Police pension / future planning

happymum37

Hello 👋 

I will retire at 60 from the police.i will have 30 years part time (50%)  pension in a CARE pension. .. this is in 20 years time

My lumper is currently projected at 50k if I take a £1100 per month. 

I over pay into my pension by 125 per as I had a 5 year non payment period when I stupidly opted out. 

The projected pension doesn't take into account the 125 as I only started that in April.

My questions are 
1. I have 5 years left of the mortgage. So will be significantly better off in 5 years. We have no plans to down size when older as its not big.    I currently have about  another100 per month spare to either put into my pension or invest? 

Thank you.  We don't have any isas and have about 30k in savings

happymum37

Anyone?  X

El_Torro

If you’re happy to retire at 60 (not sooner) then the best thing might be to pay as much as you can into your police pension. I don’t know enough about the police pension to say whether this is the best thing to do though.

One thing to consider is having investments outside of a pension to access sooner. Best place for this is probably a S&S ISA. Not as tax efficient as a pension but you can access the money whenever you want. 

Do you need £30k in cash? Normally 3-6 months worth of spending is enough for most people. It might be the right figure for you, just noting that investing some of it should make you better off in the long term. 

Once you’ve paid off your mortgage this should give you a big boost in what you can put into your pensions or ISAs, depending on which way you want to go. 

Albermarle

Without knowing much about the police pension, it is difficult to comment.
Every DB scheme has different rules, and this also applies to how much extra pension, extra contributions will buy. Including whether additional contributions are allowed at all.

happymum37

El_Torro said:

If you’re happy to retire at 60 (not sooner) then the best thing might be to pay as much as you can into your police pension. I don’t know enough about the police pension to say whether this is the best thing to do though.

One thing to consider is having investments outside of a pension to access sooner. Best place for this is probably a S&S ISA. Not as tax efficient as a pension but you can access the money whenever you want. 

Do you need £30k in cash? Normally 3-6 months worth of spending is enough for most people. It might be the right figure for you, just noting that investing some of it should make you better off in the long term. 

Once you’ve paid off your mortgage this should give you a big boost in what you can put into your pensions or ISAs, depending on which way you want to go. 

I HAVE too retire at 60 from the police but could work after elsewhere I suppose.

We need a new car so our savings will half I suspect.

Thank you I will dig out some facts about the police pension
X

jimi_man

happymum37 said:

El_Torro said:

If you’re happy to retire at 60 (not sooner) then the best thing might be to pay as much as you can into your police pension. I don’t know enough about the police pension to say whether this is the best thing to do though.

One thing to consider is having investments outside of a pension to access sooner. Best place for this is probably a S&S ISA. Not as tax efficient as a pension but you can access the money whenever you want. 

Do you need £30k in cash? Normally 3-6 months worth of spending is enough for most people. It might be the right figure for you, just noting that investing some of it should make you better off in the long term. 

Once you’ve paid off your mortgage this should give you a big boost in what you can put into your pensions or ISAs, depending on which way you want to go. 

I HAVE too retire at 60 from the police but could work after elsewhere I suppose.

We need a new car so our savings will half I suspect.

Thank you I will dig out some facts about the police pension
X

Hi

Firstly, you don’t have to retire from the police at 60, you can carry on if you want, though of course whether you’d want to is another matter entirely. One of the benefits of the latest Care pension is that there is no maximum pension you can accrue unlike with the previous 88 and 2006 pensions. 

Also you mentioned a lump sum in your initial post. The 2015 care scheme doesn’t come with a lump sum and in general, opting to take it is very poor value with only a 12:1 conversion rate. If you need a lump sum then consider investing into a private pension and use that as a savings plan. 

In general with a police pension you’re pretty well set up so once you make sure that your state pension is taken care of then you can invest some savings elsewhere - Private pension as mentioned or ISAs etc. 

happymum37

jimi_man said:

happymum37 said:

El_Torro said:

If you’re happy to retire at 60 (not sooner) then the best thing might be to pay as much as you can into your police pension. I don’t know enough about the police pension to say whether this is the best thing to do though.

One thing to consider is having investments outside of a pension to access sooner. Best place for this is probably a S&S ISA. Not as tax efficient as a pension but you can access the money whenever you want. 

Do you need £30k in cash? Normally 3-6 months worth of spending is enough for most people. It might be the right figure for you, just noting that investing some of it should make you better off in the long term. 

Once you’ve paid off your mortgage this should give you a big boost in what you can put into your pensions or ISAs, depending on which way you want to go. 

I HAVE too retire at 60 from the police but could work after elsewhere I suppose.

We need a new car so our savings will half I suspect.

Thank you I will dig out some facts about the police pension
X

Hi

Firstly, you don’t have to retire from the police at 60, you can carry on if you want, though of course whether you’d want to is another matter entirely. One of the benefits of the latest Care pension is that there is no maximum pension you can accrue unlike with the previous 88 and 2006 pensions. 

Also you mentioned a lump sum in your initial post. The 2015 care scheme doesn’t come with a lump sum and in general, opting to take it is very poor value with only a 12:1 conversion rate. If you need a lump sum then consider investing into a private pension and use that as a savings plan. 

In general with a police pension you’re pretty well set up so once you make sure that your state pension is taken care of then you can invest some savings elsewhere - Private pension as mentioned or ISAs etc. 

Thanks for your reply 

If I stay a PC I have to retire at 60. I have no choice - I was in a briefing about this only last week. 

My pension benefit protector shouted a 50k lump with a 1100 monthly pension. 

I'm really clueless on what to do next.  My husbands pension is terrible so we always thought to over pay more into mine. My state pension is covered 

Thank you

jimi_man

happymum37 said:

jimi_man said:

happymum37 said:

El_Torro said:

If you’re happy to retire at 60 (not sooner) then the best thing might be to pay as much as you can into your police pension. I don’t know enough about the police pension to say whether this is the best thing to do though.

One thing to consider is having investments outside of a pension to access sooner. Best place for this is probably a S&S ISA. Not as tax efficient as a pension but you can access the money whenever you want. 

Do you need £30k in cash? Normally 3-6 months worth of spending is enough for most people. It might be the right figure for you, just noting that investing some of it should make you better off in the long term. 

Once you’ve paid off your mortgage this should give you a big boost in what you can put into your pensions or ISAs, depending on which way you want to go. 

I HAVE too retire at 60 from the police but could work after elsewhere I suppose.

We need a new car so our savings will half I suspect.

Thank you I will dig out some facts about the police pension
X

Hi

Firstly, you don’t have to retire from the police at 60, you can carry on if you want, though of course whether you’d want to is another matter entirely. One of the benefits of the latest Care pension is that there is no maximum pension you can accrue unlike with the previous 88 and 2006 pensions. 

Also you mentioned a lump sum in your initial post. The 2015 care scheme doesn’t come with a lump sum and in general, opting to take it is very poor value with only a 12:1 conversion rate. If you need a lump sum then consider investing into a private pension and use that as a savings plan. 

In general with a police pension you’re pretty well set up so once you make sure that your state pension is taken care of then you can invest some savings elsewhere - Private pension as mentioned or ISAs etc. 

Thanks for your reply 

If I stay a PC I have to retire at 60. I have no choice - I was in a briefing about this only last week. 

My pension benefit protector shouted a 50k lump with a 1100 monthly pension. 

I'm really clueless on what to do next.  My husbands pension is terrible so we always thought to over pay more into mine. My state pension is covered 

Thank you

Hi

I really hate to get into a tit for tat argument about this, but either the briefing was wrong, or more likely it was misinterpreted or they aren't fully up to date with the latest legislation. Previously you had to request to stay on past Compulsory Retirement Age (CRA) which was 60 for Chief Inspector and under. However since the 1st April 2022 it has changed, when everyone went onto the 2015 pension scheme and now CRAs have been abolished entirely. Here is a Police Federation memo about it. 

bb-circular-007-2022-compulsory-retirement-age.pdf (polfed.org)

Personally I imagine that individual forces are a little slow in getting to grips with the new rules but it will happen in time. The benefit of staying on as I've mentioned, is that you can continue to accrue pension as there is no upper limit and it's also enhanced as your taking it later than normal (actuarial enhancement). Of course you might not want to - I did 30 years and that was plenty and getting a job post police is very easy - for various reasons police officers are highly valued in the workforce.

I notice from your other posts that your husband's pension is a DC pension (an invested pot) and he pays 7% and the employer pays 5%, which on his salary is around £5000 a year. You don't say how much he has in it, but in the next 20 years he'll add around another £100k and 20 years is a reasonable time to ride the highs and lows so even at 2% above inflation let's say £120k

Once your mortgage has finished in five years (again you don't say how much you pay but I'm guessing £500 a month?) then you could invest that £500 for the next 15 years which would give you another £100k. Plus your £30k savings, so you'll have a pot of £250k (plus whatever your husband has in his pension already). 

The lump sum in your police pension is optional and reduces your monthly amount. They often put it on projections as most police officers seem to want a lump sum, but at the age of 60 with all other things being equal, 12 to 1 conversion rate is poor. £50k not converted adds another £400 to your pension per month, so around £1500 a month. State pensions add another £800 per month each, so £3100 in total (gross) and you have to assess whether this is enough for your needs i.e. is it your 'number'?

If it is then assuming you both get your State pension at 68, you have 8 years to fund before you get yours and 3 years before he gets his (I think he's 5 years older than you) - so 11 years of £9600 to fund = £106k which is easily covered by the £250k above.

These are ballpark conservative figures, so don't take them as gospel, but should give you an idea. It's worth finding out what he's got in his pension, since the more information you give on here then the more people can assist.

Albermarle

My husbands pension is terrible 

You need to expand on this comment, especially as the poster above has pointed out that with 12% of his salary going into it, then a reasonable pot should be the end result.