Paying more into employer pension scheme

xylophone

they said I have one more year's payments to make, after which I am guaranteed full state pension but will still be paying NI as long as I am working after that.

From the information given in your previous, it appears that you were not in a contracted out scheme before 2016 (when contracting out finally ended).

You also indicate that you had 30 years (some paid on a voluntary basis), before 2016.

Therefore your calculations for NSP at 5/4/16

30/30 x £119.30 + any Additional State Pension.

30/35X £155.65.

The higher of the two was your starting amount.

Therefore you would have started with at least £133. 41

Approx another 5 full years would bring you up to full NSP.

jamesd

AliceBanned wrote: »

BTW JamesD looking at my latest LGPS pension statement it does state 'benefits can be drawn voluntarily at any time between 55 and 75'. Then there are a few statements that are confusing.

You can. But there is an "actuarial reduction" in how much you get that increases the earlier you take it, though that table doesn't go beyond a 46.3% reduction for 13 years early.

If you pay into the LGPS AVCs to get the tax free lump sum it's a good deal but wanting that constrains you to taking it with the main pension. So this doesn't make sense if you'll need to draw the money earlier to live on.

S&S ISA is useful if you want access before you're 55 or want to take out more than a pension's 25% tax free lump sum, because there's a 4k cap on future pension contributions f you take more out of a pension. For actual retirement it's better to take the pension tax relief to increase the amount of money. But you can start in an ISA and move to pension later.

AliceBanned wrote: »

I have looked at pension pot from previous employers (started age 38) and it has £76k and is invested in Standard Life 30:60:10 Glb Emg Mrkt Trk Vanguard Pension Fund. It is not at highest risk level but is fairly high and I'm ok with that at this point.

That's a decent choice. You should expect a drop of about 50% in bad times but greater overall growth.

You might also consider 10% or less in the Standard Life global smaller companies fund, though in exchange for likely greater growth, it could drop by 70-80% in a dip producing a 50% drop in the other one.

AliceBanned wrote: »

But as I can take some cash out from 55 I think it might make best sense to save any extra in here (after having an emergency fund and paid off debt).?

There are at least two good choices:

1. this one for retiring early without taking LGPS early and suffering an actuarial reduction.
2. LGPS AVC up to the point where this funds the tax free lump sum from defined benefit and AVC combined. This lets you get 100% of the AVC out tax free, not 25%, only up to the 25% of them both level. But with the catch that to get this nice tax benefit you have to take the income at the same time.

Part of the choice difficulty is that both are good, for different circumstances.

AliceBanned wrote: »

My current pot (previous employers) has charge of 0.349% per annum which I don't think is too bad?

It's excellent, close to the bottom. You'll find that it changes based on the funds you pick and how much money is in each.

AliceBanned wrote: »

It seems to be performing well with growth of £30k over ten years, or is that not great?

No way for us to know because the answer depends on when the money was put in. But given the fund choice and stock market performance from 2009 good or great is expected and you probably got it. Much of the world has been in a bull market since April 2009 and that makes equity investors look great when there's also been lucky timing.

Your choice of fund is good for a 5-10+ year plan but if it goes below 5 years some changes to reduce risk could be useful.

AliceBanned wrote: »

Doing some reading up I think I would prefer a SIPP due to the wider choice of investments. I'm not averse to some risk at this stage for a few years.

I have both SL and HL, the bigger chunk in the cheaper SL, HL for things I want that SL doesn't offer.

Decide which investments you want then pick the best place for each.

atush

AliceBanned wrote: »

Thanks atush. Would a SIPP be any better than a stocks and shares Isa?

TBH, both would be better. Isas can be used at any time (and you are in debt now w/o savings) and Sipps can be used at 55.

Both are good if you want to retire early, before your scheme age. if you retire before scheme age, your pension is reduced by around 5% per year early.

AliceBanned

Thanks Atush, Xylophone and Jamesd this has been so helpful and given me lots to think about.


I am veering towards SIPP/ISA to start with but also will speak to SL about options with that pension pot, perhaps paying in more at some stage and shifting some of the funds once I have looked into it in more detail. I also await info from Capita on their fund for AVC with Prudential and discussion with PensionWise before making major decisions.


Actually feels quite exciting that I can possibly increase my pension and have some investments and I just need to weigh this against property but it doesn't look like mortgage overpayments would be all that beneficial compared to investments in pension, for now anyway.

AliceBanned

Quote:
Originally Posted by AliceBanned
I have looked at pension pot from previous employers (started age 38) and it has £76k and is invested in Standard Life 30:60:10 Glb Emg Mrkt Trk Vanguard Pension Fund. It is not at highest risk level but is fairly high and I'm ok with that at this point.
That's a decent choice. You should expect a drop of about 50% in bad times but greater overall growth.

You might also consider 10% or less in the Standard Life global smaller companies fund, though in exchange for likely greater growth, it could drop by 70-80% in a dip producing a 50% drop in the other one.


Thanks Jamesd. I've now spoken to Standard Life. I am a 'paid up' member of that scheme since I left the employer, so cannot pay more into it, which is fine, means I need a separate one with current employer or SIPP etc.


They said I may be able to change investments but options may be limited to ones agreed by that employer, fair enough. Also I am in a 'lifestyle option' so I would have to come out of that and make my own investments. As they have been sensible but with some risk I'm nervous of doing this though not averse to it, just not used to the idea yet. . They seem to have switched me out of the SL Global smaller companies fund at age 50, probably part of the lifestyle option but for me this is too ahead of retirement to start reducing risk.


SL also said I keep the discount on fees (0.68% discount) for the life of the fund even though I have left the employer but this may change with changed investments. I am doing nothing for now but interesting to look into it and I will await info from current employer and leave this pot as it is for the time being.

AliceBanned

Sorry jamesd the comments you made are not highlighted in my response so it may be a bit unclear, not sure how to do this!

FatherAbraham

AliceBanned wrote: »

Something confused me because it says I have paid in 30 years, and 6 years are not full. I did make some extra payments several years ago to make up for this so I thought I had made enough payments. Surely if forecast is £168.60 it is ok? I was a full time student for 6 years (FE and HE) so surely nothing is needed for this period?

In general, students get no National-Insurance credits. Thus, nothing was paid in for this period.

jamesd

AliceBanned wrote: »

I was a full time student for 6 years (FE and HE)

Those are called juvenile credits and they were provided for the three years aged 16 to 18 if in full time education - school, university or some training courses. If that fits you and the years aren't showing you can get them added. Be sure to use the magic phrase "juvenile credits" to set them on the right track.

Only for those three years, not education after them.

AliceBanned

Ah yes I've just checked and I have credits for those years. Just the higher education years aren't and I had four years in University. Thanks.