Local government pensions and the Tories

seagull112

OK ... I'm going to pop my head above the parapet again, as I've also been playing with the calculator!

If you started work at 21 in say (just for the sake of argument!) a public sector post, at a salary of £20,000pa and invested 7% of your salary (£116 per month) in a private pension (increasing your payments by 3% per annum), these are the amounts that you'd end up with when you retire:

Age 55 (not unusual in the public sector)
with no lump sum ............. £3080 per annum
With £10,000 lump sum ..... £2,732 pa
with £20,000 lump sum ..... £2,387 pa

Age 60
with no lump sum .............£4,502 pa
with £10,000 lump sum ......£4.100 pa
with £20,000 lump sum ......£3,710 pa

Age 65
with no lump sum .............£6,638 pa
with £10,000 lump sum.......£6,168 pa
with £20,000 lump sum ......£5,716 pa

DiggerUK

Ed,
I didn't click to include the state pension.
I don't know if they are contracted in or out in the forecast.
Is it automatic that you are contracted out in PP, or optional.
My PSP means I'm contracted out, just basic pension to add on in retirement.

EdInvestor

Final salary pensions are normally contracted out.Others have a choice, but in 2012 this will cease and they will all be contracted in. The state second pension is not payable to the self employed.

marklv

What about this 'white paper' on pensions that came out a couple of years ago? I believe they said they were going to index the state pension to average salaries instead of RPI and replace the second state pension with a flat rate sum. Has this proposal gone forward or is it 'on ice' for the time being?

marklv

I think all these discussion about employer pensions are rather academic. Most people do not stay with the same employer for 40-45 years. Even in the public sector this isn't common any more. People get fed up, end up with a bad boss etc, so they leave.

My personal situation is that I'm 42 and, and due to changing employment several times, suffering from the stockmarket crash and some lengthy spells of unemployment, have a tiny pension fund of only £40k. However, I recently joined a public sector employer (quango, not mainstream public sector) that offers a final salary scheme of 1/60 with no lump sum. Retirement at 65 (I couldn't afford to retire earlier anyway as I am mortgaged until age 63) with a limited indexation pension of maximum 5% a year.

marklv

EdInvestor wrote: »

Of course it is always worth remembering that for anyone contracted in with a full employment record, the two state pensions will pay out 8-9k p.a. That's index linked with 100% spouse pension (for unlimited spouses) and no gender distinction.

So the company pension target is perhaps not as high as posters are suggesting.

It's always worth getting your own individual state pension forecast as everyone is different.
www.thepensionservice.gov.uk

True, but the state retirement age is going to creep up to 68. I am now targeted to receive it at 66 and wife at 67 :mad:.

And what happens if you have had spells of being contracted out (for some reason)? Do you lose that portion of your second state pension? or do you get bought back in? It's not clear.

EdInvestor

marklv wrote: »

What about this 'white paper' on pensions that came out a couple of years ago? I believe they said they were going to index the state pension to average salaries instead of RPI d replace the second state pension with a flat rate sum. Has this proposal gone forward or is it 'on ice' for the time being?

It's going forward, starts in 2012, or possibly 2015 at the latest .The S2P change is phased in over decades.

EdInvestor

marklv wrote: »

And what happens if you have had spells of being contracted out (for some reason)? Do you lose that portion of your second state pension?

Yes, it's replaced by whatever pension you contracted out into.

or do you get bought back in? It's not clear.

No you don't, except in the cases where someone takes a refund of contributions from a final salary pension having worked at a firm for less than 2 years.In this case, the person will be contracted back into S2P for that period.

marklv

EdInvestor wrote: »

Yes, it's replaced by whatever pension you contracted out into.



No you don't, except in the cases where someone takes a refund of contributions from a final salary pension having worked at a firm for less than 2 years.In this case, the person will be contracted back into S2P for that period.

Thanks for clarifying.

Is there a way to calculate your SERPS/S2P entitlement?
I can't find any online calculator, not even from the official website.

badmark

Over the years public sector pensions were always sacrosanct until some smart fund manager as if it was a surprise said "oh everybody is living longer" panic panic, despite pension holidays etc we are now living with the fall out. In this age of accountability I dont see anyone taking the can for the !!!! ups. It all started to go pear shaped with Maggy Thatcher, god love her, how the mighty are fallen (over) we get what we deserve.