Maximising for later years

Silvertabby

In your own case, as a civilian police worker, your pension is likely to be the LGPS.  Very similar to the Police Pension scheme, and just as valuable.  

jimi_man

happymum37 said:

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. 

I don’t think his age will increase faster or slower whether he is in his probation or not though it might seem like it!

jimi_man

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? 

Hi. I retired from the police about eight years ago so have a reasonable knowledge of both schemes. In relation to taking the lump sum, the people that are saying to take it are almost certainly thinking of the old scheme. There the commutation factor was age related - the younger you were , the higher the rate (because you were giving up more years of pension). In my case when I retired I was offered 21:1 which is better than 12:1 (the current offering) but as I was aged 51 it was still pretty woeful so I didn’t take it. The current rate was of 12:1 is dreadful as has been explained above so if you need a lump sum then it’s probably better fund it from elsewhere (ISAs etc). 

In relation to pension projections, unlike the old final salary pension where it was fairly easy to work out what you were going to get, the 2015 scheme is a Career Average pension so the projections are always going to be slightly vague - especially at the level of service your husband is at. (Tbh when I joined in the mid 80s I had no idea about the pension as it was mandatory to join it and we never had any pension statements, so I just moaned about what I thought was a large amount of money disappearing out of my pay every month without my permission!!). 

happymum37

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? 

Just tell him to be careful talking to colleagues.  They all say to take the biggest lump possible as " you don't know when you will die" but as 90% of my career is in the 2015 care scheme the 12 -1 commutation is not a good deal at all.

In my force the pension info is on the federation site not the pension administrators.

If I were you you ask his payroll when he can process the monthly overpayment and start it as soon as possible even if it's only £50 a month.  He will be top level PC in about 7 years so you can just increase as he goes.  

He has a lot of years and hopefully promotions to go.  Plus he will get anti social hours paid .  
Good Luck with your decision 

moneyworrier2021

So where he signed up, would be have been given the option to pay into the 2015 care scheme at a different level of input or does everyone pay the same?

He goes to pay scale 4 in January so a small increase but maybe an extra £50 a month could be a good idea. It's trying to figure out how much of a benefit paying that extra £50 would be. or instead put that £50 into a LISA for the Tax free allowance but I guess he's then paying Tax on the earnings to then get it back through that scheme.

Sorry everyone for this being so long winded. I think where for the first time in over 4 years since adopting, we will both be working full time, debt free (except mortgage) by end of 2025 and now want to subtly ramp up for our pensions at 36 and 35 so that when we get to retirement, we aren't struggling like so many seem to be these days

happymum37

He will automatically have signed up to the 2015 care scheme paying the standard amount. 
Now he's been in 2 years he can over pay. These next few years his wage will really increase so worth doing before you get used to the money x

moneyworrier2021

So we had a chat and the extra £120 a month he will get next year he wants to put in full as extra into his pension. So £1440 a year and over £36K over 25 years. He just can't get an answer as to whether that's all it is, another £36K to wards his pension or whether that's matched. 

Is the only benefit is that it avoids the 20% income tax now?

Sarahspangles

moneyworrier2021 said:

So we had a chat and the extra £120 a month he will get next year he wants to put in full as extra into his pension. So £1440 a year and over £36K over 25 years. He just can't get an answer as to whether that's all it is, another £36K to wards his pension or whether that's matched. 

Is the only benefit is that it avoids the 20% income tax now?

With Defined Benefit (DB) pensions like the Police or LGPS (on the civilian side) the thing to focus on is the amount of guaranteed pension payment that accrues each year. That will be inflation proofed so its spending power will remain the same. The benefit of paying into a pension is that 25% tax relief is added by the taxman - so your £120 becomes £150. DB pensions also pay some benefits if the employee dies before or soon after retirement, plus a spouse’s pension.

You’ll get a better idea of how this works when you start to get Annual Statements. These sometimes give a ‘value’ but you can ignore that - you only need to know if you get divorced! The number to look at is the amount you will get once retired.

moneyworrier2021

Thank you.

He has finally managed to speak to someone in the pensions department and yeah it's fairly straight forward after all. He is going to sacrifice the £120 a month i've mentioned as the 25% bonus from the Government makes it worth while. That in itself gives a healthy sum plus I believe it will also increase with Inflation.

Cobbler_tone

Sarahspangles said:

moneyworrier2021 said:

So we had a chat and the extra £120 a month he will get next year he wants to put in full as extra into his pension. So £1440 a year and over £36K over 25 years. He just can't get an answer as to whether that's all it is, another £36K to wards his pension or whether that's matched. 

Is the only benefit is that it avoids the 20% income tax now?

With Defined Benefit (DB) pensions like the Police or LGPS (on the civilian side) the thing to focus on is the amount of guaranteed pension payment that accrues each year. That will be inflation proofed so its spending power will remain the same. The benefit of paying into a pension is that 25% tax relief is added by the taxman - so your £120 becomes £150. DB pensions also pay some benefits if the employee dies before or soon after retirement, plus a spouse’s pension.

You’ll get a better idea of how this works when you start to get Annual Statements. These sometimes give a ‘value’ but you can ignore that - you only need to know if you get divorced! The number to look at is the amount you will get once retired.

DB's contribution rates are often connected to accrual rates. e.g. 5% contribution may return 1/58th and 6% may return 1/56th (of salary per year) etc 
On mine (now closed) you can request a cash equivalent transfer value once per year free of charge, after that it costs you £300 for the pleasure.