Pension question - cash in or save until retirement?

[hash tag]

Not my money, why would I care. It's all down to the investor at the end of the day.
Incidentally, many people would suggest the closer you get to retirement the less risk you should take.

 

[pseudonarcissus]

Again, how cautious are you, what is your attitude to risk?

what is risk? most of the industry risk questionnaires are not very helpful. Some advisors will run a Montecarlo analysis looking at your asset mix and retirement income requirements to give a probability of you outliving your money. DB pension schemes are great as they massively reduce this risk.

 

[Sue]

Not my money, why would I care. It's all down to the investor at the end of the day.
Incidentally, many people would suggest the closer you get to retirement the less risk you should take.

That depends how you plan on getting the money out. It could be better to leave it as it is.

Anyway, I think Orang Utan might be better focussing on finding out the pension type etc rather than worrying about this stuff right now as it may not even be relevant.

 

[Orang Utan]

15 years maybe 16 to go to normal retirement age. EG, would you be happy with 2% PA or would you rather 8%.
6% PA on £25000 is £1500 PA net. Compound that. I know where I would look.
Also, would you want a passive fund or an actively managed fund? It's not my choice but hey.

no idea what any of that means

 

[Sue]

no idea what any of that means

I wouldn't worry about that stuff tbh. Not at the moment anyway.

 

[Elpenor]

umm

additional pension contributions (paying extra so that you get a higher defined benefit pension) and additional voluntary contributions (paying in to a defined contribution scheme) are two different things, and it's not no longer as simple as buying additional years' service.

Paying more :: LGPS

has more, although worth looking at each employer (or group of employers) pension site as the fine details can vary.

(i'm still trying to decide what to do about this - as ever, it would have been better if i'd done it sooner, but the job has never looked quite secure enough to make long term plans round. blargh.)

You’re right, I was thinking of APCs I get muddled as confusingly some of our workforce in another scheme can buy added years

 

[Winot]

I don’t know enough to even answer those questions, so an advisor will be required for sure!

I doubt that you've got enough to invest to make it worth an IFAs while.

Best advice is to find a savvy friend to sit with you IRL and walk you through it.

 

[Puddy_Tat]

You’re right, I was thinking of APCs I get muddled as confusingly some of our workforce in another scheme can buy added years

you used to be able to buy 'added years' in the LGPS when it was a simple years service x final salary calculation. in hindsight, i should have done that before i left council job in 2002 (as i didn't join the pension scheme when i first started there) but it was all a bit of a rush.

 

[pseudonarcissus]

no idea what any of that means

don't worry, if you are paying into a local government scheme you are good.

If, when you retire, you have about 20 years' service you probably get about 1/3 of your salary as a pension, index-linked. Add to that 11k of state pension...can you just about live on that?
Keep the other pension where it is and think again when you're 55, it adds 2k to the line above.
See how much you have in your savings account, it's a good thing have enough to live on for a few months.
If you fancy a punt on shares with extra savings, there are a bunch of options (like ISAs) that will probably grow a lot faster than a regular savings account, but this can go up and down, but, if the answer to the question above was yes, then you can afford to accept the risk as you won't be destitute if the stock market fails by 50%.

All my retirement savings are in private pension funds of one sort or another invested in bonds and shares. My back of the envelope calculation is: can I live on my state pension, plus 4% of the total pension fund. The answer is just about, but I'd be screwed if the stock market falls 50%.

 

[Idaho]

From what you say Orang Utan , you aren't money savvy or interested in learning how to be. Consequently - best to leave that pension where it is. Sounds like a defined benefit if it pays £2k a year - which are now quite rare and quite valuable.

You will likely have to get an independent advisor to recommend a transfer before they will allow it. This is because companies were ripping off non money savvy people by tempting them with what seemed like a juicy sum to give up their defined benefit. The government put a halt to it by obliging people to consult with someone money savvy first.

 

[MrsArcanum]

If it is any help, I am just in the process of taking my works pension. This is a career average, plus a separate defined contribution for the last few years. This is now being combined with the career average. This will give me a small pension of just over £2,200 a year, as I am taking the tax free lump sum to tide me over until I get the state pension (not taking the lump sum would make little difference to the annual amount).

If you can, consolidate funds into the best pension pot of any held. This is worth doing if for no othe reason than sorting taxes.

My husband has 2 private pensions which he has to carefully divide his tax allowance between to avoid tax, as he will not get a state pension for a few years yet.

 

[Hollis]

I'm quite interested who is telling you you can get £25k now?

Like everyone else I'd be wary of cashing in a defined benefit pension - it's risk free and probably guaranteed to rise with inflation each year.

ETA: Oh i see... transfer value.

 

[Hollis]

You can also contact these people for free advice. I had an appointment with them 5-6 years ago and it's quite useful at explaining the options. They don't advise you what to do - but they can explain the impact of different options.

https://www.moneyhelper.org.uk/en/p...ion-wise/book-a-free-pension-wise-appointment

 

[nottsgirl]

Told you I was an idiot! My older ex-colleague has cashed theirs in but they are over 55.
Just clicked under the sum on my online account and more details appeared - it’s not a cash in, d’oh, but a transfer value. To another pension fund, presumably. Not my local government one though, I’d imagine. So it’s best where it isn’t it?


Ok, next question - best account to stash £300 or so a month for long term saving?

In a pension if you can as you will get tax relief!

 

[nottsgirl]

Assuming you can spare this money every month…

You should be able to buy additional years in LGPS (go to the website for your LGPS pension fund, details should be also on any annual statement). This is usually via an agreement (eg £300 per month for 5 years effectively buys you some additional few years of pension contributions which means an extra £1000 per year of pension when you retire) and is known as Additional Voluntary Contribution (AVC). This is processed via payroll so you don’t need to do anything except set it up. It’s also free of tax like your regular pension contributions so £300 only costs you £240.

You can also make AVCs where you vary the amount you pay each month but this of course would mean dealing with whoever provides the AVC more often which may not be ideal for you.

Where I work we use prudential for our AVCs (who are not very easy to deal with) but it might be a different provider for other pension funds.

Read this post carefully.

 

[nottsgirl]

I’ve got a pension that pays me £30 a month during retirement, not gonna cash that in as £30 is £30. It’s a LG pension. If you are talking about lots of tiny DC pension pots it might be worth consolidating them into one fund for ease of management.