will be on a better pension

I work in SP for the DWP (I dont actually calculate the pensions as you may have guessed from my lack of knowledge lol) but I do update pensioners accounts etc and I have never seen anyone have a weekly SP amount of more than £215 which is £11,000 a year roughly which is less than my combined pensions (even taking off the AP you say I wont get)

EdInvestor

kindofagilr wrote: »

I do still believe I will have Additional Pension as I had two jobs for a while (about 2 years) I had my full time job I have now, and I had a part time job that was 20 hours a week

Your forecast shows you will get a small amount, so that seems correct.

I always though anything you earned over the earnings threashold went to Additional Pension?

S2P is based on your earnings level, the more you earn, the higher the S2P uo to a certain maxmum level.

I work in SP for the DWP (I dont actually calculate the pensions as you may have guessed from my lack of knowledge lol) but I do update pensioners accounts etc and I have never seen anyone have a weekly SP amount of more than £215 which is £11,000 a year roughly which is less than my combined pensions (even taking off the AP you say I wont get)

But to get this 11k they have paid only their ordinary NI contribution, which they have to pay anyway. They (and their employers) have not paid anything extra.

To get your higher pension you have paid in

1.The NI contracted-out rebate
2.Your employer's contribution
3.Your own contribution

So of course it will be higher.

To compare whether contracting out is good or bad you have to compare the amount of S2P a person will get if he doesn't contract out with the amount of private pension he will get if he contracts out with the NI rebate going into a private pension. (ignoring any additional contributions into the pension.)

Your department publishes an excellent (but rather long) handbook which explains all this, I will look for a link if you want to read it.

Cook_County

kindofagilr wrote: »

The Additional Pension is not affected by the Contracted Out at all as I dont have any Pre 97 Additional Pension, I am 27 years old and started working in 1998 so all Additional Pension is payable to me.

I pay £49.12 into the scheme a month and my employer pays £269.24 a month (thats what it says on my payslip: Employer Pension Conts 17.1% 269.24)

I am sorry to butt in - but as a private sector employee I had to blink several times. Is this Sir Fred Goodwin or are the rest of us still paying 17.1% in civil service pension contributions? Why is the civil service so privileged?

Schnorbitz_2

Cook_County wrote: »

I am sorry to butt in - but as a private sector employee I had to blink several times. Is this Sir Fred Goodwin or are the rest of us still paying 17.1% in civil service pension contributions? Why is the civil service so privileged?

It could include some kind of salary exchange, I suppose . The company total may include the national insurance contribution savings.

kindofagilr

EdInvestor wrote: »

Your department publishes an excellent (but rather long) handbook which explains all this, I will look for a link if you want to read it.

Yes please, I would like to take a look at it.

Turns out we cant contract back in anyway lo, we have to contract out, and seeing as I plan on staying here till I retire then I will take what I get

I do believe £14k a year is a nice sum of money to get (when you are mortgage free, plus partners pension also) so I think we will be fine

Pssst

bendix wrote: »

Precisely. I find it bewildering to read on here so many people seem to be under the illusion that paying in a paltry 40 pounds a month for 30 years seems to lead to people innately believing they will have a huge income in their retirement years, and then howling in outrage when the pittance they will actually get is revealed to them.

It's not rocket science. The more you put in, the more you'll get out.

Simple.

I'm not pitching up as a pensions expert as I'm not but I think that many people have this misconception. They mostly dont really have a handle on how much they have to put in to get out what,on the face of it,is a pretty dismal monthly pension. In addition,if they get too much monthly pension,it will get taxed or they will find themselves not eligible for certain benefits thus worsening their situation.

I am more fortunate as i am in one of the last of the old DB final salary pension schemes which i have so far paid in for about 25 years. The company also pays in on my behalf. Do the new arrangements come anywhere near these schemes?

Again,many such schemes are in deficit. my company scheme has a small deficit going on.

Contrast this with the massive deficits in schemes such as BT,The post office and BA and the situation is such that those schemes are actually a millstone,dragging those companies under.

As an example BTs share price has slumped to around 84p recently and has recently been downgraded to a target of 70p ,partly due to the pension scheme deficit which the Co is going to have to prop up.


For the last 2 years OFGEM,the fat cat regulator, has been sabre rattling about how much companies such as National Grid pay into their pension scheme. There was a recent GMB rally to gain support in parliament to stave off this attack. And yet OFGEM has its collective tongues in the cream. Its chairman Mr Lord John Mogg does three days a month work for them on average and creams in over £100,000. Its chief Exec Mr Alistair Buchanan got paid near £250,000 last year and has the joy of collecting his gold palted civil service pension when ,no doubt,he retires early.