Maximising for later years

moneyworrier2021

Thanks for your help and guides. I can't make any sense of it but found details for my husband to call so hopefully they can give an idea on how much he would be entitled to at retirement.  He pays in £363 a month from his payslip so would be good to get an idea of where he could end up.

moneyworrier2021

Dazed_and_C0nfused said:

The contributions rates are more than some schemes but the accrual rate (1/55.3) is better than some similar schemes.

Someone earning £45,000 will pay £6,048 (which is likely to be a real cost of £4,838 once the tax saving is factored in).

In return you will get a pension of £813 🤩

£813 a month? That made up of what he puts in of £363 a month and then the rest is the polices % so to speak? 

So just under £10K a year going into a pension? 

Kernowshep

Dazed_and_C0nfused said:

The contributions rates are more than some schemes but the accrual rate (1/55.3) is better than some similar schemes.

Someone earning £45,000 will pay £6,048 (which is likely to be a real cost of £4,838 once the tax saving is factored in).

In return you will get a pension of £813 🤩

£813 a month? That made up of what he puts in of £363 a month and then the rest is the polices % so to speak? 

So just under £10K a year going into a pension? 

No.

In the example above the £813.74 comes from £45,000/55.3. That's the amount (plus inflation) that would be received p.a. at retirement for each contribution year.

I expect he's paying in 13.44% of his salary to get 1/55.3 of it (per year of contributions) at retirement (saving some tax plus having other benefits in the meantime, it's a very good deal, and "the police" pay in what's required to make that happen, currently about double the member contribution). 

See if this link helps.
https://www.gov.uk/government/publications/benefits-of-the-police-pension-scheme-2015/the-benefits-of-your-police-pension-scheme-accessible-version

moneyworrier2021

yeah I am completely lost and will probably leave it up to him to call the police pension office to find out how much to expect at the current pay in. 

for how much they are taking out each month for pension in his payslip. That's £4,356 a year alone 

JoeCrystal

moneyworrier2021 said:

yeah I am completely lost and will probably leave it up to him to call the police pension office to find out how much to expect at the current pay in. 

for how much they are taking out each month for pension in his payslip. That's £4,356 a year alone 

Really? Other posts made what he could expect clearly. It is 1/55.3th of his annual pensionable earnings or approximately 1.81%. It will then get index-linked to maintain its value. He will get that index-linked pension for life once he draws upon it. He is paying peanuts for such a generous pension.

You must understand that it is a public sector-defined benefit pension scheme with no money in the pots. Instead, it is a promise to pay him a pension when he reaches such an age that he can access it. Don't forget all the bells and whistles accompanying it, such as retirement from ill health.

Dazed_and_C0nfused

moneyworrier2021 said:

Dazed_and_C0nfused said:

The contributions rates are more than some schemes but the accrual rate (1/55.3) is better than some similar schemes.

Someone earning £45,000 will pay £6,048 (which is likely to be a real cost of £4,838 once the tax saving is factored in).

In return you will get a pension of £813 🤩

£813 a month? That made up of what he puts in of £363 a month and then the rest is the polices % so to speak? 

So just under £10K a year going into a pension? 

No, £813 per year.  Which will to some degree or other keep pace with inflation.

Remember to earn that pension he has paid (in real money) £4,838.  That's it.  £4,838 spread across a single tax year.

He will then get £813 for the first (full) year from the schemes normal pension age.

Then in year two he will get £813 plus a little extra to allow for inflation, say the £813 becomes £830/year in year 2.

Then in year he will get £830 plus a little extra to allow for inflation, say £845/year in year 3.

And so until he dies.  That could be 40 years years after normal pension age.  And if he predeceases you you might inherit a proportion of that pension.

All for the princely sum of £4,838.  Amazing value for money really 🙃

happymum37

I'm in the police pension scheme.  Most of my service in the 2015 scheme. 
I over pay by lump sum every month which isn't matched by the force .
As far as I'm aware you can only over I pay by £6500 per year. 
You can retire at 55 but it's accurially reduced if that's the correct word by 25% ..every year you work up to 60 you get a further 5%.
I'm not the best but can help with any questions 

happymum37

Ask your husband to look on his force federation website  they have loads of info.  Most forces allow you to over pay per month starting every April or pay in as a lump sum once a year but that has tax implications.  If your hubby only has 2 years in is he still a probationer? His age will increase significantly once out of probation.  If I were him I would over pay per month by a certain percentage then as his wage increases so does his additional payments. 

moneyworrier2021

He's been able to gain access to the online portal which holds his pension. its still quite vague but it looks like if he continued to pay in at his current rate, he would be entitled to about £27K a year pension. When you break it down as paying £4,800 a year for 25 years, that's a good retirement fund. 

Still need to find out about the lump sums as all the officers he works with that are retiring say to take it. Wonder if that's to do with the £12 for £1 bonus? 

Dazed_and_C0nfused

moneyworrier2021 said:

He's been able to gain access to the online portal which holds his pension. its still quite vague but it looks like if he continued to pay in at his current rate, he would be entitled to about £27K a year pension. When you break it down as paying £4,800 a year for 25 years, that's a good retirement fund. 

Still need to find out about the lump sums as all the officers he works with that are retiring say to take it. Wonder if that's to do with the £12 for £1 bonus? 

Many would say that's the opposite of a bonus!

Using your figures let's says he gave up £4,000 of his pension to get a (tax free) lump sum of £48,000.

He gets the £48,000 once and it's tax free.

But he loses £4,000 of his pension in year one of his retirement.

And in year two he loses say £4,100 (because the pension would have an element of inflation protection).

And in year three it would have been say £4,205 and so on each year.

So if he is happily retired for say 30 years that £48,000 has cost him a fortune in lost pension.

And he doesn't have a "fund".  Think of it as deferred salary.