Pension.....Win???? Al R maybe help?
Thread Starter
Pension.....Win???? Al R maybe help?
I must be getting something wrong here, but on the pensions calc if I buy £6500 of extra contributions my lump sum goes up by ~12K and my annual income by ~2k.....
Ground trade, 20yrs on 75, 2 on 15, leaving at 22.
What's going on here, am I missing something really obvious?
Ground trade, 20yrs on 75, 2 on 15, leaving at 22.
What's going on here, am I missing something really obvious?
It is disappointing that key facts regarding the new pension have yet to be published even though the scheme has gone live. The details on extra contributions should have been made available well ahead of the schemes launch so that members could have made an informed choice ahead of implementation.
As it is I guess there are precisely zero members making extra contributions due to the lack of information or a published method to make payments. I find it hard to believe that any other pension scheme would be able to behave in this way.
One hopes that they will make a special provision to allow for additional contributions from the beginning of this tax year, even though the start has been missed. The recent release of information on actuarially reduced pensions taken ahead of state pension age is welcome though.
As it is I guess there are precisely zero members making extra contributions due to the lack of information or a published method to make payments. I find it hard to believe that any other pension scheme would be able to behave in this way.
One hopes that they will make a special provision to allow for additional contributions from the beginning of this tax year, even though the start has been missed. The recent release of information on actuarially reduced pensions taken ahead of state pension age is welcome though.
Thread Starter
JTO
The forms are available on the DBS website as I have just discovered and the tax year window for this one is ticking. They can be bought monthly or in a lump sum it seems.
After running the numbers through the calculator, I plan to invest the maximum allowed of £6500 (before that figure gets cut by HMRC), ASAP. I can't seem to see a downside....
The forms are available on the DBS website as I have just discovered and the tax year window for this one is ticking. They can be bought monthly or in a lump sum it seems.
After running the numbers through the calculator, I plan to invest the maximum allowed of £6500 (before that figure gets cut by HMRC), ASAP. I can't seem to see a downside....
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Downsizer,
Does this relate to factors surrounding AVC? Have I got this wrong, you're suggesting £13k contributed, then £12k back in 2 years and a further £2k pa each year, from 2 years time?
Does this relate to factors surrounding AVC? Have I got this wrong, you're suggesting £13k contributed, then £12k back in 2 years and a further £2k pa each year, from 2 years time?
My guess is there is an error in the calculator that isn't taking into account you only having 2 years left in which to make these 'avc's'?
I'd be surprised if the figures output aren't as a result of paying an 'avc' throughout your service and they should be 'factored' for the percentage of your service you have actually contributed for i.e 2/22
I added money to my AFPS75 pension via AVC and there were detailed tables I had to use to work out the actual 'return' I was getting on my investment. As I was on PAS to 55, I expected to easily recoup my investment over the remaining 15 or so years of contributions. However, SDSR redundancy changed that. I suspect I might possibly get back what I invested if I live long enough. I'd be wary in your case of signing up until holding a written confirmation of pension benefit from the additional contribution. You could always start a SIPP and plough some into that (equal to your 40% tax payment)?
I'd be surprised if the figures output aren't as a result of paying an 'avc' throughout your service and they should be 'factored' for the percentage of your service you have actually contributed for i.e 2/22
I added money to my AFPS75 pension via AVC and there were detailed tables I had to use to work out the actual 'return' I was getting on my investment. As I was on PAS to 55, I expected to easily recoup my investment over the remaining 15 or so years of contributions. However, SDSR redundancy changed that. I suspect I might possibly get back what I invested if I live long enough. I'd be wary in your case of signing up until holding a written confirmation of pension benefit from the additional contribution. You could always start a SIPP and plough some into that (equal to your 40% tax payment)?
Thread Starter
Al
This regards buying extra pension under the '15 scheme. It states the maximum lifetime amount you can add is £6500, set by the government. this can be added monthly from wages or if you wish as a large lump sum.
If I add the £6500 in one tax year, on the pensions calculator, my lump some on exit jumps by circa 12k and my annual incomes rises by 2k per annum....
So essentially for a 6.5k investement, I get 12k back plus an extra 2k a year for life....
This regards buying extra pension under the '15 scheme. It states the maximum lifetime amount you can add is £6500, set by the government. this can be added monthly from wages or if you wish as a large lump sum.
If I add the £6500 in one tax year, on the pensions calculator, my lump some on exit jumps by circa 12k and my annual incomes rises by 2k per annum....
So essentially for a 6.5k investement, I get 12k back plus an extra 2k a year for life....
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Where's the catch?
My situation is I leave aged 38 at my AFPS 75 IPP, with 129 days on AFPS 15, following 16 years service. If I make a single £6500 Added Pension in tax year 15/16, the most you can contribute to the pension, according to the pensions calculator my numbers are:
If I don't take commutation, the pension jumps £7k per annum at SPA.
AFPS 15 commutation lump sum, payable at SPA: £1488 jumps to £29 345
AFPS 15 commutation pension at SPA: £223 jumps to £4401.
(I leave out the AFPS 75 commutation as that doesn't change with the Added Pension.)
As downsizer says, I cannot see the downside of making this investment as long as I see a few years after 70. Could someone also clarify what would happen with my pension for my wife having done this if I were to die before SPA?
Edited: not an AVC, it's Added Pension and you can only invest £6500 (currently unless HMT increase the allowance) total extra into the pension.
If I don't take commutation, the pension jumps £7k per annum at SPA.
AFPS 15 commutation lump sum, payable at SPA: £1488 jumps to £29 345
AFPS 15 commutation pension at SPA: £223 jumps to £4401.
(I leave out the AFPS 75 commutation as that doesn't change with the Added Pension.)
As downsizer says, I cannot see the downside of making this investment as long as I see a few years after 70. Could someone also clarify what would happen with my pension for my wife having done this if I were to die before SPA?
Edited: not an AVC, it's Added Pension and you can only invest £6500 (currently unless HMT increase the allowance) total extra into the pension.
Last edited by Guest_22; 15th Apr 2015 at 08:25.
As much detail as I can find:
From FPS:
Added Pension
As a member of the Scheme you can pay personal contributions in order to purchase Added Pension to increase either your retirement benefits and/or dependants’ benefits. You can choose to pay either a lump sum or fixed monthly payments over a scheme year. This is a contract between you and the Scheme Administrator. You will need to take out a new contract for each scheme year that you intend to purchase Added Pension and any Added Pension contracts taken out part way through a scheme year will cease at the end of the scheme year and will be shorter than 12 months. A new contract will need to be taken out at the beginning of the next scheme year. Only one Added Pension contract can be taken out per scheme year.
The amount of Added Pension you purchase will increase annually in line with the Consumer Price Index (CPI) in each subsequent scheme year until the pension comes into payment. The amount of Added Pension a member can purchase throughout their public service career will be subject to Her Majesty’s Treasury (HMT) limits. The total amount of Added Pension that can be purchased over your public service career will be capped and from 2015 is £6500 but could be subject to change in the future.
You may cancel your Added Pension contract at any time but you will only receive a proportion of the amount of Added Pension you would have received had you paid the full contributions. If you leave the Armed Forces before you have completed 2 calendar years qualifying service, you will receive a refund of your personal contributions, less any relevant tax charges.
As a member of the Scheme you can pay personal contributions in order to purchase Added Pension to increase either your retirement benefits and/or dependants’ benefits. You can choose to pay either a lump sum or fixed monthly payments over a scheme year. This is a contract between you and the Scheme Administrator. You will need to take out a new contract for each scheme year that you intend to purchase Added Pension and any Added Pension contracts taken out part way through a scheme year will cease at the end of the scheme year and will be shorter than 12 months. A new contract will need to be taken out at the beginning of the next scheme year. Only one Added Pension contract can be taken out per scheme year.
The amount of Added Pension you purchase will increase annually in line with the Consumer Price Index (CPI) in each subsequent scheme year until the pension comes into payment. The amount of Added Pension a member can purchase throughout their public service career will be subject to Her Majesty’s Treasury (HMT) limits. The total amount of Added Pension that can be purchased over your public service career will be capped and from 2015 is £6500 but could be subject to change in the future.
You may cancel your Added Pension contract at any time but you will only receive a proportion of the amount of Added Pension you would have received had you paid the full contributions. If you leave the Armed Forces before you have completed 2 calendar years qualifying service, you will receive a refund of your personal contributions, less any relevant tax charges.
Currently, the maximum amount of extra annual pension that someone can benefit from is £6,500 per year. This sum is set by Her Majesty’s Treasury and may alter. The minimum amount you can pay towards Added Pension is £300 per year as a lump sum or £25 per month. We have not seen the factors yet but, as a rule of thumb, about £1000 paid at the age of 30 buys an extra £100 of annual pension for the member. The factors, when available, will cater for the variables such as your age when you start to pay for Added Pension, whether you pay monthly or by lump sum and whether you buy Added Pension just for yourself or yourself and your dependants.
As it is I guess there are precisely zero members making extra contributions due to the lack of information or a published method to make payments. I find it hard to believe that any other pension scheme would be able to behave in this way.
AVCs have been suspended for AFPS 15 - or that's what has been publicised so far. I mentioned it on one of the other threads a couple of weeks ago as a heads up as I only stumbled on it by accident rather than being actively informed.
Essentially, they believe the new scheme offers as standard the same benefits that people were previously buying under the AVC scheme, barring extra years service (what I pay in to), so any one formerly buying enhanced death in service and widow benefits will no longer be able to do so under 15 scheme. The extra years, unless I've misread it, will continue , but I don't know when that will open up again.
Of course I stand to be corrected and there could have been further changes in the past 2 weeks we weren't told about!
You are correct in part (ie Death In Service) but the 'Added Pension' is new for AFPS 15 and the text I quoted above is from the AFPS 15 Scheme. The Pension Calculator has been updated recently to cater for the new 'Added Pension' option, but with little supporting detail (despite the efforts of the Forces Pension Society).
Thanks for the update chaps, the PPruNe virtual SHQ to the rescue once more.
If Carlsberg did SHQs ...
Edited to add:
Just had a look for the Added Pension bits in light of other posts. Now it might be me bring a bit thick after a long day, but how bloody complicated have they made it?!!!! I had the added years AVC under AFPS 75 and the aim was simple - if you joined up after 21, pay a bit extra each month and at the end you will qualify for a full pension if you stay til 55. Simples. It bridged the gap between the earliest you could start accruing pension rights and the point in time you joined.
That doesn't seem to be an option here, you now appear to have to guess how much to put in to bridge the gap. Where's the option to say I want to pay enough to ensure I retire on a full pension as I would have done under the simple AFPS 75 AVC arrangements? Is there nothing they can't bugger up or make insanely difficult by tinkering?????
If Carlsberg did SHQs ...
Edited to add:
Just had a look for the Added Pension bits in light of other posts. Now it might be me bring a bit thick after a long day, but how bloody complicated have they made it?!!!! I had the added years AVC under AFPS 75 and the aim was simple - if you joined up after 21, pay a bit extra each month and at the end you will qualify for a full pension if you stay til 55. Simples. It bridged the gap between the earliest you could start accruing pension rights and the point in time you joined.
That doesn't seem to be an option here, you now appear to have to guess how much to put in to bridge the gap. Where's the option to say I want to pay enough to ensure I retire on a full pension as I would have done under the simple AFPS 75 AVC arrangements? Is there nothing they can't bugger up or make insanely difficult by tinkering?????
Last edited by Melchett01; 14th Apr 2015 at 20:13.
Does this change if you spread the £6500 over more than 1 year? I've got 4 years to my IPP, so spreading the load might make it less of a pinch this tax year, but I'm not going to pass it up!
Thread Starter
ATG
It didn't when I did my calcs. I tried a load of permutations from 6500 now, several k per year for several years, and 6500 in the tax year I leave, all the same result.
Best to check your own numbers though....
It didn't when I did my calcs. I tried a load of permutations from 6500 now, several k per year for several years, and 6500 in the tax year I leave, all the same result.
Best to check your own numbers though....
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What a great advert for the state of UK Mil leadership that people have to come to PPRuNe and EGoat for military pension advice.
They cannot give specific advice on what options you should take (for example in respect of AVCs or the like) since only a pension qualified financial adviser (as in, permitted by the FCA) can give such advice.
For example, I was recently tasked to find a suitable pension for a small company as part of the ongoing statutory auto enrollment program. No problem - I found two (neither of which was NEST, AL R
). I was then asked to compare and contrast the two and do a presentation to the employees with my recommendation. I told the MD to foxtrot oscar as I was simply not authorised to give this level of advice, and to do so would be to expose the company to deep doo doo.In sum, if you read the literature that these big schemes dish out it is all pretty descriptive...and not at all prescriptive.
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Here is what I put on e-goat. The article sets out the position for all three pension schemes.
"At the link below you will find an article I wrote on AVCs etc. If you are still on AFPS 75 you can still take out AVCs should you so wish. If you are still on AFPS 05 you can still buy Added Years. If you have transferred to AFPS 15, it is Added Pension (so a specific amount of extra money - not linked to rank or pay scales). It is the Added Pension factors that we haven't been able to get from MOD (but are on the case).
http://www.pathfinderinternational.c...125c-412220849
"At the link below you will find an article I wrote on AVCs etc. If you are still on AFPS 75 you can still take out AVCs should you so wish. If you are still on AFPS 05 you can still buy Added Years. If you have transferred to AFPS 15, it is Added Pension (so a specific amount of extra money - not linked to rank or pay scales). It is the Added Pension factors that we haven't been able to get from MOD (but are on the case).
http://www.pathfinderinternational.c...125c-412220849