Pensions help?!?!


#1

Hello all!

I’ve just spent the day sorting out my finances and taking saving a little more seriously and fell down the pension rabbit hole.

I’m so confused about the whole thing, I need it to be explained to me like i’m a three year old!

I work for a university and currently contribute 6.5% to LGPS. My employer contributes 18%. Now, I believe the LGPS is a final salary pension scheme, but what exactly does this mean? If I increase/lower my contributions will I get more/less money when I retire??

I’m currently 23. How do I know that what I’m paying in will be there for me when I’m 60+?

Your help would be much appreciated!!


(Kevyn) #2

I’m not great with pension knowledge but one thing I know is that I wouldn’t lower your contributions to a LGPS. They are generally a better pension when compared to private schemes. I would instead maximise your contributions into it. I was thinking of setting up a second pension with Pension Bee but I wouldn’t want it to touch my TPS so couldn’t sign up.


#3

This might help explain:


(Splodf) #4

Your pension is already amazing, it will be better then 99.9% of people on here. So firstly, you have nothing to worry about.

FS pensions are explained here: https://www.pensionsauthority.ie/en/LifeCycle/Private_pensions/Final_salary_defined_benefit_schemes/


#5

And this:

https://www.lgpsmember.org/


(Splodf) #6

You can set up a SIPP without transferring your TPS. I personally wouldn’t bother though and would just increase contributions to your TPS, unless you fancy something really risky to try and boost your pension?

If you do go down the Pension Bee route pick up a referral link for some free money.


(Kevyn) #7

I wasn’t very knowledgeable when the scheme changed in 2015 (didn’t really care about pensions then) and my pensionable date changed from 65 to my state retirement age (which is now 68). I could have bought those 3 years back within 6 months of the scheme changing but I never read the literature at the time. I can’t see myself being a teacher anywhere near the age of 68 (or higher if a future government raises the state retirement age again) so I was thinking of setting one up to supplement a lower paid job from 55/60.


#8

I never thought I would be a disciple of the State, but I ended up doing almost 30 years, and yes, my final salary pension is very nice thank you! :sunglasses:


(Splodf) #9

Fair enough.

There’s plenty of options available.

S&S ISA going really long term.
LISA
Vanguard even releasing SIPPs soon.

I’d personally wait it out for the Vanguard SIPP. Pick an a nice all cap, or target retirement fund.

https://www.vanguardinvestor.co.uk/need-help/answer/do-you-offer-a-pension-or-a-sipp

https://www.vanguardinvestor.co.uk/investing-explained/what-are-target-retirement-funds

Monevator has a good series running on a nice diverse slow and steady fund that could be replicated to suit your needs.

https://monevator.com/the-slow-and-steady-passive-portfolio-update-q4-2018/


(Ollie Forsyth - The Makers Podcast) #10

Hey All

We are actually hosting an event on Pensions all around this on July 10th, you can register your interest below:

https://www.facebook.com/events/2250633228566853/

We’ll make it super easy for you to understand the pension jargon!


#11

The LGPS is, these days, one of the main reasons that working for local government is a good idea. It’s incredibly generous compared to most private sector pensions.

Basically it’s a defined benefit scheme. This means that for every year you put money in, you are guaranteed a certain amount of income in retirement. It’s not a final salary scheme, but it’s still a very good pension.

This page shows the calculation https://www.lgpsmember.org/arm/already-member-how.php .

You should keep contributing at your current rate, there’s no need to increase anything. If you work under this scheme for the next 30 years you’ll have a very decent pension.

Probably the biggest thing to consider for you to consider is that if you are ever moving jobs to the private sector, you will need to look at their pension scheme quite carefully. A lot of employers offer only 3% pension contributions, so to keep up your current contribution levels you’d need contribute 19% of any salary offered.


#12

For those in a workplace pension whose employer hasn’t yet had a chat and if you’re not aware, then this is worth a read: