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Hypothetical LGPS Value
caveman38
Posts: 1,314 Forumite
My wife worked for the local council PT when my children started work. She never intended to stay and because of that I discouraged her from joining the pension scheme.
I went on to regret my advice mainly because she continued for another 32 years.
Because of this I promised to make good the funds in a SIPP equivalent to what her pension would be worth.
I have a final salary pension and know my SP is lower because of the contracted out element. I assume the LGPS was similar.
My questions are:
a) She is due a SP of nearly £170 later this year. What do you reckon it would have been worth had she paid into the LGPS and what she would have lost as a result of contracting out.
b) on a salary now of £13,000 and 32 years. What do you estimate her pension would be.
This is only intended to be rough, as I am to pick up the tab. I have paid money into her SIPP for a few years and need to know the shortfall to be paid into another savings account.
I went on to regret my advice mainly because she continued for another 32 years.
Because of this I promised to make good the funds in a SIPP equivalent to what her pension would be worth.
I have a final salary pension and know my SP is lower because of the contracted out element. I assume the LGPS was similar.
My questions are:
a) She is due a SP of nearly £170 later this year. What do you reckon it would have been worth had she paid into the LGPS and what she would have lost as a result of contracting out.
b) on a salary now of £13,000 and 32 years. What do you estimate her pension would be.
This is only intended to be rough, as I am to pick up the tab. I have paid money into her SIPP for a few years and need to know the shortfall to be paid into another savings account.
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Comments
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Whats her full time salary?
At a guess of her being 50% that her pension would be 32/80 x £26k so about £10k pa plus a lump sum of £30k.
At a very rough annuity rate calculation that's worth ~ £1/3 million
She receivers a higher state pension because she wasn't contracted out. However as an LGPS member she'd have paid lower NI so that probably evens out.
Shes avoided 32 years of 6.5% of salary pa contributions0 -
She has only been a part time employee on 20 hours. today she earns £13,000.
Don't frighten me!0 -
She has only been a part time employee on 20 hours. today she earns £13,000.
Don't frighten me!
I have a friend that did the same, when someone comes up with a figure, I will suggest she asks her husband for the same amount :rotfl:
You need to be frightened, it was a major error.0 -
She has only been a part time employee on 20 hours. today she earns £13,000.
Don't frighten me!
Whoops, I forgot to allow for part time so its only 1/2 that, so in the region of £150k for the pension.
ETA: that's assuming all her service was part time - the calculation is based on full-time equivalent salary, but years of service is based on part-time hours so, eg, 10 years at 50% time only counts as 5 years0 -
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My wife worked for the local council PT when my children started work. She never intended to stay and because of that I discouraged her from joining the pension scheme.
Whoops....I went on to regret my advice mainly because she continued for another 32 years.
Would still have been worth it if it were much less.I have a final salary pension and know my SP is lower because of the contracted out element. I assume the LGPS was similar.
Yes, the LGPS was contracted out for the lifetime of contracting out.My questions are:
a) She is due a SP of nearly £170 later this year. What do you reckon it would have been worth had she paid into the LGPS and what she would have lost as a result of contracting out.
Finger in the air, I'd say something like £140 pw possibly - starting amount in 2016 of a full basic state pension + some S2P due to being a low earner + 2 years of nSP accrual.b) on a salary now of £13,000 and 32 years. What do you estimate her pension would be.
If we assume she has worked hours of 20/37 throughout the 32 years -
Final pensionable pay for final salary benefits:
13,000 x (37/20) = 24,050
Service from 87-08 (= 21 years in the 80ths scheme):
Pension of 24,050 x 21 x 20/37 x 1/80 = 3,413
Tax free lump sum of 26000 x 21 x 20/37 x 3/80 = 10,238
Service from 08-14 (= 6 years in the 60ths scheme):
Pension of 24,050 x 6 x 20/37 x 1/60 = 1,300
Service from 14-15 (assume actual salary of 12.2K during that year):
Pension of 12200 x 1/49 = 249
Service from 15-16 (assume actual salary of 12.5K):
Pension of 12500 x 1/49 = 255
Service from 16-17 (assume actual salary of 12.5K):
Pension of 12500 x 1/49 = 255
Service from 17-18 (assume actual salary of 13K):
Pension of 13000 x 1/49 = 265
Service from 18-19 (assume actual salary of 13K):
Pension of 13000 x 1/49 = 265
Total annual LGPS pension
= 3,413 + 1,300 + 249 + 255 + 255 + 265 + 265
= 6,002
Total tax free lump sum
= 10,238
If the hours have changed over time, then you will need to break out the 80ths and 60ths parts - each PT% will be against the same final pensionable pay figure, so there's no windfall or loss by going either less or more part time near the end.0 -
OK, I know I'm a d**k. But I just need some figures please.
I know she'll get near £170 per week SP as she has a forecast of high £16o's.
From hyubh's exhaustive figures her LGPS would have given her £6K pa and a lump sum of £10K.
What do you estimate her SP would have been, please.0 -
The OP has been given a significant beating here, and rightly so.
However, to help stem the bleeding, the LGPS pension would have been subject to income tax, which you'd need to factor in to the calculation...0
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