Pension contributions lost due to industrial action

gullarm

I was recently involved in a strike at work - I work for my local council.

I realised that my pension would be docked accordingly for the two days strike action, today I have received a letter offering me the option to make up the difference in my lost pension rights. Something else I expected.

Is it worth me paying the £24.21 the make up the shortfall.

The reason Iam confused is Iam 36 and have worked for the council for the past 3 1/2 years and will more than likely continue to work for the council until I retire ( thats the plan anyway ).

Surely I will exceed my maximum contribution in the time span of my total employment, or am I missing something!

dasherman

The loss of 2 days wont make a huge difference to your pension and the £24.21 includes your contributions aswell as the councils!

Many final salary pensions have a limit of 40 qualifying years at aged 60 or 45 qualifying years at aged 65.So if you work until 60 you will have built up 27.5 years or 32.5 years at 65.So you will not exceed your maximum contribution in the time span of your employment!

You have the potential to buy added years - if the scheme allows it. This is generally well worth doing and is usually more cost effective than using a AVC/Stakeholder/SIPP,because your buying extra guaranteed pension rather than putting your faith in the financial markets.

CAE

If working for the local council I am assumng you are in the Local Government Pension Scheme.

Just to note that there is no longer a maximum of 40 years membership at age 60, or the ability to buy added years due to changes in the regulations.

If you do not pay the pension contributions due to your industrial action it will make virtually no difference to your pension at the time you retire. However you are normally only given 30 days after your return to work to elect to pay.

If a period of industrial action was for an extended period this could affect your decision as to whether to pay the contributions or not.

Hope this helps