Never held a penison...worried...

RedfordML

Thank you! So every month 19.3% of my monthly salary will be put into my pension?

Is 19.3% the standard as i will be totally honest, seeing this month contribution has really surprised me...in a good way! Cant beleive ive been so blind to how pensions work.

Its a LGPS, so i simply keep a record of this (as I only plan to be in this role 6-12 months) and then every year i email them and detail changes???

Thanks all...

JoeCrystal

Remember I said that "For your sake, I hope you haven't opted out of defined benefit pension schemes in the past." These schemes are very valuable. If you had opted out of these schemes in the past, then it can be far more costly than £40 per month. The worth of the DB pension scheme is about a quarter to a third of your salary.

First of all, please read all relevant sections of the website: https://www.lgpsmember.org/ And do not be afraid to ask more questions if there is anything you do not understand. We are here to help!

Now you mentioned that you are on 14k, should you spend a whole year working on that salary, you will build up an annual pension of £285 per year. It cost you £770 or £64 per month this year to build up that annual pension which is a peanut. All investment risks rest solely with the fund, and you know that you got an ironclad index-linked pension by 68 or earlier (which will see it actuarially reduced).

But this year (for example, which thankfully is no longer the case), you decided to opt out and get around £40 per month. Great! You got £480 this year. The cost of opting out for one year? Assuming the pension kept up in real term and your life expectancy is 86 or 89 depending on gender. You missed out between £5,130 to £5,985 in today's term overall during your retirement after 68. So already, your questionable decision already cost you a few thousand pounds. And that is just one year! Put things in perspective! So I am delighted to hear that you opted in now.

For 38 years old and for someone who wants £285 index-linked annuity by 68 in a DC scheme would need to contribute £22 per month (increased by inflation every year) for forty years and that if the market is doing well with all investment risks rests solely with the employee.

Plus there are the whole host of other benefits to LGPS including ill health retirement, death in service and so on. You mentioned that you might leave within six months or twelve months. Please read this: https://www.lgpsmember.org/tol/thinking-leaving-before.php

Frankly, if I am in a job with access to a very generous pension scheme, I wouldn't want to leave! It may be worth looking into transferring in your old plans into it as well. Speaking as someone whose employer only contributed a minimum of 2% into his pension scheme.

Terron

JoeCrystal wrote: »

Remember I said that "For your sake, I hope you haven't opted out of defined benefit pension schemes in the past." These schemes are very valuable. If you had opted out of these schemes in the past, then it can be far more costly than £40 per month. The worth of the DB pension scheme is about a quarter to a third of your salary.

Most are, but some aren't as good.

mikeydevaney

Redford, Where I worked for many years there were a number of staff who never enrolled in the company pension scheme - until the finance/HR staff referred them to me. And here is how I persuaded them to join the company scheme.
Imagine you go to your bank and deposit say £50 into your account. The bank staff say - " Would you like us to add a further £50 to that for you? ". What would you say? That is exactly what happens intension arrangements as well as other benefits.

badmemory

OP you do realise that you are currently turning down 3% of your pay (5% next year)? Still I'm sure your employer will not complain! If you opt in for April onwards you will have the personal allowance increase to soften the blow!

Cat_Loving_Lady

As you are 38, you have another 30 years working therefore you can still build up a pension. Just don't leave it because time runs away you need to start it now. Anything is better than nothing.

Johnhowell

RedfordML wrote: »

EES 5.5% ERS, 19.3% on the pension part of my wage slip???

RedfordML wrote: »

Thank you! So every month 19.3% of my monthly salary will be put into my pension?

Is 19.3% the standard as i will be totally honest, seeing this month contribution has really surprised me...in a good way! Cant beleive ive been so blind to how pensions work.

Its a LGPS, so i simply keep a record of this (as I only plan to be in this role 6-12 months) and then every year i email them and detail changes???

Thanks all...

No, I read it that you pay the 5.5% as employee and your employer pay 19.3%. All good for you.

Others on here will have more information on LGPS pension scheme.

enthusiasticsaver

A LGPS is a defined benefit scheme so if you have opted out you have given away some valuable benefits and should rectify that asap. It does not matter if you only plan to be in that role for a short time as if the next job also is an LGPS then you will build up benefits in both and it will just show that on your pension history. If you had benefits in other pension schemes in the past they could have been transferred into the LGPS.

capital0ne

I'd be more worried by the title of this post

Never held a penison...worried...