Average pension pot on retirement and whats your aim ?

Lifematters

Marmot said:

Lifematters said:

hugheskevi said:

Lifematters said:

I am taking a large cut in my headline pay to join the CS entirely so that I can transfer some of my DC into the CS DB scheme.

I am seriously considering this option. Have you had a quote as to the amount of DB you could get for x amount of DC at x age?  Wondering just how generous the transfer in is. I know it gets more expensive with age.

The actuarial factors are at this link - https://www.civilservicepensionscheme.org.uk/media/yxhmcyya/cetv-factors-and-guidance-alpha.pdf

Thank you @hugheskevi, this is perfect! 

Hi, just jumping on this thread a bit.  I'm in the process of doing the same, so I've been offered a CS role which is quite a cut to my current salary but I'm going to do it so I can transfer my DC into the Alpha scheme.  I'm a bit confused by the Factors for CETV guidance document... so I'm currently 50 (51 in May) so I'll have a pension age of 67.  The document says I should use the values in table 4.  So for a Female of 51 it says pension factor of 8.40.  But I'm not sure what I need to do with that pension factor.  I can see the formula/calculation that's on page 6 but I don't understand how to work out if I don't actually have any pension yet (due to start with CS next month) and I'd like to transfer in 100k once I've started with the CS how much would that actually buy me...?  I'm probably being a bit dim but any help anyone can give would be great!  

For simplicity, if your salary was £30k pa (ignoring increases) and you worked another 16 years, pension entitlement would be 2.32% of £30k x16 = £11,136 pa. You then multiply the £11,136 by pension factor 8.40 (and any survivor pension factor / revaluation factor) for rough idea of CETV value. 

Marmot

hugheskevi said:

Marmot said:

Lifematters said:

hugheskevi said:

Lifematters said:

I am taking a large cut in my headline pay to join the CS entirely so that I can transfer some of my DC into the CS DB scheme.

I am seriously considering this option. Have you had a quote as to the amount of DB you could get for x amount of DC at x age?  Wondering just how generous the transfer in is. I know it gets more expensive with age.

The actuarial factors are at this link - https://www.civilservicepensionscheme.org.uk/media/yxhmcyya/cetv-factors-and-guidance-alpha.pdf

Thank you @hugheskevi, this is perfect! 

Hi, just jumping on this thread a bit.  I'm in the process of doing the same, so I've been offered a CS role which is quite a cut to my current salary but I'm going to do it so I can transfer my DC into the Alpha scheme.  I'm a bit confused by the Factors for CETV guidance document... so I'm currently 50 (51 in May) so I'll have a pension age of 67.  The document says I should use the values in table 4.  So for a Female of 51 it says pension factor of 8.40.  But I'm not sure what I need to do with that pension factor.  I can see the formula/calculation that's on page 6 but I don't understand how to work out if I don't actually have any pension yet (due to start with CS next month) and I'd like to transfer in 100k once I've started with the CS how much would that actually buy me...?  I'm probably being a bit dim but any help anyone can give would be great!  

So working on age 51, the member factor is 8.4 and the partner factor 1.39. Assume a pension of £1,000 which has a survivor pension of 37.5%, or £375 (this is just to plug in numbers to produce a multiplier rather than use algebra, for simplicity). Note there are 16 1 Aprils between May 2022 and NPA in May 2038, and this gives a factor of 1.37 from Table 6.

So the CETV is:

[ (£1,000 x 8.4) + (£375 x 1.39) ] x 1.37 = £12,222.11

So the multiplier is £12,222.11 / 1,000 = 12.22. Divide whatever the DC pot is by 12.22 and the result should be the transfer-in value.

This is assuming that transfer-in quotes are calculated on the same basis as CETV transfer-out quotes. Without speaking to the administrator, this is probably as close as you can get to an estimate.

That's great, thanks so much :-) 

Thrugelmir

Workerdrone said:

Albermarle said:

Workerdrone said:

anonmoose said:

Reading flipper-72 s post it could be me!  I earn same salary as you and yes it is also half what it was 16 ish yrs ago when I gave up my career to bring up our kids. I worked part time and flexi since having children but in a lower paid job that fitted around our kids.  I went back to full time when they started school but in the same flexible lower paid job.  So I do all the sick days, orthodontic appts, hospital appointments, afterschool pickups (you get the drift).  It works well as a family set up and my husband is free to pursue his career but is fully aware it wouldn't be possible without my support.

We see our pension pots as joint and my other half has a reasonable salary but below higher tax bracket.  So between us we have done ok, brought up our kids, have a wonderful house but have modest pension pots which we are just starting to ramp up in our mid 40s.  

I personally don't get intimidated by posts from people in the top 1% of earnings.  I think this forum and the savings forum has taught me so much and by the nature of these forums it does attract very savvy savers in very well paid jobs so the results of any questions about pot size will be skewed.  You just have to search online to see what national averages are to get a more realistic picture. 

When I read posts about the LTA I chuckle and think what a nice problem to have!

But there is room for all of us and the fact is my retirement will be more comfortable because of the great advice on this forum and that is the key thing.  It's all relative from where you personally start your journey.

I find it quite inspiring and something to aim for. Theres a lot of good advice on here about how to handle your pot and general investing regardless of how big it is. I for one am simply grateful people take the time to share experience.

Also probably would not be a good sign if those sharing their knowledge about investing were skint   

Indeed, Thankfully Neil Woodford and Nick Leeson haven't graced us with their presence.

Baillie Gifford have lost their crown rather rapidly though. 

michaels

hugheskevi said:

Marmot said:

Lifematters said:

hugheskevi said:

Lifematters said:

I am taking a large cut in my headline pay to join the CS entirely so that I can transfer some of my DC into the CS DB scheme.

I am seriously considering this option. Have you had a quote as to the amount of DB you could get for x amount of DC at x age?  Wondering just how generous the transfer in is. I know it gets more expensive with age.

The actuarial factors are at this link - https://www.civilservicepensionscheme.org.uk/media/yxhmcyya/cetv-factors-and-guidance-alpha.pdf

Thank you @hugheskevi, this is perfect! 

Hi, just jumping on this thread a bit.  I'm in the process of doing the same, so I've been offered a CS role which is quite a cut to my current salary but I'm going to do it so I can transfer my DC into the Alpha scheme.  I'm a bit confused by the Factors for CETV guidance document... so I'm currently 50 (51 in May) so I'll have a pension age of 67.  The document says I should use the values in table 4.  So for a Female of 51 it says pension factor of 8.40.  But I'm not sure what I need to do with that pension factor.  I can see the formula/calculation that's on page 6 but I don't understand how to work out if I don't actually have any pension yet (due to start with CS next month) and I'd like to transfer in 100k once I've started with the CS how much would that actually buy me...?  I'm probably being a bit dim but any help anyone can give would be great!  

So working on age 51, the member factor is 8.4 and the partner factor 1.39. Assume a pension of £1,000 which has a survivor pension of 37.5%, or £375 (this is just to plug in numbers to produce a multiplier rather than use algebra, for simplicity). Note there are 16 1 Aprils between May 2022 and NPA in May 2038, and this gives a factor of 1.37 from Table 6.

So the CETV is:

[ (£1,000 x 8.4) + (£375 x 1.39) ] x 1.37 = £12,222.11

So the multiplier is £12,222.11 / 1,000 = 12.22. Divide whatever the DC pot is by 12.22 and the result should be the transfer-in value.

This is assuming that transfer-in quotes are calculated on the same basis as CETV transfer-out quotes. Without speaking to the administrator, this is probably as close as you can get to an estimate.

Don't forget max buy in is 50% of pensionable income - in this example 8k ish is presumably not a problem.

Nebulous2

Albermarle said:

Also I think it is misleading for many people to assume you need 70% of your working income as a minimum.

Clearly this 70% figure is a huge generalisation and is probably based on a typical middle earner, middle class family .

Someone on a low income probably needs 100% as they are struggling even when working . Likewise a high flyer could manage on a lot less than 70%.

On the positive side you do not need 70% gross income to get 70% net income , as probably you will be paying proportionately less tax , no NI and no pension contributions .

Indeed. My gross pension is about 51% of what my final salary was, before I stopped last year. My take home from the pension is just under 71% of previous take home.  

Kim1965

50 % of my take home pay goes towards paying into a pension, supporting a child at uni plus wirk related expenses. This would suggest that for me i do not need 2/3 of my pre retirement pay. 

Ibrahim5

I spent a lot of time working out how much I needed in retirement. I earned £100K so 2/3 was £66K, 1/2 was £50K. Which magazine seemed more sensible at £26 to £41K. Even though I earned £100K I only spent more than average on property and holidays. In the highest council tax band and with a big gas bill I can't get by on the least without downsizing. House maintenance also but not as bad as some people seem to suggest. Holidays can be very cheap if you can go at anytime. I am always checking out Tuesday flights. You have to work out your own figures. It's interesting reading these fora but there is no substitute for doing your own. I think the percentage of previous pay is particularly useless.

Steven_Lopez

It all depends on what kind of retirement you intend to have

Nebulous2

Kim1965 said:

50 % of my take home pay goes towards paying into a pension, supporting a child at uni plus wirk related expenses. This would suggest that for me i do not need 2/3 of my pre retirement pay. 

Have you calculated what you will need in retirement, or your 'number?' 

The recently revived number thread is lengthy, but is well worth a read, even if you just dip into it and read a few pages here and there. 

Workerdrone

Thrugelmir said:

Workerdrone said:

Albermarle said:

Workerdrone said:

anonmoose said:

Reading flipper-72 s post it could be me!  I earn same salary as you and yes it is also half what it was 16 ish yrs ago when I gave up my career to bring up our kids. I worked part time and flexi since having children but in a lower paid job that fitted around our kids.  I went back to full time when they started school but in the same flexible lower paid job.  So I do all the sick days, orthodontic appts, hospital appointments, afterschool pickups (you get the drift).  It works well as a family set up and my husband is free to pursue his career but is fully aware it wouldn't be possible without my support.

We see our pension pots as joint and my other half has a reasonable salary but below higher tax bracket.  So between us we have done ok, brought up our kids, have a wonderful house but have modest pension pots which we are just starting to ramp up in our mid 40s.  

I personally don't get intimidated by posts from people in the top 1% of earnings.  I think this forum and the savings forum has taught me so much and by the nature of these forums it does attract very savvy savers in very well paid jobs so the results of any questions about pot size will be skewed.  You just have to search online to see what national averages are to get a more realistic picture. 

When I read posts about the LTA I chuckle and think what a nice problem to have!

But there is room for all of us and the fact is my retirement will be more comfortable because of the great advice on this forum and that is the key thing.  It's all relative from where you personally start your journey.

I find it quite inspiring and something to aim for. Theres a lot of good advice on here about how to handle your pot and general investing regardless of how big it is. I for one am simply grateful people take the time to share experience.

Also probably would not be a good sign if those sharing their knowledge about investing were skint   

Indeed, Thankfully Neil Woodford and Nick Leeson haven't graced us with their presence.

Baillie Gifford have lost their crown rather rapidly though. 

Tell me about it. a bit like ARK invest. I have some BG American in funds for my wife and my kids. They've got about 15 and 50 years respectively to recover. Come back a bit this week. Thing is I don't see anything fundamentally wrong with the underlying holdings. Just seems like a flight to value of late has knocked them