Personal Pension Scheme Puns

I have just opened up an account on ii.co.uk. I want to transfer my work pension into ii.co.uk.

When filling up the "transfer in" form, I noticed I had to choose between:

• "personal pension scheme inc. stakeholder pensions"
• "SIPP"

I am not sure which of these options would apply; my work pension was the "standard" pension account that was created when I got employed.

Hi folks.

I've seen a few posts here about defined benefit pension schemes and a handful on exiting them. Currently, my small company are looking to exit our DB pension scheme (LGPS) to save costs.

As a younger person on a pretty average London salary I don't feel I have benefited overly from this, although I do expect to receive a payout of £1500 per year from this scheme upon reaching state pension age.

Am I at a disadvantage by not having a DC pension currently (I'd like one to access before 68)? Are there many steps I can take now to build a pot ahead of the switch to DC pension? And will the usual half your age % contributions work for me here, or should I be contributing more than this because of my situation?

Thanks

I work for a local government and have opted into the pension scheme, as all my colleagues have raved about how they're much better than private or personal pensions.

I've had a quick go at the math's and this doesn't seem to be the case, for me anyway.

Lets say, my annual salary is £25k, my salary and inflation increases 4% each year till I retire in 40 years.

If I invested in a private pension, I'd pay 5% of my salary (£118k total) till I retire which my employer would match. If I invested this and made an average 8% return each year, I'd have a total pension value of £1.14M (or £0.6M if returns are 5%).

However, if I stay in my government pension, I'd contribute 7% of my salary (£166k total) and my annual pension allowance including the added inflation would be £50k (salary/49 is how they work it out). If I died at the average age of 80 I'd have 12 years to claim this, making my total pension value of £0.61M.

I understand there's many variables here and possibly more risk with the private pension, but I really don't get the hype for the government pension type, plus I don't like the lack of control I'd have.

Any help would be appreciated.

Here's an image of how I've worked all of this out: Imgur Image

Have I missed something?

Cheers

EDIT: Thanks a lot for all of the comments. I wasn't expecting this much advice at all.

My father is interested in transferring his pension from L&G to a SIPP and managing his investments/drawdown himself rather than taking an annuity.

What what we can gather, in order to transfer his pension pot into a SIPP it is required to be signed off by a Financial Adviser, however all the financial advisers we have found charge incredibly high fees and want to peddle their own products.

He simply wants to transfer the pot to a SIPP with iWeb.

Is this possible, if so, how can we do it in the most cost effective manner and what kind of financial advisers should he be looking for to complete this work?

EU national currently living in the UK. My employer offers a pension scheme to which I am currently contributing the base rate. I can afford to increase my contributions which comes with a tax benefit, however I don't plan to stay in the UK for long. These pension pots are not accessible until the age of 57 in the UK. What happens to these pensions schemes of the person leaves the UK before retiring? Is it better to increase the contributions under this scenario?

I'm in my mid 20s and I live in Germany. My employer asked me if I want to contribute to the employee-funded pension scheme through a deferred compensation model (Entgeltumwandlung).

The maximum that can be contributed annually is €6.816 (€568 monthly) and it is free of taxation, which is 8% of the Social Security Contribution Ceiling of the pension insurance. Moreover, up to 4% of the social security ceiling (€3.408 annually, €284 monthly) is free of the social security contributions.

The reasons why I am hesitant are that:

- I am likely to move from Germany in the next few years (probably out of the EU).

- I would rather save and then invest money on my own instead of depending on a government which is probably going to fuck me over royally given the ever-increasing proportion of elderly people.

- Frankly, I did a bit of research, but I am still not sure how it works.

I was employed and paid contributions through my salary towards the pension scheme. Subsequently I left the employer. The employer did not send any details regarding my pension scheme so I requested this information. I received information that the employer had cancelled my pension scheme membership this was done without my consent or knowledge. Can the employer cancel my pension scheme without my consent?

I currently have no pension, and have been focused on getting cash savings together first, and am now making regular contributions to LISA.

There's currently no pension contributions at my current workplace, and there's not been a rush to sort it out. It'll be in place when they have to do it, and by then will be the bare minimum matching that they can.

Is it worth waiting to see officially what the offer is, or should I start investing in a private pension plan instead?

EDIT: Currently no debts / mortgage. Have already used my ISA for the year.

England: I have been working for the NHS for 7 years and pay into the NHS 2015 pension scheme which I believe is a defined benefit scheme.

Can someone please explain what a defined benefit scheme is (like I am 5 please) and what this means for me in retirement? I have read all the documents that come with it but don't fully understand pensions if I am honest. I think there is a cap on the number of years that I can contribute, how does this affect the end result? Is there any way for me to estimate what I may get in a yearly pension at retirement age (or earlier)? The Total Reward Scheme is currently down for us as our staff systems are undergoing maintenance.

I currently contribute 9.3% and my employer contributes 14.3% I believe.

Hi everyone! I am currently employed (and well, living) in the UK and will be moving to Italy in the new year. I don't have any ISA and will soon open a local bank account to transfer my cash.

What is still outstanding is what to do with the pension fund I have. Basically, my contract included a private scheme with the employer matching the % of salary sacrifice you make into the scheme. By contacting the provider, I think there is not an option where I can transfer the pot (more than 15k) into an Italian provider, as there are not recognized entities that accept that (that I am aware of). The conclusions I come up is simply end the contributions I make into the scheme, let the compound interest work and then withdraw the money once reachc UK pension age (65 i think). Hopefully I will pay only tax in the UK as result...

Any more efficient idea? Please note that closing the policy and withdrawing now will mean the employer will get a refund of the amount he paid in!

I quit my job last month after 9 years working there, and had a generous final salary pension scheme.

Just got a letter from my pension provider this week with a summary of my accrued benefits, stating I had built-up a total pension of £8,876 per year as of my final date of employment.

I will be starting a new job soon, which provides a defined contribution pension.

I initially assumed the best course of action was to do nothing and leave my final salary pension in the plan until I retire, but the more I think about it, the more it feels like it would be better to transfer it to my new DC pension..

From my research, it seems that "cash-equivalent transfer values" have traditionally been calculated at 20x the annual pension income, but recently 30x is not uncommon apparently. In my case, this would correspond to £177k (20x) to £266k (30x).

If I leave my final salary pension as is, it will increase with inflation up to 2.5% per year. However, I should be able to do better than that if I invest it into my new DC scheme (say 7-10% per year on avg). I'm 31yo, so not planning on touching that money for 30+ years.. The difference for my pension pot at the end of my career over such a long period of time could be massive!

So - it feels like a no-brainer to me - but wanted to check if I'm missing anything? What are the benefits of leaving it in my current final salary pension (yes - I know guaranteed income when I retire, but anything else?)

I've been paying into the NHS 2015 defined benefits pension scheme for around 3 years. I've now moved to a job in the Civil Service so I am now part of the Alpha defined benefits civil service pension scheme.

I've been looking at transferring in my NHS pension to the Alpha scheme, mainly to keep things straightforward by having it all in one place.

Can you help me understand what I need to consider before I do this and the negatives? I've done some online research but it mostly only talks about DC pension transfers so I'm a bit confused.

I certainly wouldn't write off returning to a job in the NHS in the future so this is also in my thinking about whether transferring in is worthwhile.

Thanks

I'm employed by a university and am currently contributing to the SAUL pension scheme. Following a promotion, I've been asked whether I want to make an irreversible decision to switch to USS pensions scheme (i.e. I will not be able to switch back to SAUL later, not clear whether I can choose to switch to USS later if I stay with my current employer - I'm in the process of finding out).

Summary and key differences are (based on my understanding):

• Contribution
  • SAUL: 6% by the employee, 16% by the employer
  • USS: 9.8% by the employee, 21.4% by the employer
• Defined Benefit
  • Guaranteed income following retirement and one-off cash lump sum (3x annual pension). This value is based on your annual salary:
  • SAUL: 1/75th of annual salary
  • USS: 1/75th of annual salary up to a threshold (of £59,883.65 in 2021/2022). Above the threshold, contributions go into a defined contribution scheme.
• Defined Contribution (DC) scheme
  • Only applies to USS.
  • Contributions are invested, hence value may go up or down.
  • Annual Contribution to DC = (Annual Salary - Threshold)x20%
• CPI: Both schemes revalue defined pension benefits aligned with the Consumer Price Index (CPI)
  • SAUL: Ceiling of 2.5%
  • USS: Ceiling of 10%
• Death
  • SAUL: Death in service lump sum benefit is 4 x annual pensionable earnings with a spouse/partner pension of 2/3 enhanced to age 65. In addition, a lump sum if you die within five years of retiring (the total of any remaining pension you would have received if you hadn’t died within five years of retirement.), plus a spouse’s pension or civil partner’s pension and children’s allowances for eligible children, which are payable from the day after the day you die (your spouse’s pension will be two-thirds of your pension at the date you died).
  • USS: Death in service lump sum benefit is 3 x annual pensionable earnings with a spouse/partner pension of ½ of pension enhanced to age 65. In addition, a lump sum if you die within five years of retiring (the total of any remaining pension you would have received if you hadn’t died within five years of retirement.), plus a spouse’s pension or civil partner’s pension and children’s allowances for eligible children, which are payable from the day after the day you die (your spouse’s pension will be two-thirds of your pension at the date you died).

The only benefit of USS that I see is the higher CPI ceiling. Besides that, for a smaller contribution, SAUL is offer

Around a year ago I had to unfortunately leave the UK for good. I used to have a decent pension contribution from my former employer and I was able to accumulate around 13k worth in a SW pension scheme.

Now that I have left the UK (I am European though, if that is useful and still have a UK bank account) what are my options with such pension scheme?

- How can I efficiently use that money?

- Can I transfer it to a different fund? Even a different provider?

- Can I withdraw the money from it after X years? What are the average taxes I will need to pay for it?

And most importantly, what would you all recommend me to do with it?

Hi UKPF,

I recently got a job offer with a civil service employer who are offering a choice of two pension schemes:

1. A defined benefit arrangement where I pay 7.24% of my salary and gain 1/60 of my career averaged pay for every year I stay with the employer
2. A defined contribution scheme where I pay 4% and my employer pays 7% into a pension pot with the option to increase personal contributions through a salary sacrifice type arrangement.

Some background information on myself:

I'm in my early 20s just starting off with my career and currently paying off student loans. I often see defined benefit schemes encouraged on this subreddit but my worries are that the 1/60 per year career averaged pension accruement seems very low, and that by going with defined benefit, I lose out on the effects of compounding interest on a defined contribution pension pot this early on in my career. If it helps, I probably don't plan on staying with this employer for more than a few years (until maybe later on in my career).

Any pointers on which pension scheme might make more sense in my situation?

I’ve seen quite a few comments on here saying DB pension schemes are rare, but from what I’ve seen doesn’t almost every NHS/public sector role/university role come with a DB scheme? Isn’t it more of a case of public sector vs private sector?

During my job hunt, I stumbled across a job advert that gave a list of why you should work for them and it says they have great staff benefits and one that caught my attention was that employees who work for them are placed on the local government pension scheme. They made it sound like this is really attractive/lucrative, like it's better than pensions other companies place you on. Is it really? Do they actually pay out more?

Dear redditors,

I am a foreign citizen that transferred to the UK to work at a University as a Lecturer. Translated, my comprehension of the UK pension system is very low.

During these first weeks at work, I received an email stating I was automatically enrolled to the USS Pension Scheme, and I could unsubscribe if I wanted. I have understood USS Pension Scheme is a Private pension scheme addressing academics. However, I have not understood if it constitutes the only pension contributions I pay (substituting national pension contributions) or it is an additional, supplementary pension scheme. Can someone please explain it to me?

Additionally, I would like to ask an advice, in your opinion. As a foreign citizen that is currently working in the UK but does not know if he will remain here for life or not (and for now, it is more a no than a yes), is it convenient or not to remain enrolled to the USS?

Thank you very much in advance for your answers and advices!

Hi all,

Just looking for some advice about the Alpha pension scheme which is a Defined Benefit (DB) scheme.

So i understand that it works out to be 2.32% * Years of Service * average salary.

However, say i worked there for 10 years age 20-30 vs 40-50 (with the same average salary) my end pension pot would be worth the same.

But using the magic of compound interest, if i had a standard pension 20-30 vs 40-50, the money within the 20-30 pot would be worth alot more than at 40-50.

So my question is. Although the Alpha scheme is amazing, due to compound interest, surely having a defined contribution (DC) pension would have more advantage at such a young age than a defined benefit (DB)?

Maths to back it up:

Age 20-30 :Average Salary £20k = £443 a year (2.32%) x 10 years is £4430.

Age 40-50 :Average Salary £20k = £443 a year (2.32%) x 10 years is £4430.

(I understand that its £4430 a year, but the number of years i claim it, is irrespective of the age i worked there)

Age 20-30 :Average Salary £20k = 5% employer = 5% me = £2000 = something like £80,000 in compound interest over 43 Years.

Age 40-50: Average Salary £20k = 5% employer = 5% me = £2000 = Something like £20,000 compound interest in 15 years.

So what im trying to say is, is it more beneficial to work for a role providing a DC pension and then when im say 40-50 switch to a DB pension. Ideally, it would be, work for a DC pension company for the majority of working life, then top it off with a DB towards the end, when the compound interest would be negligible.

Let me know if im getting anything wrong here.

Hi guys, I was looking into the pension scheme and it looked interesting. As this is my first job that offers such a scheme I have a few questions about it. It essentially says that if I contribute 5% of my weekly salary via salary sacrifice (I am assuming this is a form of tax relief), then amazon will match that and add another 5% into my pension pot. I'd like to ask where this "pension pot" is held, and do I have any control on how the pension is invested or not. Also, If I leave amazon, what happens to my pension? Does it get transferred to a new company, or does it stay in the same company. Also, can I take out my pension at any age, or does it have to be when I am around 55, which is the retirement age I am guessing. Sorry for these vague and naive questions, but I literally just entered the job world, so I don't know basic stuff like pensions :-). Thanks for any replies guys!

I'm to be starting my first proper job and just got the pdf with all the company benefits and it mentions a pension scheme. It reads:

"Company X provides a Pension Plan (the Plan) to help team members save for retirement. Participation in the Plan is voluntary. If you choose to participate, you must contribute at least 5% of your basic salary. Company X will contribute 10% of your basic salary. Pension Plan contributions are invested and managed by New Ireland.

So would this mean if they are making contributions I have to go with this crowd and can't come in with my own pension in advance like Irish life for example or some company that I think has a better plan? Am I devoid of choice in this scenario or is it assumed there's flexibility beyond what's written above?

My wife works as an elementary school librarian in Ontario. Last year, she was away for a personal day with no pay. She received a notice in the mail that said she had the option of paying ~$15 towards the pension for the day missed. The amount represents both her and her employer's contribution for the missed day. I don't know a lot about how her pension is calculated and it's been difficult getting in contact with someone who can provide clear answers. What I'm not understanding is what the impact on her pension would be if she doesn't pay this. I realize the amount is small, but I don't really understand what difference a single day away would make? Can anyone help?

Edit: I'm not sure why this is being downvoted. If there's a better place to post this, please let me know.

Hi all

I am 31 (if that is relevant) and in a defined benefit pension scheme with a pension age of 65.

If I were to retire before then, say 60, would it make more financial sense to claim the pension from 60 - and incur the reduction factors - or preserve the pension for 5 years and claim it at the prescribed redemption age of 65?

Each year you take the pension earlier than 65, there is a roughly 5% drop in benefits. The pension benefit at 60 is 75%

The scheme claims they are 'cost neutral reduction factors' as you will be claiming for longer and contributing for fewer years, and so you don't lose out. I understand this.

However, these reduction factors have significantly increased over the years and my more senior colleagues have much more lenient reduction factors, despite life expectancy barely changing in that time. So I do wonder how 'cost neutral' they truly are.

Regardless, as well as the cost of the pension membership, I contribute towards an AVC scheme which works as a DC pension in conjunction with the DB pension. This is then used as the lump sum at retirement so you can take the full DB salary, as it were. They have to be taken together. I am in the 40% tax bracket and so this is useful.

Moreover, I contribute to a S&S ISA. This is what would be used to bridge the gap between retiring and claiming my pension, if I opted to preserve the benefit to avoid the 'cost neutral reduction factors'.

Any and all feedback is greatly appreciated.

Thanks for your help

I'm in my mid 20s and I live in Germany. My employer asked me if I want to contribute to the employee-funded pension scheme through a deferred compensation model (Entgeltumwandlung).

The maximum that can be contributed annually is €6.816 (€568 monthly) and it is free of taxation, which is 8% of the Social Security Contribution Ceiling of the pension insurance. Moreover, up to 4% of the social security ceiling (€3.408 annually, €284 monthly) is free of the social security contributions.

The reasons why I am hesitant are that:

- I am likely to move from Germany in the next few years (probably out of the EU).

- I would rather save and then invest money on my own instead of depending on a government which is probably going to fuck me over royally given the ever-increase proportion of elderly people.

- Frankly, I did a bit of research, but I am still not sure how it works.