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    • pollyneilson
    • By pollyneilson 24th Jul 17, 10:04 AM
    • 1Posts
    • 0Thanks
    Auto-enrolment pension
    • #1
    • 24th Jul 17, 10:04 AM
    Auto-enrolment pension 24th Jul 17 at 10:04 AM
    I am 63 this year and have just been permanently employed at my local council and they have automatically enrolled me for a pension. I realise this is the law, but I am not sure that it is worth me paying into it at my age. I don't have a private pension to add it to, as for over 22 years I was a full time carer for my husband and so have never paid into a pension scheme, but I do have the qualifying years needed for a state pension. Would I be better to save my contributions myself as surely I haven't time to build up any real worthwhile pension? My job is part time and pays about 12000 a year. Can anyone help??
Page 1
    • greenglide
    • By greenglide 24th Jul 17, 10:43 AM
    • 3,096 Posts
    • 2,015 Thanks
    • #2
    • 24th Jul 17, 10:43 AM
    • #2
    • 24th Jul 17, 10:43 AM
    How long do you envisage working there?

    If you dont join you will be throwing away significant sums of money that they will would otherwise pay into the pension scheme for you.

    The fact that you do not have any pensions is not a reason not to join, it makes it all the more important.

    This is a public sector Defined Benefit pension scheme, not a minimum auto-enrolment scheme.
    • Neasy
    • By Neasy 24th Jul 17, 11:02 AM
    • 65 Posts
    • 73 Thanks
    • #3
    • 24th Jul 17, 11:02 AM
    • #3
    • 24th Jul 17, 11:02 AM
    I think it really is worthwhile paying in to the Local Government scheme; apart from anything else (as Greenglide says) you would be throwing away the employer's contribution which is significant.

    I am not an LGPS expert so my calculations may be wrong but I think that in the LGPS you pay in a certain (salary-related) percentage of your pension (on 12000 a year I think you are paying in 5.5% = 660 per year) and each year you accrue 1/49th of your salary as pension to be paid to you from when you take your pension for the rest of your life, which I calculate to be around 250. So for each 660 you get 250 a year for the rest of your life, unless I've worked it out completely wrong. This income is index-linked and guaranteed. There are other benefits of being in the scheme such as ill-health benefits etc., and remember that your contribution gets taken out of your salary pre-tax; I don't know how much tax you would otherwise pay but I really can't see a downside to this.
    • Silvertabby
    • By Silvertabby 25th Jul 17, 1:35 PM
    • 2,724 Posts
    • 3,894 Thanks
    • #4
    • 25th Jul 17, 1:35 PM
    • #4
    • 25th Jul 17, 1:35 PM
    If you opt out, not only will you be giving up your employer's 'free money' (probably about 18% of your salary) but also death in service (poo happens) and ill health benefits.

    Neasy is right about the 250 per year, for every year of LGPS service, for the rest of your life - and you'll pay less than 660 per year contributions after tax relief.

    Another option, as, you don't have any other pensions other than the State pension, would be to take your LGPS pension as a one-off lump sum, called trivial commutation. The first 25% would be tax free, with the remainder taxed at your normal rate.

    You will need to stay in your job for at least 2 years, however, as any less than this would only give you the option of a refund of your own contributions (your employer's would be forfeit) less tax. OK, in theory, you would have another option - that of transferring your benefits to a private pension scheme - but that can only be done before you hit 64.
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