Pension pot tiny at 52

QrizB

Pocketmoths said:

It’s a local council one. It sounds like contributing to that might be better.

It's likely to be the Local Government Pension Scheme, LGPS.

If it is LGPS (and please do check this) the accrual rate is 1/49th. If you're on £29k a year, each year of service you'll earn a pension worth 29k/49 which is £590 per year, once you get to 67.

If you started with the council at 50 and stay with them until you're 67, you'll have 17 years of service. That would be a pension of about £10k per year.

See here:

https://www.lgpsmember.org/your-pension/paying-in/how-your-pension-is-worked-out/

Together with your state pension, you'd have £22k per year.

wolvoman

If it’s a council pension then it’s highly likely to be final salary.

You’re 52 now, if you work to 67 then you’ll accrue 17 years of that pension. Based on your current salary of £29k, that would give you a pension of approx £8,000 a year (in today’s money).
Add £12k from state pension and £2k from your private pension and it totals to about £22k a year at age 67.

Given your salary and debt/mortgage situation, I’d say you should use any spare cash on paying off debt and the mortgage. And sounds like control of husband’s spending too.

All the above based on assumption that you have a final salary pension scheme from your current employer.

Dazed_and_C0nfused

wolvoman said:

If it’s a council pension then it’s highly likely to be final salary.

You’re 52 now, if you work to 67 then you’ll accrue 17 years of that pension. Based on your current salary of £29k, that would give you a pension of approx £8,000 a year (in today’s money).
Add £12k from state pension and £2k from your private pension and it totals to about £22k a year at age 67.

Given your salary and debt/mortgage situation, I’d say you should use any spare cash on paying off debt and the mortgage. And sounds like control of husband’s spending too.

All the above based on assumption that you have a final salary pension scheme from your current employer.

It's highly unlikely to be final salary.

@QrizB is almost certainly correct.

Pocketmoths

I really want to thank you all for some clarity. I think I’m going to focus on clearing debt, which is manageable, and then maybe topping up the local government salary. (But I will look at it first). 

SarahB16

Pocketmoths said:

I really want to thank you all for some clarity. I think I’m going to focus on clearing debt, which is manageable, and then maybe topping up the local government salary. (But I will look at it first). 

If you are in the Local Government Pension Scheme then making AVC contributions will most likely be your best option after clearing your debt. If you have any further questions just start a new thread, e.g. AVC query with LGPS pension and others and myself included will be able to provide our opinions to guide you further. 

Pocketmoths

Thank you so much this is such a helpful steer , I feel less like I’m going to be chucking what limited spare money I have at something without a plan. 

barnstar2077

Pocketmoths said:

Thank you so much this is such a helpful steer , I feel less like I’m going to be chucking what limited spare money I have at something without a plan. 

You are already one up on most people, just by looking into things.

In general, having a plan, even if it isn't perfect, is still better than no plan at all (by a long, long way!)

Kernowshep

Based on the info you've given I'd agree with others, clear the debt (unless the interest rate is low), get a saving buffer (of 3-6 months spend), don't overpay the mortgage, then assuming it's LGPS add to the AVC (which you'll be able to take tax free up to limits and use this to clear/help clear the mortgage at that time if it's still going). 

It's also worth finding out if the AVC's can be done via salary sacrifice (often via my money matters) - that gives an extra boost especially if the employer adds their NI savings.

wolvoman

Dazed_and_C0nfused said:

wolvoman said:

If it’s a council pension then it’s highly likely to be final salary.

You’re 52 now, if you work to 67 then you’ll accrue 17 years of that pension. Based on your current salary of £29k, that would give you a pension of approx £8,000 a year (in today’s money).
Add £12k from state pension and £2k from your private pension and it totals to about £22k a year at age 67.

Given your salary and debt/mortgage situation, I’d say you should use any spare cash on paying off debt and the mortgage. And sounds like control of husband’s spending too.

All the above based on assumption that you have a final salary pension scheme from your current employer.

It's highly unlikely to be final salary.

@QrizB is almost certainly correct.

QrizB is describing a classic DB scheme.

I used the phrase final salary as that’s what DB schemes are classically known as.

indeed the financial difference between final salary and any other form of DB pension is a very small percentage.

itsthelittlethings

wolvoman said:

Dazed_and_C0nfused said:

wolvoman said:

If it’s a council pension then it’s highly likely to be final salary.

You’re 52 now, if you work to 67 then you’ll accrue 17 years of that pension. Based on your current salary of £29k, that would give you a pension of approx £8,000 a year (in today’s money).
Add £12k from state pension and £2k from your private pension and it totals to about £22k a year at age 67.

Given your salary and debt/mortgage situation, I’d say you should use any spare cash on paying off debt and the mortgage. And sounds like control of husband’s spending too.

All the above based on assumption that you have a final salary pension scheme from your current employer.

It's highly unlikely to be final salary.

@QrizB is almost certainly correct.

QrizB is describing a classic DB scheme.

I used the phrase final salary as that’s what DB schemes are classically known as.

indeed the financial difference between final salary and any other form of DB pension is a very small percentage.

I think the difference can be quite significant.