BT Pension Scheme- Confused.com

jem16

Gadfium wrote: »

Investing in another pension doesn't appeal too much.

It does when you get 40% tax relief and pay 20% tax when you retire - instant 20% increase.

Do you expect to be a higher rate taxpayer in retirement?

jennyjj

If you are in the BT Pension scheme, then presumably you are also eligible for Saveshare and DirectShare. You really ought to consider maxing out your contributions to those excellent schemes. Also, I believe that there is a pensions portal available to you within the intranet. That can help with some modelling. Bear in mind with that portal that all estimates assume that you continue contributing.

JJ

Gadfium

jennyjj wrote: »

If you are in the BT Pension scheme, then presumably you are also eligible for Saveshare and DirectShare. You really ought to consider maxing out your contributions to those excellent schemes. Also, I believe that there is a pensions portal available to you within the intranet. That can help with some modelling. Bear in mind with that portal that all estimates assume that you continue contributing.

JJ

Yes, both of the Sharesave and DirectShares are maxed out.

BobQ

Gadfium wrote: »

Hmm...looks like I am going to have to seriously think this through.

If I stay in the company till I get 20 years (another 7 years) then the pension will be at 1/4 of current earnings, which is short of where I want to be.
.

Not exactly. Your pension will be the sum of its two parts. You need to check the scheme rules but as I understand it pre 2009 service is based on your final salary and accrues at 60ths and this pension is payable in full at age 60. So if you retire at 60 with a final salary of £80K your pension will be £80000*10/60 so about £13.3K

After 2009, the scheme pays a career average pension with the full pension being payable at 65. This will accrue at 1/80th plus a 3/80th lump sum. This post 2009 pension is based on your actual salary each year from 2009 but lets say that in 7 years time it might be worth a £10K pension and £30K lump sum.

(If you are not clear what a career average scheme is -If you earned £50K in 2009-10 the pension earned for that year is £50000/80. If in 2010-11 you earn £52000, the pension earned will be £52000/80. This will added to the sum for the previous year (which will first be updated for inflation). If your salary increased to £75K this year your pension earned will go up to match but unlike the pre-2009 service does not increase the benefits earned in previous years. In seven years time your pension will be the total pension for each of the 10 years. (Obviously if you earn £75K thoughout the 10 years it will be as simple as £75000 * 10/80 but otherwise that is a crude estimate).)

If you wish to retire at 60 your pre-2009 pension will be added to your post 2009 pension but remember that you have to take them both at the same time. So if you retire at 60 you will get the £13.3K from Part 1 but the Part 2 will be actuarily reduced because it is being paid for 5 years longer so if worth £10K you will only get a 75% of that. Whether you can delay the payment of Part 2 do not know.

The idea is of couse to make you work to 65,

jennyjj

Also note, Actuarial reduction of about 5% or so for each year taken early isn't the bad deal it may sound. Though the reduction is in perpetuity, you get to draw a sum early which you wouldn't otherwise have drawn. So say you draw 5 years early and are docked 25%, then at the end of 5 years you have amassed 5*0.75*(what your full pension would have been.). That'll counterbalance what you lose as (remaining lifetime)*0.25* (what full pension would have been)
It would help to know exactly when you are going to die to work out whether it costs in:) Better still, it would be brilliant to know WHERE you are going to die, and just don't go there:rotfl:

JJ

Gadfium

jennyjj wrote: »

It would help to know exactly when you are going to die to work out whether it costs in:) Better still, it would be brilliant to know WHERE you are going to die, and just don't go there:rotfl:

JJ

I watched the film Looper this evening. If you've seen it, then you know how mucg this statement messes with your head!:D:D