Local Government Pension - do i join?

dundeegarry

Hi, Excuse my ignorance on pensions. I have been told in the past that as a teacher I should join the local government pension scheme here in Dundee (you pay 6% of your salary a month). Due to various factors, mainly paying off large debts I have not been in this scheme or any pension scheme (maybe I have been paying SERPS?). Now I am in the position that I will be able to afford to pay into this scheme. Recently I have heard stories of pension fund deficits and threats that private pensions cannot be paid. I know the unions here have recently stopped controversial changes to the final salary scheme. At present I think I can still be accepted onto the local goverment (teachers) pension scheme. Should I apply to join this before the government make changes or stop allowing people in? I am 34. I also understand that I can make AVCs. Is this a good idea? If I have been paying towards the state pension un-knowingly through NI contributions can these be transferred into this Local Government final salary pension? Any advice appreciated.

dunstonh

Recently I have heard stories of pension fund deficits and threats that private pensions cannot be paid.

I small minority of cases that applies to. Indeed, far too much media time has been made of it and it puts wrong assumptions into peoples minds. Such has been the case with you. There is no deficit with civil service based schemes.

I know the unions here have recently stopped controversial changes to the final salary scheme.

Controversial to whom? Don't answer, that is worth a whole thread of its own

At present I think I can still be accepted onto the local goverment (teachers) pension scheme. Should I apply to join this before the government make changes or stop allowing people in?

Nothing else will come close to it so if you want an income in retirement, then the answer has to be yes.

I am 34. I also understand that I can make AVCs. Is this a good idea?

It can be. It will increase your income in retirement but there are alternative methods which would be potentially better depending on your retirement goals.

If I have been paying towards the state pension un-knowingly through NI contributions can these be transferred into this Local Government final salary pension?

You state pension entitlement cannot be transferred. If you are referring to contracting out of Serps/S2P, then I believe (but it would need verifying) that protected rights (the bit from contracting out) cannot be transferred into the civil service scheme.

dundeegarry

Thanks for all the info. I'll try and sign up for it then! I think one of the changes they're trying to bring in is you need to work until you're 65 instead of 60. Hopefully I'll still be alive by then!

Dr_Tom

I guess you would be joining the Teachers Pension Scheme - this is a very good deal as your employer contributes on top of your salary and as it is a final value scheme you receive a proportion of your final salary. Buying back years is also probably a good idea although you don't benefit from the employer contribution on these. You can also retire and take your pension up to 10 years early, although it is reduced, so pretty much dependent on you having maximum years of service at the point of retirement.

dunstonh

You can also retire and take your pension up to 10 years early, although it is reduced, so pretty much dependent on you having maximum years of service at the point of retirement.

It should be noted that this is subject to trustees approval. Whilst they may have allowed it in the past, there is no guarantee that this would continue in the future. Buying extra years is possibly not the best option where early retirement is required. It could be, but you would have to accept the risk you may not be able to take the pension early.

Debt_Free_Chick

dundeegarry wrote:

Thanks for all the info. I'll try and sign up for it then! I think one of the changes they're trying to bring in is you need to work until you're 65 instead of 60. Hopefully I'll still be alive by then!

Actually, you'll have to work until 65 to get the full pension, but there's nothing to stop you retiring at 60 and taking a reduced pension.

All this talk of increasing the pension age only affects the age at which you get the full pension ... it doesn't mean you actually have to carry on working until that age

DavidLaGuardia

Further to what Debt Free Chick has said, someone can also leave teaching at 60 and still get pension full benefits (for the time they were in the scheme) at age 65. Hence many may leaver early for alternative work until that age, or with sufficient savings travel etc.