Is this worth it? Paying 19% of salary to get 1.1k in 30 years time?

pennystretcher

I'm doing the same in LGPS, paying additional pension contributions rather than putting money to AVC schemes. Before you max out your contributions, ensure you have saved a resonable enough "rainy day fund"..or are at least building this up as well as you go - LISA would be a good way of doing this, I wish I could have one!!

FIRSTTIMER

Interesting, that's good to know! How does the LGPS increase work. Is it paying for additional pension in blocks to take at retirement, or a better accrual rate?

pennystretcher

Additional annual pension, e.g. for a female born 01/01/1980 to buy £500 pa extra pension would cost £4804.20 if paid over one year. You can buy about £7k extra annual pension at the moment - the amount you can buy also goes up by CPI increase.



A calculator online for LGPS scheme:

https://www.lgpsmember.org/more/apc/extra.php

snowqueen555

Why are you paying 19% of your salary? do they give you an option to increase contributions?

I am in the LGPS, awaiting my transfer in, the rate is similar to TPS. It's a decent deal I think (£7.80 annual contribution accrues £1 to my annual pension).

daveyjp

Why 19% contribution?

JoeCrystal

daveyjp wrote: »

Why 19% contribution?

You can opt for a faster accrual rate of 1/45 and the option to buy out the actuarial reduction which enables you to retire on a full pension earlier if you can pay a higher contribution for both of them. There is even added pension up to £6750 per year as well either as a lump sum purchase or monthly payment over however many years you want.

lisyloo

FIRSTTIMER wrote: »

Agreed. I have definitely set my sights on stopping work at 60 full stop where I can. A current CETV value of 80k will hopefully bridge income between 60-65 along with a LISA I am starting. A few have suggested not to put money in a SIPP as much as I thought I was going to, to help between 60-65 as I will have a lot in pensions which will have tax implications and to maybe divert to a LISA instead for cash between 60-65 too.

Yes you need to be mindful of LTA (lifetime allowance) as the tax over that level is punitive.

FIRSTTIMER

Thanks. How will I work this tax implication out in the future, I plan to be buying the full £7000. The only downfall is buy out and additional benefits and faster accrual all add up to this limit.

The 19% is through normal contributions, faster accrual and 3 year buy out.

justme111

In my time I looked at additional benefits and thought I might be better off just to take my pension reduced as the conditions of those are not as beneficial as the basic NHS pension. To be honest I did not calculate it , just had an overall impression and it seemed like too any eggs in one basket for my liking.

justme111

Besides what's the point for you , OP, to have 30 k after 60 if now your disposable income must be way lower with all those contributions and may be other expenses that you are not going to have in retirement ?