How can I work out my income in retirement?
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Prudent
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I am very confused by pension issues - maths is not my strong point 
I was wondering how to work out what I will have in retirement?
I have a work pension in a final salary scheme. I am 40. When I received my last statement from the pensions services it said I would be entitled to a lump sum of £33,000 plus £10,500 per annum assuming I continued on my present salary until 60. I am just starting to apply for promotion so hope this will go up, but would like a figure based on this amount. The right to retire at 60 still stands for my work pension. I could choose to work beyond then, but may not want too as my job is stressful.
How much state pension would I get? I have worked full time for about 10 of the years since leaving uni at 24, 3 not all (young child) and rest part tme.
I was wondering how to work out what I will have in retirement?
I have a work pension in a final salary scheme. I am 40. When I received my last statement from the pensions services it said I would be entitled to a lump sum of £33,000 plus £10,500 per annum assuming I continued on my present salary until 60. I am just starting to apply for promotion so hope this will go up, but would like a figure based on this amount. The right to retire at 60 still stands for my work pension. I could choose to work beyond then, but may not want too as my job is stressful.
How much state pension would I get? I have worked full time for about 10 of the years since leaving uni at 24, 3 not all (young child) and rest part tme.
Frugal Living Challenge 2024 CROFT Crafting: £84/300, R (visiting daughter): £145/£500 Outside activities: £114/244 (Allotment), Outside 2 (Mud monsters et al) £127 F(Family visits): £50/500 Tummy (food budget): Aiming to use full budget monthly of £200
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To find out about your state pension, you need a pension forecast , either ring 0845 3000 168 or apply on line at http://www.thepensionservice.gov.uk/resourcecentre/e-services/home.asp
You working part -time necessarilly affect whether you were accruing qualifying years or not towards your state pension, what matters is how much you where earning.I no longer work in Council Tax Recovery but instead work as a specialist Council Tax paralegal assisting landlords and Council Tax payers with council tax disputes and valuation tribunals. My views are my own reading of the law and you should always check with the local authority in question.0 -
For the works pension, if its based on years of service you will need the accrual rate. This may be 60ths or 80ths for example. If you will have a pensionable working life with them of 25 years, you will then have 25/80ths of your final pensionable salary. That pensionable salary may not be your leaving salary. It could be the average of the best 3 years in the previous 10 years, it could be the average of the last 3 years or it could be an average of your working life with that company.
Lets say your income is £18,000 but your pensionable salary is £16,000 and you have done 25 years and the scheme is 80ths. That would mean you would have 25/80ths of £16,000 which makes a pension income of £5,000 a year before tax.
What you need to find out what the accrual rate is, if there are penalties on early retirement and how the final pensionable salary is calculated.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
I understand how my monthly pension is calculated including the calculation of the lump sum. But, if I decide to get the maximum amount in a lump sum with a reduced gross monthly pension, how is this calculated. Any advice would be gratefully received!!
Thanks0 -
rachel12 wrote:I understand how my monthly pension is calculated including the calculation of the lump sum. But, if I decide to get the maximum amount in a lump sum with a reduced gross monthly pension, how is this calculated. Any advice would be gratefully received!!
Thanks
What type of pension is it? If final salary occupational pension, how it is done and what rates are shown in the pension booklet. If personal pensions, it is 25% unless you have applied for protection under the pre A day rules.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
That was quick! Its a final salary pension, based on 80ths, 3 times the final salary. I can retire at 60, but due to redundancy in 3 years, I plan on leaving then, taking redundancy and early retirement at age 54, when I will have 31 years and 193 days service. I have been advised that there will be no abatement. They also quote a lifetime allowance percentage of 20.74% - and a lifetime allowance value - haven't got a clue what that is.
Thanks - this is appreciated0 -
rachel12 wrote:They also quote a lifetime allowance percentage of 20.74% - and a lifetime allowance value - haven't got a clue what that is.
Thanks - this is appreciated
Don't worry about this. Under the new tax rules, you can receive a pension (including any lump sum) up to the Lifetime Allowance, without paying any extra tax*. Anything you receive over the Lifetime Allowance has extra tax to pay. Your pension from this scheme is estimated to be only 20.74% of the Lifetime Allowance so you are not affected by the extra tax.
* Ignoring the "extra" tax (payable on anything you receive over the Lifetime Allowance), your pension is, of course, taxed in the same way as your salary i.e. Income Tax is deducted under the PAYE system.Warning ..... I'm a peri-menopausal axe-wielding maniac
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Thanks for the clarification on the lifetime value bit, as a complete novice, it is all slowly becoming clearer! Does anyone else know how the lump sum (if I take the maximum allowance with a reduced monthly pension) is calculated. I understand how the calculations are worked out if I want to take the bog standard monthly pension and lump sum.
Thanks again0
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