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    • RyanIre
    • By RyanIre 16th Apr 19, 12:51 PM
    • 13Posts
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    RyanIre
    Career average Pension
    • #1
    • 16th Apr 19, 12:51 PM
    Career average Pension 16th Apr 19 at 12:51 PM
    Hello just wanting some advice

    I'm about to take up a public sector role and the pension provider is Nilgosc whose is scheme 1/49th of my pensionable pay. I believe it's a career average pension as final salary no longer exists.

    New to this all but I assume this is better than the defined contribution of 8% I make and my current employer makes? Also should I transfer my current smallish pot of pension across to my new employer pension if this is possible?

    Thanks in advance!
Page 1
    • JoeCrystal
    • By JoeCrystal 16th Apr 19, 1:09 PM
    • 1,619 Posts
    • 1,083 Thanks
    JoeCrystal
    • #2
    • 16th Apr 19, 1:09 PM
    • #2
    • 16th Apr 19, 1:09 PM
    It is a lot better. It is generally worth between a quarter to a third of your salary. It is certainly worth asking them to see how much it will get if you transfer your pension pot in, It also comes with ill-health retirement, a lump sum if you die and so on. Worth reading this site An iron-clad index-linked pension is very valuable.

    If you tell us how old you are and on what salary, I could probably work out how much it would cost in term of DC pension, but it is a lot higher than 8%.
    • tacpot12
    • By tacpot12 16th Apr 19, 1:09 PM
    • 2,296 Posts
    • 2,002 Thanks
    tacpot12
    • #3
    • 16th Apr 19, 1:09 PM
    • #3
    • 16th Apr 19, 1:09 PM
    A career-average pension will be better than a defined contribution scheme because the employer is taking the investment risk, and other risks such as longevity.

    If you are allowed to transfer your existing pension pot, then doing so would probably be a good idea, but just make sure you are clear what benefits your pot is buying you. You could post the details back here to see if it is good value.
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always check official information sources before relying on my posts.
    • RyanIre
    • By RyanIre 16th Apr 19, 1:21 PM
    • 13 Posts
    • 2 Thanks
    RyanIre
    • #4
    • 16th Apr 19, 1:21 PM
    • #4
    • 16th Apr 19, 1:21 PM
    It is a lot better. It is generally worth between a quarter to a third of your salary. It is certainly worth asking them to see how much it will get if you transfer your pension pot in, It also comes with ill-health retirement, a lump sum if you die and so on. Worth reading this site An iron-clad index-linked pension is very valuable.

    If you tell us how old you are and on what salary, I could probably work out how much it would cost in term of DC pension, but it is a lot higher than 8%.
    Originally posted by JoeCrystal
    Super thanks, I'm 35 and on 45k in the new role.
    That's good news, shall check the contribution rates also
    • JoeCrystal
    • By JoeCrystal 16th Apr 19, 1:50 PM
    • 1,619 Posts
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    JoeCrystal
    • #5
    • 16th Apr 19, 1:50 PM
    • #5
    • 16th Apr 19, 1:50 PM
    Super thanks, I'm 35 and on 45k in the new role.
    That's good news, shall check the contribution rates also
    Originally posted by RyanIre
    As you are on a high salary already, it is even more valuable. Let say you spend 33 years working for LGPS on 45k salary and assuming that CPI matched the pay rise for simplicity's sake. You can expect a pension of 30,300 by 68. To get that from scratch and getting an index-linked annuity, you would need to contribute 1,860 per month for the next thirty-three years and increase your contribution by inflation every year. For something that cost 255 per month, that is a pretty good deal. You can also transfer in your DC pension pot as well opt for up to added pension of up to 6,843 with an extra monthly contribution or a lump sum if you want to.
    Last edited by JoeCrystal; 16-04-2019 at 1:53 PM.
    • crv1963
    • By crv1963 16th Apr 19, 1:58 PM
    • 787 Posts
    • 1,810 Thanks
    crv1963
    • #6
    • 16th Apr 19, 1:58 PM
    • #6
    • 16th Apr 19, 1:58 PM
    Super thanks, I'm 35 and on 45k in the new role.
    That's good news, shall check the contribution rates also
    Originally posted by RyanIre
    Congratulations on your new job- and pension scheme. No one in the public sector earns 45k without a level of stress at some point. I'd suggest that with a bit of planning you could start now reading around and aim to retire before 68.

    A bit put away elsewhere for this will be welcome to your future self- take it from someone who didn't pay much attention until much older than you are now.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • edrushuk
    • By edrushuk 16th Apr 19, 2:00 PM
    • 269 Posts
    • 67 Thanks
    edrushuk
    • #7
    • 16th Apr 19, 2:00 PM
    • #7
    • 16th Apr 19, 2:00 PM
    JoeCrystal how did you calculate that I am trying to figure out what I would get with my NHS pension. I am 52 on 28K ( started about 3 years ago on 21K). If I carried on working full time until 67 I had guessed ( a very loose guess) a pension of about 14k. I assume it would make a difference if I wanted to reduce my hours.


    Apologies Ryanire, for jumping onto your post, it is difficult to get a straight answer and I need to ensure I know where I stand


    Thank you
    Susanna
    • JoeCrystal
    • By JoeCrystal 16th Apr 19, 2:21 PM
    • 1,619 Posts
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    JoeCrystal
    • #8
    • 16th Apr 19, 2:21 PM
    • #8
    • 16th Apr 19, 2:21 PM
    JoeCrystal how did you calculate that I am trying to figure out what I would get with my NHS pension. I am 52 on 28K ( started about three years ago on 21K). If I carried on working full time until 67 I had guessed ( a very loose guess) a pension of about 14k. I assume it would make a difference if I wanted to reduce my hours
    Originally posted by edrushuk
    Hi Susanna,

    Well, the beauty of CARE is that each part of the pension is based on your salary yearly. It would make a difference if you reduce the hours but only for that year. So you earn a pension each year of 1/54 of your pensionable pay. Which get increased by CPI+1.5%. So assuming you get a pay rise that matched CPI+1.5% every year, you can expect a pension of 8,950 in today's term by 67. It is difficult as we have no idea what your salary is going to be for the next 15 years and CPI. I hope that makes sense.
    • RyanIre
    • By RyanIre 17th Apr 19, 9:23 AM
    • 13 Posts
    • 2 Thanks
    RyanIre
    • #9
    • 17th Apr 19, 9:23 AM
    • #9
    • 17th Apr 19, 9:23 AM
    As you are on a high salary already, it is even more valuable. Let say you spend 33 years working for LGPS on 45k salary and assuming that CPI matched the pay rise for simplicity's sake. You can expect a pension of 30,300 by 68. To get that from scratch and getting an index-linked annuity, you would need to contribute 1,860 per month for the next thirty-three years and increase your contribution by inflation every year. For something that cost 255 per month, that is a pretty good deal. You can also transfer in your DC pension pot as well opt for up to added pension of up to 6,843 with an extra monthly contribution or a lump sum if you want to.
    Originally posted by JoeCrystal
    Joe much appreciated

    That appears much better than my current 8% contribution
    I suppose the only negative appears to be the 68 pension age, if I didn't transfer in my DC pension pot could I retire at say 65 and still be eligible for the LGPS pension?

    Also the 255 per month contribution is only 6.8%, that seems quite low conpare dot any private sector firm I've worked for!
    • Pension Geek
    • By Pension Geek 17th Apr 19, 9:30 AM
    • 174 Posts
    • 133 Thanks
    Pension Geek
    Joe much appreciated

    That appears much better than my current 8% contribution
    I suppose the only negative appears to be the 68 pension age, if I didn't transfer in my DC pension pot could I retire at say 65 and still be eligible for the LGPS pension?

    Also the 255 per month contribution is only 6.8%, that seems quite low conpare dot any private sector firm I've worked for!
    Originally posted by RyanIre
    You can retire early, but it will be reduced;

    https://www.nilgosc.org.uk/early-retirement-in-the-2015-scheme

    Of course, you could make other provisions and wait for the pension.
    Not an expert, but like pensions, tax questions and giving guidance. There is no substitute for tailored financial advice.
    • JoeCrystal
    • By JoeCrystal 17th Apr 19, 9:39 AM
    • 1,619 Posts
    • 1,083 Thanks
    JoeCrystal
    Joe much appreciated

    That appears much better than my current 8% contribution
    I suppose the only negative appears to be the 68 pension age, if I didn't transfer in my DC pension pot could I retire at say 65 and still be eligible for the LGPS pension?

    Also the 255 per month contribution is only 6.8%, that seems quite low conpare dot any private sector firm I've worked for!
    Originally posted by RyanIre
    Not necessary. You can access it from age 55 although the pension will be reduced due to early payment. Let say you work until 55 and accrued the pension of 18,400 in today's term based on twenty years service. iPension will be reduced by 47% for early payment so you can get 9,700 from the age of 55.

    You are right. 6.8% is very low for what you can get out of the pension scheme. If you stay on until 68 and on 45k salary, as it stands, you would pay 100,980 in pension contribution, but your pension at 30,300 from 68 will pay back all the pension contributions you made in a few years.

    The fact is that such schemes will be unaffordable in the long term and the pension schemes will inevitably increase the employee contributions and reduce the generosity. The beautiful thing about NILGOSC is that it got an actual fund backing the payment unlike the NHS for example whose the combined number of deferred members and pensioners in payment will outnumber the active members eventually.
    Last edited by JoeCrystal; 17-04-2019 at 9:47 AM.
    • crv1963
    • By crv1963 17th Apr 19, 11:13 AM
    • 787 Posts
    • 1,810 Thanks
    crv1963
    Joe much appreciated

    That appears much better than my current 8% contribution
    I suppose the only negative appears to be the 68 pension age, if I didn't transfer in my DC pension pot could I retire at say 65 and still be eligible for the LGPS pension?

    Also the 255 per month contribution is only 6.8%, that seems quite low conpare dot any private sector firm I've worked for!
    Originally posted by RyanIre
    Hence my suggestion about further reading and then planning an earlier retirement date.

    We started much later in life than you in planning but we looked at -

    1) What retirement income do we need (basically covers the outgoings an EU holiday pa)/ would like ( take up new interests, annual long haul holiday, an EU holiday, run two cars)/ wish for (two or more long haul holidays plus possible holiday cottage).

    We decided to try for the would like version.

    2) What starts when- DB, DC and ISA savings pots-

    DB - 58 to get the maximum pension in my scheme
    DC- anytime after age 55
    ISA- whenever we want.

    3) How will we pay mortgage off? TFLS to finish it after a few years of overpayments(not vast sums).

    4) Where is the best place to put savings? For us SIPP but you may find a combination of SIPP, PP or LISA or ISA?

    Play around with your figures- pick a target age to go and how to fund it, allowing at 35 the target may change, the rules certainly will but you can only plan within the rules as they are currently.

    Good luck.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
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