I don't understand pensions... specifically mine :/

Carrie1983

Hi,

I am hoping those savvy among you can help me to understand. I am by no means thick, but when it comes to things like pensions, I just don't understand.

So, since I graduated in 2006, I have had several jobs, but a couple of them have had pension schemes. The first was a job I was in for 2 years and the contribution was 2%, matched by employer. When I left, I heard nothing more about it. Private company. The next is in my current job which I have been in for a year, and because I am a parent of a toddler (newly single), I do work part time (£29 hours term time only, £11500 a year salary). I am not sure what the % contribution is or whether my employer, the local county council, matches it, but it equates to around £35 from a £975ish monthly gross.

I thought of stopping my pension contributions because every penny counts, but I am starting to also worry about old age and do feel obliged to carry it on. I just don't understand them...

How will I receive the money held in those pots? I don't even know where the money is being held that I have paid into them... Will it be paid with my state pension, or when I am 68, will it automatically start being paid? Is it worth staying in the scheme?

I am now applying for full time work with a different county council, so the scheme is likely to operate in a similar way but contributions will be a lot higher, so I'd really appreciate any advice so that I can say at the outset whether I want to join up etc.

Thank you.

bigfreddiel

pensions are simple -they're just explained badly by these financial professionals

it's a way of building up a pot of money to pay you in old age

its built with tax free money - income later is txed

(isa's are built with taxed money but income is tax free)

your company may contribute - its like being paid more but not actually seeing it

you can't touch your pension till pension age - stopsyou dipping in and eroding it for frivolous items

obviously there;s more than that but you need to read your pension providers documents - bit like the instruction manualthat comes with your tv

you can of course pay someone to read the manual for you - costs about £200/hr -its your choice

fffj

xylophone

The first pension seems to have been some sort of money purchase pension- do you not have any information from the company? You might like to give them a ring?

I imagine that it is still sitting in the scheme.

With regard to your current pension, it seems likely that you are in the Local Government Pension Scheme which is a defined benefits pension and you would be wise to continue paying into it. You need to check with your employer.
http://www.lgps.org.uk/lge/core/page.do?pageId=1
If you are successful in your application to another county council, your pension scheme will be LGPS again but administered by the new authority - a relative has just moved jobs from one authority to another and arranged for the new authority to transfer over his pension to their administration.

I am wondering whether you would be in time to arrange for a transfer of the money purchase pension to the LGPS- might be worth exploring.

With regard to your state pension, you will fall to be treated under the new single tier rules. http://www.dwp.gov.uk/docs/single-tier-pension.pdf

mania112

bigfreddiel wrote: »

obviously there;s more than that but you need to read your pension providers documents - bit like the instruction manualthat comes with your tv

you can of course pay someone to read the manual for you - costs about £200/hr -its your choice

And why bother because you've explained it perfectly, for free.

atush

Stay in your current LGPS pension. And go back to FT when you can to get the max pension.

Carrie1983

Thank you for replies.

There is no manual; I didn't know I was in a pension until I spotted it on my payslip a few months after starting the job.

I will stay in the pension as I did a bit of googling last night and note that it will provide a decent lump sum/annual amount when I retire.

xylophone

I will stay in the pension as I did a bit of googling last night and note that it will provide a decent lump sum/annual amount when I retire.

And have you checked out your money purchase(?) scheme and explored the possibility of a transfer to LGPS?

hyubh

Carrie1983 wrote: »

There is no manual; I didn't know I was in a pension until I spotted it on my payslip a few months after starting the job.

If your employer's HR didn't give you a printed copy, the administrators should have a scheme guide on their website. What county is your place of work in?

That said, the rules of the LGPS don't vary within England and Wales or Scotland (as applicable), so there's a national site that provides basic info as well - https://www.lgps.org.uk

I am now applying for full time work with a different county council, so the scheme is likely to operate in a similar way but contributions will be a lot higher

It's unlikely to be a 'lot' more in terms of the rate - employee rates in the LGPS are currently banded by whole-time equivalent, not actual pay, albeit with preferential treatment for term-time workers.