Public Sector Pension Scheme

Clarkovich

Hi folks, a complete pensions novice looking for some help.

I'm considering leaving my pension plan and looking at an alternative method of retirement planning. First off I know I can't receive any advice about this however was just looking for opinions on my current plan compared with others on the market and whether you guys feel my projections are a good return considering the amount I pay in.

I currently pay 8.5% of my salary, which is set to increase to 11% over the next 2-3 years.

Projections to age 60: a lump sum of 48k and 12k paid as income.

I'm looking to come out of the scheme for a few reasons as follows:

1) the amount I pay into my scheme seems very high compared to a lot of my friends. In fact its much higher than anyone I know. If I'm calculating it correctly I will have paid in close to 100k by the time I reach age 60.

2) Public sector pensions are already under scrutiny. I'm not very confident that the pension I'm paying into just now will be anything like the one I have in 10 years time.

3) I am in debt just now. I have taken on a second job but The £200 I pay in per month could be used to help clear that in the first instance, giving me more disposable income later to start another plan.

As I said already I do have limited knowledge of this but my plan would be to come out of the pension, focus on clearing debts then start paying into some sort of ISA at a later date. I would of course have to be disciplined with this, which I have already thought about.

Any information anyone has would be appreciated. Also is there is anyone I could ring to get professional advice? This isn't a decision I'm taking lightly but I feel that if I am going to make a change I should be looking to do it now.

thanks

jem16

Clarkovich wrote: »

1) the amount I pay into my scheme seems very high compared to a lot of my friends. In fact its much higher than anyone I know.

Then they are not paying enough.

If I'm calculating it correctly I will have paid in close to 100k by the time I reach age 60.

So for £100k you get back £48k tax free and £12kpa for the rest of your life. How else would you make that £100k work?

2) Public sector pensions are already under scrutiny. I'm not very confident that the pension I'm paying into just now will be anything like the one I have in 10 years time.

Probably not but it will still be miles better than anything you can do yourself.

3) I am in debt just now. I have taken on a second job but The £200 I pay in per month could be used to help clear that in the first instance, giving me more disposable income later to start another plan.

That £200 will only be £160 increase in your net pay - probably less as you will pay more NI as well.

As I said already I do have limited knowledge of this but my plan would be to come out of the pension, focus on clearing debts then start paying into some sort of ISA at a later date. I would of course have to be disciplined with this, which I have already thought about.

An ISA won't come close to making up the loss of your employer's contributions.

Any information anyone has would be appreciated.

You would be a fool to opt out.

Also is there is anyone I could ring to get professional advice?

An IFA.

CLAPTON

look up the annuity rate for a 60 year old person buying an index linked annuity (with a spouse pension if appropriate)
for 100k you would get about 3,500 per annum

you would be a complete and utter fool to opt out

EclipsedMind

You can see an IFA and get some advice http://www.unbiased.co.uk/find-an-independent-financial-adviser/

Personally I think your pension projection is very generous for what you are paying in and even with the increased contributions you would be mad to try and go it alone. If you were to do as you suggest and invested in an ISA you would be missing out on tax relief on the funds you are paying in. As a poster above noted by going it alone you are forfeiting employer contributions which are factoring into the company pension payout.

I would try and sort out your debts by making savings elsewhere such as in your lifestyle but I think you will be seriously making a mistake by giving up quite a generous pension.

My advice is take your pension projections to an IFA and get him/her to go through it with you and show you what else you could get for 11% of your salary. I think you will find it quite enligtening.

EM

Turnbull2000

For 11% of salary, most private sector workers would be lucky to retire at 67 on £7,000 p/a without inflation proofing. You really need to appreciate just how good your pension is.

Loughton_Monkey

By doing what you are proposing, you are committing financial suicide. It's as simple as that.

If you are in debt 'right now' in a serious way, then surely this is another symptom that you don't fully understand money? Please do not compound that by coming out of an extremely valuable pension arrangement (very valuable depite what you are paying in).

For every £200 you put in (£160 after tax) there is an 'invisible' £200 or so being put in by the taxpayer. Throwing this away for the sake of a short-term debt problem is going to ensure that you remain in debt.

Annisele

Hargreaves Lansdown have a pension calculator that will give you some guesstimates as to what you might get at retirement if you contributed 11.5% of your salary to a personal pension. It'll be *much* less than your scheme will give you.

Your plan to contribute to "some sort of ISA" isn't a bad one - so long as you do that as well as remaining in your employer's pension scheme, rather than instead of doing so.

kidmugsy

Pay no heed to these killjoy naysayers. Do what you feel like.
The phantom taxpayer.

magpiecottage

kidmugsy wrote: »

Pay no heed to these killjoy naysayers. Do what you feel like.
The phantom taxpayer.

Only somebody who had no liability for the advice they gave would make a recommendation like that

There are a VERY few high earning people for whom opting out late in their career MIGHT be worthwhile.

But they will be earning enough to pay an qualified IFA to advise them rather than relying on an internet forum.

Do not do it unless your name is Gordon and a girl called Julie jilted John to go out with you.

Clarkovich

Thanks a lot for the replies folks.

As I said in my initial post I am a complete novice with this and it clearly shows from the replies I've had .

The debt I have is now less than £4k so that was never the main reason for coming out of my pension scheme as I'm managing it quite well , was more to speed up the process of getting rid of it completely.

I am going to speak to a friend who is an IFA but even on the phone he said 'why would you want to leave that scheme?' so I suppose that speaks volumes given he hasn't even seen the figures yet.

Anyway, thanks for taking the time to reply. Much appreciated.