Pensions advice

atb

I have just started a pension scheme with my employer where I am going to be contributing £100 towards it per month.

It states in the employer handbook that -You will recieve 1/60th of your final pensionable pay for each year of your pensionable service together with an additional pro-rata amount for part years.

I am 31 at present and looking to retire aged 60.

How much would I get per week from this scheme?
Would I get this in addition to the state pension?

Thanks in advance.

dunstonh

How much would I get per week from this scheme?

Assuming 60 is the scheme retirement age...

29/60ths of your final salary.

So, if you are on £25,000 now you will get £12,500 in todays terms assuming no significant career increases.

Would I get this in addition to the state pension?

It will be in addition to the basic state pension (which is payable at age 67 for you). You may not get a second state pension though.

atb

dunstonh wrote: »

So, if you are on £25,000 now you will get £12,500 in todays terms assuming no significant career increases.

So I would get 12.5 K per year?

dunstonh

So I would get 12.5 K per year?

In todays terms. Obviously, pay rises over the years will increase that figure but if you assume pay rises are in line with inflation, then you use your current pensionable income as the figure to calculate the 29/60ths.

Remember your pensionable income will not normally include bonuses or overtime and is typically your basic salary.

You also need to check the pension age. If the scheme age is 65, then anything ealier than that could face some penalty. So, you may get 29/60ths at age 60 but a deduction for taking it 5 years before. Your scheme booklet should confirm this.

For reference, the basic state pension is £4500 and is set for age 67 for you. So, that should give you an idea of what you need to plan for.

i.e. can you live on £12500 a year from age 60 and then £17,000 from age 67?

If not, you can start building up a pot to help fund that aim. £12,500 is close to the breadline figure so its probably a bit too low. Especially when you consider that retired individuals tend to suffer a higher inflation rate.