please advise...feel stupid and not sure what to do!

missindecisive

Hello. Hope someone can point me in the right direction! I started my working life in the finance sector and worked full time for about 11 years, I had a final salary scheme pension and I know I have opted out of serps. As a young person at the time retirement seemed so far away!
I started to have children, gradually going back part time and then finally only working 1 day a week before I left to stay at home with my children. I realise now I should have left earlier on my full time salary as my private pension pot is only worth about £2500 per year. Big mistake I think.
I then spent the next 14 years or so at home with my children bringing them up and did not go to work, my husband supported me.
I now have a small cleaning job working for my local council cleaning their offices,its 10 hours per week earning me about £2500 per year, not much but a start back into work. They have offered me to take their pension scheme but I don't know if its worth it as my earnings are so low.? As my youngest child is only 6 years old I will probably be doing this job for a good few years yet until they are older and I can increase my hours. Can I opt back into serps? What should I do? Thank you for your help..feel so silly and ignorant but at 44 years old I need to start paying attention! Many thanks

jem16

missindecisive wrote: »

I started to have children, gradually going back part time and then finally only working 1 day a week before I left to stay at home with my children. I realise now I should have left earlier on my full time salary as my private pension pot is only worth about £2500 per year. Big mistake I think.

If you're suggesting that your final salary pension is calculated on your part time salary as opposed to your full time salary, I'd be very surprised if that was the case. Normally final salary pensions are calculated on the full time equivalent and it's the years of service that changes. Perhaps you should check on that first.

I now have a small cleaning job working for my local council cleaning their offices,its 10 hours per week earning me about £2500 per year, not much but a start back into work. They have offered me to take their pension scheme but I don't know if its worth it as my earnings are so low.?

If it's local council and it's the LGPS you're being offered then grab it quickly. Even with low earnings you'd be daft not to take it.

Can I opt back into serps? What should I do?

Contracting out of SERPS, or S2P as it's known now is no longer available except for defined benefit schemes such as the LGPS so if you join that you will be contracted out. That will be abolished too from 2016 when the new flat rate state pension comes in.

atush

So, grab that LGPS pension as fast as you can-sign up monday.

As for your other pension, make sure they send you a statement. Then you will have the details needed if anyone here can help. I agree with Jem, I would be surprised if your pension isn't based on full time eqiv salary.

As a side note, if you were working in finance, I assume you have skills that could see you to a higher pay job than cleaning?

missindecisive

Thank you for your replies...will dig out any info I have on my pension and be back later with more info if I can. Will also join the lgps as advised.
I've took this job as a starting block back into work, mainly as I can work it around family life, but also to rebuild my confidence as it is low from being at home for so long...its not my overall career plan but I just wanted to show future employers I'm not afraid of hard work and perhaps gain some references in the meantime, thanks again will be back later .

Fruit_and_Nut_Case

jem16 wrote: »

if it's local council and it's the lgps you're being offered then grab it quickly. Even with low earnings you'd be daft not to take it.

atush wrote: »

so, grab that lgps pension as fast as you can-sign up monday.

+1 ..........

vm2pensioner

Yes - go for it!

Drp8713

If your old final salary pension is based on actual pay, why not find out what it would be worth if you transferred it into the LGPS?


Although it may buy you less years and days it could be worth more based on the FTE salary

missindecisive

Hello again. dug out some paper work and found a website I needed to log onto that deal with the pensions. Logged in.

It says the date I started, the date I left the scheme, amount of deferred pension £2243.79 per year. It does not give a breakdown anywhere of how its calculated, although somewhere in the depths of my sideboard, I know I will find some old paperwork which will explain it (although I could never understand it hence head in sand)
From memory, I worked full time for approx 11 years, then 3 days a week for about a year or so after some mat leave and my first child, then had child 2 and returned 1 day per week. I think it was based on my final salary when leaving which would'nt have been much as I was only 1 day...oh dear.

Will I still get a basic state pension when I retire, aswell as this small pension I built up earlier in my life, and aswell as the Lgps?
sorry feel so stupid x

hyubh

missindecisive wrote: »

found a website I needed to log onto that deal with the pensions

What's the website out of interest?

I worked full time for approx 11 years, then 3 days a week for about a year or so after some mat leave and my first child, then had child 2 and returned 1 day per week. I think it was based on my final salary when leaving which would'nt have been much as I was only 1 day

As jem16 says, the term 'final salary' as used in these contexts doesn't typically imply actual salary. Let's assume a 1/80 accural rate and automatic lump sum of three times the pension (a common benefit structure back in the day); given what you say, there's about 12 years reckonable membership (i.e., calendar service pro-rated for part time working):

2243.79 / 12 x 80 = £14,958.60

Looks like a whole-time equivalent figure to me, or at least, certainly not based on only working one day a week. For the same of argument, let's use calendar service of 13 years instead, and an accural rate of 1/60 (this is what the LGPS currently has - higher accural rate, but no automatic lump sum):

2243.79 / 13 x 60 = £10,355.95

Still looks too high for one day a week.

Will I still get a basic state pension when I retire, as well as this small pension I built up earlier in my life, and as well as the Lgps?

Yes. Being a member of a final salary scheme meant you were probably contracted out of SERPS during that time, so you may not get the full 'flat rate' state pension however (the 'flat rate' state pension will be combining the existing basic and additional state pensions).

mark55man

Find out where you were contracted out of SERPS to. That should be a pot of money with the company that your employer contracted it out to. SERPS is very complicated. For me - in the private sector - the money was put into a separate scheme (Scottish Widows) which I then transferred into a personal pension and manage myself. In other cases (mainly public sector) it seems to be incorporated into the DB scheme.

Remember your £2.5K pa FS pension would require a money pot of £50K to buy as an annuity. Your SERPS pot will be a small amount that can be grown over the year to retirement.

So when you add your state pension £7K + your first Final Salary Scheme £2.5K + Your LGPS Salary scheme - maybe £1K + what you can get from your SERPS money - and it all starts to add up - especially if your OH has similar

jem16

missindecisive wrote: »

It says the date I started, the date I left the scheme, amount of deferred pension £2243.79 per year. It does not give a breakdown anywhere of how its calculated, although somewhere in the depths of my sideboard, I know I will find some old paperwork which will explain it (although I could never understand it hence head in sand)
From memory, I worked full time for approx 11 years, then 3 days a week for about a year or so after some mat leave and my first child, then had child 2 and returned 1 day per week. I think it was based on my final salary when leaving which would'nt have been much as I was only 1 day...oh dear.

As hyubh has worked out, it's very unlikely to have been calculated on your part-time salary.

£14958.60 for 1 day a week would have meant a full-time salary of £777,847! Highly unlikely.

You will also find that your deferred pension has grown in line with inflation over the last 14 years.