Paying more into employer pension scheme

AliceBanned

I've also phoned the pension scheme today which is managed by a private company. The person I originally spoke to just told me to look on the LGPS website but I need to know about specific options via my employer - ie discretionary payments etc.


They are sending something out to me so hopefully this will help me decide how to save.

Dazed_and_confused

Also sorry I don't understand what you are saying in 1 above. Thanks.

Lots of people who post on here after looking at their State Pension forecast online ask if they are getting £168.60 or £168.60 less £x COPE figure.

If your forecast is £168.60 and you expect to work for the 15 years earning sufficient to make each a qualifying year then you are on track.

Paying for earlier years may bump up your forecast but as you cannot exceed £168.60 it seems of no benefit if you're planning on getting the 15 years needed in the future.

xylophone

A COPE will be shown on your forecast if you were in a contracted out pension scheme at any time between 1978 and 2016.

LGPS was certainly contracted out and it is possible that the two other schemes you mention were also contracted out.

See https://www.royallondon.com/media/good-with-your-money-guides/the-new-state-pension-your-questions-answered/

At 6/4/16, two calculations were done for you and your "starting amount" for new state pension was the higher of the two.

NI years/30 x £119.30 + (Additional State Pension - deduction for contracting out)

(NI years/35 x £155.65) - COPE.

As your "starting amount" was less than a full new state pension, there was the possibility of improving your situation as explained in the link above.

molerat

The only slight downside is that it looks like you need the full 15 years you have left to reach the maximum. If you have less than 30 pre 2016 years and there are some 2006 - 2016 cheap part filled years then it may be worth filling some of those as a bit of a safety belt.

AliceBanned

xylophone wrote: »

A COPE will be shown on your forecast if you were in a contracted out pension scheme at any time between 1978 and 2016.

LGPS was certainly contracted out and it is possible that the two other schemes you mention were also contracted out.

See https://www.royallondon.com/media/good-with-your-money-guides/the-new-state-pension-your-questions-answered/

At 6/4/16, two calculations were done for you and your "starting amount" for new state pension was the higher of the two.

NI years/30 x £119.30 + (Additional State Pension - deduction for contracting out)

(NI years/35 x £155.65) - COPE.

As your "starting amount" was less than a full new state pension, there was the possibility of improving your situation as explained in the link above.

Thanks xylophone. There is nothing showing about COPE at all on my Account on gov.uk - pension forecast. Not sure why. I am pretty sure previous employers did not contract out, but not sure about this one (past two years) though it is LGPS so surely it should mention COPE? Maybe not as I joined them in 2017.

AliceBanned

molerat wrote: »

The only slight downside is that it looks like you need the full 15 years you have left to reach the maximum. If you have less than 30 pre 2016 years and there are some 2006 - 2016 cheap part filled years then it may be worth filling some of those as a bit of a safety belt.

Thanks molerat that's what I thought. I wasn't aware of the size of the changes in 2016 until I read the link sent by xylophone explaining this. Just wasn't on my radar, but at least it is now. 2003 onwards are the best years and this is fairly consistent as I have been in full time fixed employment, plus for most of the years from about 2000 but there were a few years of part time work before this and all of them with no private pension scheme at all.

jamesd

Given the limited time it does seem worth checking the cost of buying each pre-2016 year. People do tend to retire a few years before state pension age.

AliceBanned wrote: »

in the next 3-5 years to buy a bigger property and have a lodger - I've shared flats before and am fine with this

Normally I'd be writing that a bigger property takes money from retirement investing and delays retirement. But with a lodger the extra income may exceed the extra costs.

The substantial limitation of LGPS is the high normal retirement age. Paying into personal pensions can help because there's no penalty for taking income from them from age 55.

AliceBanned wrote: »

Current projection on retiring at 67 ... £6k a year from the pension pot for previous two jobs

How have you invested this money? The choice can make a big difference to the growth and final value.

Don't take the 6k projection seriously. It probably assumes that you will throw away half of the potential income by buying an inflation-linked annuity. At age 65 that would pay about 2.5% of the pot value. Deferring claiming the state pension instead pays 5.8% increasing with inflation. Income drawdown with the Guyton-Klinger rules would start at 5% but normally increase above inflation.

There are limits on the recycling of pension tax free lump sums into new pension contributions but one easy to use limit allows taking £7.5kn per rolling twelve month period (not tax or calendar year). You could take that from your existing personal pension pot once you reach 55. More may be permitted, how much depends on the total pot value and history of personal pension contributions.

nigelbb

jamesd wrote: »

Given the limited time it does seem worth checking the cost of buying each pre-2016 year. People do tend to retire a few years before state pension age.

That's a sweeping statement that sounds very unlikely to me. Do you have some evidence to back it up?

AliceBanned

Thanks Jamesd. I was asked by DWP to make some additional payments to make sure I had paid enough for state pension, some years ago and I made those payments but perhaps this was the minimum they required. I hadn't thought at the time this would mean me working to state pension retirement age. I may wish to retire a few years earlier or at least go part time.


I will have a look at the funds re my first pension pot - two previous company pensions combined - and let you know. I haven't had the confidence to change from the default safer options but as I have 15 years for this to grow perhaps I should.

AliceBanned

jamesd wrote: »

The substantial limitation of LGPS is the high normal retirement age. Paying into personal pensions can help because there's no penalty for taking income from them from age 55.

I had no idea of this so that's helpful to know now! I will probably in that case save in a separate pension scheme. I am awaiting info from my employer's one with Prudential but will then compare it to others. Not clued up at all about this time of investing so I have a lot of research to do.