Pension Question

johnsmithy

Hi,

Firstly, please forgive my ignorance but I need to ask some questions in regards to pensions because some of it I find a bit confusing.

Now my pensionable earnings are used to work out my benefits and has given me a forecast of my preserved pension per annum.

My question is, are the pensionable earnings the equivalent of what is in your pension pot, so for example, if I had pensionable earnings of £20000 and my preserved pension was £4,000 per annum, does that mean I would get £4000 each year out of the £20000 until the £20000 had run out?

Once again, I do apologise for my ignorance as it is a topic I am, at times, struggling to understand as I am trying to plan for my future so I know how much I would need to know to take out of future job payments in order to have a comfortable retirement, once I have secured employment.

Thank you.

Kynthia

Are you employed and in a defined benefit pensions scheme? If so then what then your salary is is relevant to how your pension is calculated and you don't have a 'pot' but a promise on how much you'll be paid every year in retirement. However not all of your salary is necessarily counted in these calculations as some parts might not be included for pension purposes. So your pensionable earnings are what you earn in the year that is relevant for your pension.

How your pensionable earnings are used depends on your scheme, for example are you in a final salary or career average scheme? Also your annual contributions to your pension scheme are a percentage of your pensionable earnings I believe. What scheme are you in?

hyubh

johnsmithy wrote: »

My question is, are the pensionable earnings the equivalent of what is in your pension pot

No.

so for example, if I had pensionable earnings of £20000 and my preserved pension was £4,000 per annum, does that mean I would get £4000 each year out of the £20000 until the £20000 had run out?

No, you get the 4K (index-linked in some way) until you die, after which there is potentially a widow(er)'s pension after you die. (This is assuming a DB scheme, which terminology like 'preserved pension' implies.)

johnsmithy

Thank you very much for this.

I am in the Civil Service Pension Scheme and reading the statement, I became a bit confused, but your answers have really helped me to understand and now I know that I will get the sum of my preserved pension each year until my death, that clears it up - they never make it clear.

I am still trying to find a way into employment right now but I am going to be more careful on how I deal with pension details because what annoys me is, in my last job, or indeed when anyone starts a job, they never make it clear what you should do in order to plan for a healthy retirement - they want you to do all the legwork - to me, its a shady practise, but that's just my opinion.

Anyways, thanks.

JohnSmithy

robber2

Employers have to be very careful that they do not fall foul of the legislation regarding the giving of pension advice. Not shady at all.

mollycat

johnsmithy wrote: »

Thank you very much for this.

I am in the Civil Service Pension Scheme and reading the statement, I became a bit confused, but your answers have really helped me to understand and now I know that I will get the sum of my preserved pension each year until my death, that clears it up - they never make it clear.

I am still trying to find a way into employment right now but I am going to be more careful on how I deal with pension details because what annoys me is, in my last job, or indeed when anyone starts a job, they never make it clear what you should do in order to plan for a healthy retirement - they want you to do all the legwork - to me, its a shady practise, but that's just my opinion.

Anyways, thanks.

JohnSmithy

This made my jaw drop.

Ever heard of personal responsibility?

What else apart from sort out your retirement do you want you employer to do for you; cook your tea, book you a holiday, have your babies perhaps?

Unbelievable.

Teapot55

mollycat wrote: »

This made my jaw drop.

Ever heard of personal responsibility?

What else apart from sort out your retirement do you want you employer to do for you; cook your tea, book you a holiday, have your babies perhaps?

Unbelievable.

The OP (Original Poster) did say that he knows very little about pensions. He is aware of his own lack of knowledge & thinks employers should have some responsibility for helping people to understand stuff. This is not unreasonable. Many employers have someone you can go to who understands this very complex subject or they hold workshops about it.

(It is very unkind to lambast somone in the way you have done, mollycat).

johnsmithy

Sorry, did not mean to be offensive, what I was trying to get over was that I think the giving of advice could be more thorough. Then I don't know what the law is in regards of the employer in giving information.

I understand about personal responsibility, but the thing is when you are young and naive when starting a job, you're not necessarily going to have your head switched on in order to know what the best thing is to do in regards to your pension - which might go to explain why over time, individuals build up quite small pots.

Anyways, thanks for all your advice, its answered my original question - appreciated.

atush

Employers are not allowed to give you advice on finance really.

mollycat

Teapot55 wrote: »

The OP (Original Poster) did say that he knows very little about pensions. He is aware of his own lack of knowledge & thinks employers should have some responsibility for helping people to understand stuff. This is not unreasonable. Many employers have someone you can go to who understands this very complex subject or they hold workshops about it.

(It is very unkind to lambast somone in the way you have done, mollycat).

He was in the Civil Service Pension Scheme........information about this is easily acessable.

So is pension information generally. (Google anyone)

What I found odd was the entitlement expressed in the post I quoted.

There is no way employers have a responsibilty for helping employees make life decisions, (like retirement planning).

Therefore, your chastising respsonse to my (non) "lambasting" is also very unkind, Teapot.

hyubh

johnsmithy wrote: »

I was trying to get over was that I think the giving of advice could be more thorough. [...] I understand about personal responsibility, but the thing is when you are young and naive when starting a job, you're not necessarily going to have your head switched on in order to know what the best thing is to do in regards to your pension

To be honest, expecting the employer to advise on pensions is like expecting the employer to advise on salary - it's a bit backwards, because pensions and salary are both part of the total remuneration package you've gone for in the first place. Were you to later consider employment in the private sector, for instance, you should carefully weigh up whether the higher pay compensates for the likely loss of generous pension rights in the public sector. Of course, this isn't to say pension benefits are everything... but the same goes for take-home pay.