What number are you aiming for - solely DC pot

Spreadsheetman

michaels said:

Mistermeaner said:

I'm still surprised how little pensions are discussed PROPERLY in the media - particularly when a fuss is made about e.g. nurses pay etc. - a factual presentation of the real terms value of NHS pensions (and other public sector pensions) compared to what huge numbers of people in the private sector get might shape peoples thinking somewhat.
This isn't begrudging anyone anything - we all make our choices; but feel alot of folk live in ignorance of either the great benefits that they get or indeed to major issues the may face.

I started a thread on this suggesting that it amounted to an extra 60% (ish, can't quite remember) on the average public sector salary, some with DBs didn't like to hear but that was the consensus number.

Yes. The theoretical £30k pa DB pension is probably £1.5M DC equivalent when the risk level is adjusted to be "comparable".

[Deleted User]

Spreadsheetman said:

michaels said:

Mistermeaner said:

I'm still surprised how little pensions are discussed PROPERLY in the media - particularly when a fuss is made about e.g. nurses pay etc. - a factual presentation of the real terms value of NHS pensions (and other public sector pensions) compared to what huge numbers of people in the private sector get might shape peoples thinking somewhat.
This isn't begrudging anyone anything - we all make our choices; but feel alot of folk live in ignorance of either the great benefits that they get or indeed to major issues the may face.

I started a thread on this suggesting that it amounted to an extra 60% (ish, can't quite remember) on the average public sector salary, some with DBs didn't like to hear but that was the consensus number.

Yes. The theoretical £30k pa DB pension is probably £1.5M DC equivalent when the risk level is adjusted to be "comparable".

Based on? That’s not what the actuaries are telling us when they estimate commuted value. 

hugheskevi

Mistermeaner said:

I'm still surprised how little pensions are discussed PROPERLY in the media - particularly when a fuss is made about e.g. nurses pay etc. - a factual presentation of the real terms value of NHS pensions (and other public sector pensions) compared to what huge numbers of people in the private sector get might shape peoples thinking somewhat.
This isn't begrudging anyone anything - we all make our choices; but feel alot of folk live in ignorance of either the great benefits that they get or indeed to major issues the may face.

I think it goes far wider than just the media. Trades Unions will be up in arms arguing over a few percentage point crumbs in an annual pay award, but pension changes can easily be many multiples of what might be picked up in an annual pay round and get far less attention.

I was astonished how little most people were bothered by the RPI/CPI change back in 2011. Many didn't even know, yet it dramatically reduced the value of pension for many members (maybe in the order of 20%, depending on age). Yet most were far more concerned with a pay freeze costing them in many cases several hundred pounds, whilst overlooking the change that cost them tens of thousands.

Still, if people properly understood pensions and their power to be tax effiicient, they would take advantage and rules would change, so from a personal perspective I'm quite pleased most just view pensions as something very complex and not to be involved with beyond whatever their employer does as standard

MEM62

This is a debate that I always find interesting. 
Those on better incomes with the money to do so will often have a target and a well devised plan to reach their goal.  Pensions in this instance are well planned.  Then you will have those with less income that still want to plan but are restricted in what they can afford to save.  Then there are those on a limited income for whom making provision for retirement is difficult.  
In my case I was not an early starter in terms of pensions as my generation were not well educated in finance when we were younger.  I am 58.  However, I don't leave it too late either.  We are probably somewhere in the middle group and when I am looking at our retirement plan I do so on the basis of "where can we get to?" with our pension pots.  I currently pay 32% of my earnings into my pension by salary sacrifice.  This figure was arrived at because it puts me just below the 40% tax bracket.  That should give me a pension pot of around £350 by the time I am 62-63.  At that point, if I feel the way I do now, I will work part time to pay the bills and holidays and just leave the pension where it is.  I don't think that I will be ready to stop working in my early 60's but I want less pressure & responsibility than I have now.  (I also have an income from my flat, which I kept when my OH and I bought this house 4 years ago)  My OH currently has around £100k in a DC pot and has a FS pension from an earlier employment pension that will pay out around £5k per year when she reaches 60. 
Based on what we want from retirement, I think we will be OK.           

michaels

What would the 5k at 60 cost as an annuity compared to how much she has paid in to get the dc 100k pot?!

jimi_man

Deleted_User said:

Spreadsheetman said:

michaels said:

Mistermeaner said:

I'm still surprised how little pensions are discussed PROPERLY in the media - particularly when a fuss is made about e.g. nurses pay etc. - a factual presentation of the real terms value of NHS pensions (and other public sector pensions) compared to what huge numbers of people in the private sector get might shape peoples thinking somewhat.
This isn't begrudging anyone anything - we all make our choices; but feel alot of folk live in ignorance of either the great benefits that they get or indeed to major issues the may face.

I started a thread on this suggesting that it amounted to an extra 60% (ish, can't quite remember) on the average public sector salary, some with DBs didn't like to hear but that was the consensus number.

Yes. The theoretical £30k pa DB pension is probably £1.5M DC equivalent when the risk level is adjusted to be "comparable".

Based on? That’s not what the actuaries are telling us when they estimate commuted value. 

But how do they work this out? My pension for example, is a DB one and I've been getting it for just over 3 years (I'm mid 50's) and it's a little over £30k. Yet I get a slip every year that tells me it's worth about 68% of the LTA or something like that. They multiply it by 20 or so to get the figure possibly, which seems somewhat low to provide those level of benefits?
Yet £1.5 million seems rather high. Maybe it's one of those unquantifiable sums. 

michaels

jimi_man said:

Deleted_User said:

Spreadsheetman said:

michaels said:

Mistermeaner said:

I'm still surprised how little pensions are discussed PROPERLY in the media - particularly when a fuss is made about e.g. nurses pay etc. - a factual presentation of the real terms value of NHS pensions (and other public sector pensions) compared to what huge numbers of people in the private sector get might shape peoples thinking somewhat.
This isn't begrudging anyone anything - we all make our choices; but feel alot of folk live in ignorance of either the great benefits that they get or indeed to major issues the may face.

I started a thread on this suggesting that it amounted to an extra 60% (ish, can't quite remember) on the average public sector salary, some with DBs didn't like to hear but that was the consensus number.

Yes. The theoretical £30k pa DB pension is probably £1.5M DC equivalent when the risk level is adjusted to be "comparable".

Based on? That’s not what the actuaries are telling us when they estimate commuted value. 

But how do they work this out? My pension for example, is a DB one and I've been getting it for just over 3 years (I'm mid 50's) and it's a little over £30k. Yet I get a slip every year that tells me it's worth about 68% of the LTA or something like that. They multiply it by 20 or so to get the figure possibly, which seems somewhat low to provide those level of benefits?
Yet £1.5 million seems rather high. Maybe it's one of those unquantifiable sums. 

100% simple to quantify, get the best annuity quote for the same benefit and that is the value of your DB pension. 

jimi_man

michaels said:

jimi_man said:

Deleted_User said:

Spreadsheetman said:

michaels said:

Mistermeaner said:

I'm still surprised how little pensions are discussed PROPERLY in the media - particularly when a fuss is made about e.g. nurses pay etc. - a factual presentation of the real terms value of NHS pensions (and other public sector pensions) compared to what huge numbers of people in the private sector get might shape peoples thinking somewhat.
This isn't begrudging anyone anything - we all make our choices; but feel alot of folk live in ignorance of either the great benefits that they get or indeed to major issues the may face.

I started a thread on this suggesting that it amounted to an extra 60% (ish, can't quite remember) on the average public sector salary, some with DBs didn't like to hear but that was the consensus number.

Yes. The theoretical £30k pa DB pension is probably £1.5M DC equivalent when the risk level is adjusted to be "comparable".

Based on? That’s not what the actuaries are telling us when they estimate commuted value. 

But how do they work this out? My pension for example, is a DB one and I've been getting it for just over 3 years (I'm mid 50's) and it's a little over £30k. Yet I get a slip every year that tells me it's worth about 68% of the LTA or something like that. They multiply it by 20 or so to get the figure possibly, which seems somewhat low to provide those level of benefits?
Yet £1.5 million seems rather high. Maybe it's one of those unquantifiable sums. 

100% simple to quantify, get the best annuity quote for the same benefit and that is the value of your DB pension. 

Right, but it doesn't seem to be possible to obtain such a quote for someone aged 51. 

Spreadsheetman

michaels said:

jimi_man said:

Deleted_User said:

Spreadsheetman said:

michaels said:

Mistermeaner said:

I'm still surprised how little pensions are discussed PROPERLY in the media - particularly when a fuss is made about e.g. nurses pay etc. - a factual presentation of the real terms value of NHS pensions (and other public sector pensions) compared to what huge numbers of people in the private sector get might shape peoples thinking somewhat.
This isn't begrudging anyone anything - we all make our choices; but feel alot of folk live in ignorance of either the great benefits that they get or indeed to major issues the may face.

I started a thread on this suggesting that it amounted to an extra 60% (ish, can't quite remember) on the average public sector salary, some with DBs didn't like to hear but that was the consensus number.

Yes. The theoretical £30k pa DB pension is probably £1.5M DC equivalent when the risk level is adjusted to be "comparable".

Based on? That’s not what the actuaries are telling us when they estimate commuted value. 

But how do they work this out? My pension for example, is a DB one and I've been getting it for just over 3 years (I'm mid 50's) and it's a little over £30k. Yet I get a slip every year that tells me it's worth about 68% of the LTA or something like that. They multiply it by 20 or so to get the figure possibly, which seems somewhat low to provide those level of benefits?
Yet £1.5 million seems rather high. Maybe it's one of those unquantifiable sums. 

100% simple to quantify, get the best annuity quote for the same benefit and that is the value of your DB pension. 

Exactly. I quickly ran through Aviva's on-line annuity calculator based on someone aged 60 and I came up with £28k pa for £1M pot (max on-line) which was before index-linking and dependent benefits were added. (it crashed when I tried to add dependents)

[Deleted User]

michaels said:

jimi_man said:

Deleted_User said:

Spreadsheetman said:

michaels said:

Mistermeaner said:

I'm still surprised how little pensions are discussed PROPERLY in the media - particularly when a fuss is made about e.g. nurses pay etc. - a factual presentation of the real terms value of NHS pensions (and other public sector pensions) compared to what huge numbers of people in the private sector get might shape peoples thinking somewhat.
This isn't begrudging anyone anything - we all make our choices; but feel alot of folk live in ignorance of either the great benefits that they get or indeed to major issues the may face.

I started a thread on this suggesting that it amounted to an extra 60% (ish, can't quite remember) on the average public sector salary, some with DBs didn't like to hear but that was the consensus number.

Yes. The theoretical £30k pa DB pension is probably £1.5M DC equivalent when the risk level is adjusted to be "comparable".

Based on? That’s not what the actuaries are telling us when they estimate commuted value. 

But how do they work this out? My pension for example, is a DB one and I've been getting it for just over 3 years (I'm mid 50's) and it's a little over £30k. Yet I get a slip every year that tells me it's worth about 68% of the LTA or something like that. They multiply it by 20 or so to get the figure possibly, which seems somewhat low to provide those level of benefits?
Yet £1.5 million seems rather high. Maybe it's one of those unquantifiable sums. 

100% simple to quantify, get the best annuity quote for the same benefit and that is the value of your DB pension. 

Worth noting that the value to you might be different. You could have lots of fixed income from other sources. You could know more about your life expectancy than a lifeco. You might have a lot of experience of managing your own assets. You might be going senile.  Those kinds of things change the equation.