Vin Rouge / L J,
Just so my thinking is correct......
A workplace pension/SIPP etc sees money invested-and at the end, you get what you get depending on how your “pot” performs.
AFPS works backwards-your return is guaranteed, and the GAD works out what it thinks you should pay in (to a civilian equivalent) to receive the guaranteed return.
If so-then the GAD must be assuming a pretty poor performing “fund” if it thinks contributions need to be that high. What growth assumptions are behind the SCAPE contributions? If its none, or just a few percent, then no wonder the contributions are so high. I would expect a healthy couple of percent above inflation from any invested pension pot. Is SCAPE simply writing an IOU for a modest amount of interest up front and putting that in the IOU pot for later?
The benefits of compound interest can be huge over time on any workplace pension/SIPP. Just two % above inflation will see any pot of money double in 35 years, or 3% about will double in just over 20.
Diversifying your portfolio in a SIPP spreads risk and allows you to “take the rough with the smooth” especially if you have time on your side. I totally get that the AFPS is risk free (save armageddon) though.
LJ-hope Mrs LJ’s pot enjoys better luck soon.
Regarding my Lifetime allowance in your response to my post the other day-I did recently receive my annual pension statement. It had my “ value of your benefit against LTA limit” down as “0” which I’m pretty sure is incorrect.