Private Pension - do you lose it?

Tindella_2

Have just read a letter on TV about a lady who had paid into a private scheme for 40 years. She only got a miserable £42 per week but when she qualified for State Pension the £42 was deducted from it, leaving her with only the equivalent of s State Pension. Can this be right?

I have a small teacher's pension (I took early retirement for my sanity!) and was hoping when I reach 60 to have the full State Pension (as I have paid all my contributions!) AS WELL AS my teacher's pension, to which I also contributed. Two sets of contributions - two pensions??

Anyone out there know?? Many thanks!

Milarky

I think you may be describing a type of arrangement whereby the the private [or employer's] pension is made up by the amount of state pension expected just for the period of time between 'normal' retirement age and the 'state' retirement age. When the state pension is due this 'extra' amount is intended to stop. [I can't think of the term for this type of pension, although there is a name for it.]

This 'enhancement' is in reality just an 'add on' which, because it is only paid for five or so years up to 'retirement', allows the level of pension which is intended to be paid indefinitely to be that much more than it would otherwise.

Although I detest the expression in another context, this is a form of income 'smoothing' as it ensures total pension remains payments constant - as pensions are designed to achieve a general objective of income certainty

In your case it could be so - but you just need to ask the pension trustees. If you were banking on receiving the full basic state pension as added income at age 60, and there is a chance this may not transpire, it is all the more important that you conform the true picture ASAP, of course.

dunstonh

There isnt enough info to suggest why it happened and there are some inconsistancies.

Personal pensions have only been round since July 1988. So 40 years into one of those cannot be right. Prior to that you had retirement annuity contracts but they were not as widespread as personal pensions.

You say she got a "miserable" £42 per week but chances are she only paid a "miserable" amount into it.

My initial thought was the same as Milarky as there are some schemes (although usually occupations schemes) that take part or all of the state pension into account when paying their pension and will reduce theirs once the state pension comes available.

It could also be that this lady was being paid under the pension credit system which is there for people with low income in retirement. Last year it was known as the minimum income guarantee which made small pensions next to worthless as the amount paid by the state would be reduced by the amount of the private pension. When it was changed to the pension credit, this £1 for £1 reductio stopped and people are no longer penalised for have a small pension.

deemy2004

Are you sure of the facts, that they deducted the £42 from the state pension ?

As what normally happens is that the state pension is fixed and paid as is. Then the TOP UP, means tested pension allowance is reduced which would roughly be equal to the £42 loss. on what she would have got anyway if she had no private pension.

Until they do somethign about this means testing business, private pensions for most people are a con. Best to fill up your ISA allowances etc.

dunstonh

private pensions for most people are a con. Best to fill up your ISA allowances etc.

Making statements like that is dangerous as some people reading this may actually think you know something. Please provide evidence that those under the age of 50 would be better off with an ISA when looking at providing an income in retirement. I would be very interested in seeing your figures.

Robert_Sterling_3

If you get your pension from the Teacher's Pensions Agency as most teachers do you are laughing.

Sarahsaver

teachers earn every penny of their pensions.
if teaching were as cushy as some people think there would not be a shortage.
i get a teachers pension
it is NOT enough to live on, as i had to retire a couple of years ago at the ripe 'old' age of 32 for health reasons.
I thought you kept your teachers pension and had the state pension as well when you reach retirement age.

Ted_Hutchinson

I have a small teacher's pension (I took early retirement for my sanity!) and was hoping when I reach 60 to have the full State Pension (as I have paid all my contributions!) AS WELL AS my teacher's pension, to which I also contributed.  Two sets of contributions - two pensions??

Depending on your age when you retire from teaching, you will receive:
your occupational pension from the teachers’ scheme; and
the basic state pension if you are eligible and have reached the state retirement age.

From
A GUIDE TO THE TEACHERS' PENSION SCHEME

Pal

teachers earn every penny of their pensions.
if teaching were as cushy as some people think there would not be a shortage.
i get a teachers pension
it is NOT enough to live on, as i had to retire a couple of years ago at the ripe 'old' age of 32 for health reasons.
I thought you kept your teachers pension and had the state pension as well when you reach retirement age.

The teacher's pension scheme, like many others, is not that much if you are not a member of it for long, as you were not given that you retired at 32. For those working to retirement age it is a very good scheme.

This entire thread appears to relate to a contracted out personal pension benefit being deducted from means tested income top ups, a problem that the Government created and is regularly critisised for. Hopefully it will be corrected within the next few years.

Robert_Sterling_3

teachers earn every penny of their pensions.

I could not agree more after several decades at the chalk face in a tough London Borough.
I retired a bit early " in the interest of the efficient discharge of the Local Authorities educational duties."
I.e. They could pay two young teachers who might otherwise be unemployed if I would kindly offer to go quitely and a lot sooner than I had expected in exchange for a suitable inducement.

deemy2004

Making statements like that is dangerous as some people reading this may actually think you know something.   Please provide evidence that those under the age of 50 would be better off with an ISA when looking at providing an income in retirement.    I would be very interested in seeing your figures.

Learn from the mistakes of others.
Look at those retiring now and those likely to retire in the coming years. What do you think they are demonstarting about outside Parliament ?

Loss of pensions completely ?
Pensions much, much less than they though they would be ?
Promises broken ?
Pension fund shortfalls of x billions per year, Who do you think is going to fund these shortfalls in the pension funds ? Thats right those paying in pension funds now.

Look, ask the people retiring whether they feel they have been conned or not.

If you put the money in a cash isa, say £3k per year, which is probably more than the amount your likely to commit to a pension fund anyway. Then you know eactly your return and where you stand EVERY year. Plus at the end, at retirement age, you don't have to buy an annuity at say 4% or LESS per year.

The % of final salary schemes are the only ones worth putting money in, (if the company does not do a maxwell).