pension advice needed please !

james3333

MMMmm....
so, based on 10 YEARS service... rough figures...
4.5k( from the company) on top of my contributions of 17k ( £137 per month)
= £21,500

SO... this compared to an ISA or somthing over the same length of time i.e
17k ( £137 per month) + the ISA interest 5.5% =17,935

bloody great if i have done my sums ok?

cheers.

ReportInvestor

Andy_L wrote:

your employer will have estimated the costs and allowed for it in your total renumeration package

In fact they've all vastly underestimated the costs. That's why deficits are high and defined benefit schemes are closing down so quickly.

EdInvestor

james3333 wrote:

MMMmm....
so, based on 10 YEARS service... rough figures...
4.5k( from the company) on top of my contributions of 17k ( £137 per month)
= £21,500

Err no. The 4.5k a year is the total, includes your contributions. If you leave and pension is deferred it will be increased by inflation or 5% (whichever is lower) until you retire though.And usually the pension is index linked.

james3333

EdInvestor wrote:

Err no. The 4.5k a year is the total, includes your contributions.

thought it was too good to be true.;)

so, the figures look more like this...
my contributions of 17k ( £137 per month) + 8.7% from the company
= £18,500

compared to an ISA or somthing over the same length of time i.e
17k ( £137 per month) + the ISA interest 5.5% =17,935

correct?
if so, this isnt massivly better than anything else, like an ISA, savings etc that could be found?

jamesr_4

No

When you leave the company, you get nothing until the schemes retirement age (probably 65). The company will then pay you £4,500 (probably adjusted for inflation) every year for the rest of your life.

Andy_L

No.

Over the past 8 years you havn't contributed £137/month - it started at £50 and increased as your salary went up (do you know what %age of salary you are have to contribute?)

Some straight line guestimation gives a 10 year figure of ~£12.5 that you've contributed rather than £17k
Your employer doesn't add 8.7% of those contributions, they add 8.7% of your salary per year to that amount, probally (more than?) doubling it.

Although don't get hung up on the size of that pot as you don't get access to it, instead as jamsr says you get that annual pension instead rather than having to invest that pot in the financial market to fund your retirement

james3333

jamesr wrote:

No

When you leave the company, you get nothing until the schemes retirement age (probably 65). The company will then pay you £4,500 (probably adjusted for inflation) every year for the rest of your life.

oh, i see.
i have just been over complicating this whole matter...
..... if iam on 45k when i leave.... iam dividing 45k by 60.
and thats what i will get PER YEAR when i retire! ( taking into account that i have not always been on 45k) so less than that.
i get what you guys mean now, i was thinking about a big pot that was getting bigger and bigger for a lump sum!!!

EdInvestor

You will get a pension based on a) your final salary when you leave/retire and b) the number of years you have worked at the company.

So if your final salary when you retired was 45k and you had worked there for 25 years, you would get 25/60 X 45k = 18,750 a year.

If you had only worked there for 10 years it would be 10/60 X45k = 7,500 a year.

Usually you can take a slightly smaller pension and get some of the money as a lump sum.

james3333

got this masterd now!
cheers chaps.!!!!!
might enquire about the smaller pension, to get a lump sum ( just out of interest)

james3333

just got this reply from our pensions dept.

james,
Currently the rules for taking your retirement pension is that you would received 25% of your calculated pension as a tax free lump sum and a reduced pension.

any thoughts?