downsizer - VMT

Rereading your post has me wondering if one of us has the wrong end of the stick. As I understand it the £6500 is the maximum you can receive or 'add' to your final pensions when in payment. It is not what you invest.

What is unclear is how much you have to invest to receive the full £6.5k. Using the indicative figures mentioned earlier it could require a £65,000 investment to receive the extra £6500 per year.

I'm sure someone will step in if I have this wrong as I am less than clear on the costs of this scheme.

Tofu,

There are, in my opinion, many superior options to NEST out there. And you're right.. auto enrolment legislation forbids an employer from telling/implying/suggesting (an employee) that investing in a pension is a good or bad idea. SME don't have the money, resources, time to focus on yet more red tape and this is yet another bureaucratic burden that many can ill afford. I agree with the sentiment though. If a civvy worker earns approaching £1m in a lifetime but ends up with just £25k in a pension, something's wrong.

At present the initial NEST annual charge is 0.3% but there's an additional annual 1.8% also applied to cover various other blah. Younger workers are invested (by default, they can switch) to target returns only greater than inflation plus 3% and costs. In essence, the people who run NEST are more afraid of faint hearted 20 somethings leaving NEST because they don't understand that you take risk in the early years in return for your fund to buy units with high volatility cheaply to get traction.

Most of them being inappropriately invested into a short term bias strategy is wrong for them - we sometimes forget that capacity and inclination for investment risk works both ways. There are lots of really good options out there, if you haven't already done so and by way of information, the Scottish Life/Royal London proposition is well worth looking at. It invested heavily in NEST-esque infrastructure 5 years ago.

The RAF took the tri-service lead in a brilliant impartial and objective financial education presentation which was on the go a few years ago - but it withered on the vine when those who got it going were posted. I know it was a brilliant programme, I did most of the presentations :E. The content was superb and generated entirely by the Consumer Financial Education Board (which re-rolled into the hideous Money Advice Service).

The suitability or otherwise of AVC/added pension depends entirely on the numbers - after that, they stand or fall based on the merits, or otherwise, of an AVC in principle. The biggest single issue I have with AVC is that the scheme member, usually the husband, has all the retirement savings in his name, and his wife has none. Consequently, the tax liability in decumulation (ie; when you're on the beach) is a shocker for the alpha male whilst the personal allowance for 'the wife' goes untroubled. It's vital to start planning early, absolutely vital.

Right or wrong, I started personal pensions for my three eldest when they were teenagers (with financial input from their grandad's gifting strategy!). Now, in their mid twenties, it's up to them but the spectre of working until north of 70/72 is a bleak one. Bear in mind too, that unless you hit AFPS normal retirement age of 60, deferred benefit legislation kicks in which means any deferred AFPS 15 benefits are already, automatically and statutorily tied, by default, to the state retirement age.

So, if your state pension shifts to the right and you stage in at 71, so too, do your AFPS 15 deferred benefits. In other words, you get the state pension at 71, you get deferred AFPS15 benefits at 71. That represents a huge legislative risk and a massive planning black hole. Personal pension benefits too, will be pegged to it, but drag by ten years. That will affect anyone currently under 40 or so. In terms of Downsizer's quandary, it'll be interesting to see the numbers for what are, essentially, '15 AVC.

JTO

Ahh, ok, it could be that.

When you run the numbers the calc says "Benefit Purchased", with the maximum being £6500. I assumed the "Benefit Purxhased" was the purchase "price", so £6500.

So you are suggesting to get £6500 of "Benefit Purchased", it may cost you a lot more....? Which kind of makes more sense, I did think it was too good to be true....

Now a member of the Reserve Forces Pension Scheme, can I top this up?

Only by commercial AVCs and Stakeholder pensions, I am afraid. The scheme was written knowing that FTRS contracts were for (normally) limited periods only so there was no point tying people into contracts through to age 55 or 60.

Had an email today informing me that the pension calculator is incorrect: in effect you have to pay in £100k to get a £6.5k increase in pension.

Hopes dashed and all!!!!

I was hoping for something closer to £65k, not £100k!

Also received via email confirming pension calculator errors:


‘Online Pension Calculator

An error/misunderstanding has been identified on the online pension calculator over Added Pension. The contractor will attempt to hide this function until it can be rectified and checked through further User Trials. The issue is that personnel are inputting the value of ‘money they would like to invest’ rather than ‘pension they would like to buy’. This is producing figures that would require an additional £100k of investment by the individual. Personnel wishing to purchase Added Pension are advised to contact Vets (UK), details can be sought through the link below:

http://defenceintranet.diif.r.mil.uk/Personnel/Military/Remuneration/Pages/Remuneration.aspx’

As the Added Pension fields on the pension calculator are taking longer to hide/ remove than hoped, we have produced the following lines to take on the issue and would appreciate it if you would push these out via your individual comms chains as soon as possible. An Ops bulletin has also been placed on JPA, see link below:

http://defenceintranet.diif.r.mil.uk/Organisations/Orgs/HOCS/Organisations/Orgs/DBS/MilitaryPersonnel/JPAPortal/Library/Bulletins/Pages/1504-001.aspx


Lines to Take for Service personnel wishing to purchase Added Pension contracts under AFPS 15

· Personnel are advised not to forecast their Added Pension benefits using the pension calculator. The calculator can, however, still be used for producing standard pensions forecasts. Currently the most advisable route for obtaining an Added Pension quotation is via DBS Veterans UK, using AFPS Form 6.

· Although the pension calculator is providing accurate forecasts for Added Pension, the fields relating to Added Pension are presented in a manner that is easy to misinterpret, and it is apparent that many personnel are becoming confused.

· The main area of confusion relates to the amount of Added Pension that can be purchased. The £6500 is a HM Treasury limit relating to the maximum amount of Added Pension that the member can receive each year in retirement; it does not relate to the amount of contributions that a member may make. For example, to benefit from an additional £100 of Added Pension each year in retirement, a typical member may have to make contributions equal to anything between £1000 and £2000 (the calculations are different for each person depending on their circumstances, this is an indicative example only). So, for a typical member to accumulate Added Pension which provides an extra £6,500 per year in retirement (the maximum amount), they may have to make contributions throughout their public service career in the region of £60,000 - £120,000.

· Personnel intending to purchase Added Pension should first request a quote from DBS using AFPS Form 6. Only when personnel have received the quote and they wish to take out an Added Pension contract for that year should they complete AFPS Form 6A. The link to the form that should be used to obtain a quote is below:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/420457/afps-2015-form_6.doc

· A revised DIN, setting out the details of purchasing Added Pension in clear terms will be issued imminently.

No wonder those that can want to take the money and run......and I thought it was bad 7 years ago!

is that contact the same DBS Forces Pensions who were on strike / work to rule recently? May affect turnaround of your personal quotes if so?