Help with Pensions.

Dazed_and_C0nfused

Bluebird09 said:

Sso sorry, it's Admin Officer, so just above admin asst. My salary in 2015 was actually more than it is now as I had to reduce my hours in 2016 due to health problems. 

It's not your actual salary that counts, it what your salary is if you were full time.

Is that more or less that what it would have been in 2015 (the full time salary then as well).

Bluebird09

Oh sorry yes, the full time salary would be a little more than it was in 2015, but not very much at all.
I really am not very good at understanding pensions, I had thought my being part time would reduce my salary as I'm earning less, and contributing less.
Thank you for your patience, it is really very much appreciated. 

xylophone

Yes I think I stand to collect the full state pension if I continue to work to retirement (but I will need to clarify that also)

What exactly does your state pension forecast say?

https://www.gov.uk/check-state-pension

I have approx £100 per month I could add in contributions.

https://www.civilservicepensionscheme.org.uk/members/alpha-scheme-guide/

Your employer takes your contributions from your pay before working out the tax, so you will automatically receive full income tax relief. 

The above is the "net pay" system of tax relief but you appear to be a low earner for whom this not optimal.

https://www.ftadviser.com/pensions/2020/09/08/can-govt-solve-the-net-pay-versus-relief-at-source-dilemma/

However lower earners in net pay pension schemes, who are not paying tax on the element of pay from which their pension contribution is deducted, are worse off than equivalent lower earners in RAS schemes, who receive a basic rate tax top-up on contributions even though they have not paid any or much tax.

The problem is made worse because the individuals affected by it are less likely to engage with the tax system, meaning many will be unaware that they might be better or worse off under one system or the other, and even if aware, are restricted by a choice made by their employer.

Consider opening and contributing to a personal pension  for this  additional pension saving?

https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/personal-pension-account might suit - it will accept £100 a month.

Bluebird09

Hi,
My state pension forecast say I have £147.52 as of the 5th April 2020, and need to contribute another 6 years before 5th April 2035 to achieve a state pension of £175.20.

Dazed_and_C0nfused

Bluebird09 said:

Hi,
My state pension forecast say I have £147.52 as of the 5th April 2020, and need to contribute another 6 years before 5th April 2035 to achieve a state pension of £175.20.

And do you expect to work for another 6 years (including the current tax year)?

If so that is your State Pension sorted.

Bluebird09

Yes I do, and thank you for the link, I'll look through it. It's my occupational pension that seems so small. 

Dazed_and_C0nfused

Bluebird09 said:

Oh sorry yes, the full time salary would be a little more than it was in 2015, but not very much at all.
I really am not very good at understanding pensions, I had thought my being part time would reduce my salary as I'm earning less, and contributing less.
Thank you for your patience, it is really very much appreciated. 

Being part time reduces how much you accrue each year but the salary your pension will be based on is the full time equivalent.

For example if your full time rate is £20,000 and you work 50% of the normal hours you will get 0.5 of a year but that year will be calculated on a salary of £20,000.

Bluebird09

Thank you, that makes sense now. So when I'm looking at my £5k based on my Classic pension, as long as my FT equivelent salary hasn't reduced since 2015, this could be pretty much accurate? 
As a low earner there is no real benefit in me adding to my Civil Service pension as I won't benefit for tax reasons? 

CapricornLass

Have you actually spoken to the Civil Service Pensions dept in Liverpool?  I think you really need to talk directly to them about your Classic Pension

NedS

Reviewing what you have told us so far:

Presumably your state pension age is 67 (as you are aged 52). Lets look at what you'll have if you carry on working in your current job until aged 67. You currently earn £12,000pa and have 15 years to go until state retirement age.

You have a Classic pension of £5,000 payable from aged 60

You currently have £1700 in alpha. Your alpha pension accrues at 2.32% of your salary per year, so £12,000 salary x 2.32% = £278.40 x 15 more years = £4176. This is how much more your alpha pension could increase if you carry on working until 67 with no additional contributions. Total alpha pension would be around £1700 + £4176 = £5876.

As per above, if you work another 6 years, you will have full state pension of £9141

So at State retirement age, you will have an income of around £20,017 (in today's money) which is inflation linked and will rise with inflation each year.

Knowing this, you can now start to make a decision if you are happy with this and think it is enough, or if you want to make additional contributions to try to increase your pension further, or if you think you'll have more than enough to start thinking about retiring early.