Local Government employee - should i pay into LGPS?

glosmatt

Hi All,

I am 3 months into a 12 month fixed term contract with a large local authority. I am currently paying into the pension scheme and have about a week to withdraw and claim back contributions. I am paying about £120 in a week so if i withdraw I will have about £70 extra a month what with the tax increasing etc.

Baring in mind that I may not be a council employee in less than a years time, should I pay into the pension scheme or not? Or should I simple save the contributions myself?

Please lets not go down the unfariness of a public sector pension scheme etc, I am just looking for a little advice and not to get into the whole debate.

Many thanks in advance

CLAPTON

no brainer

stay in the LGPS scheme

why wouldn't you?

you pay about 6% (less tax) and we taxpayers add about 20% of you salary

shaunrc

Hi glosmatt

The simple answer is yes you should. If you can afford the contributions you should make them because the cost of the benefit promised to you is far far higher than any contribution you might be asked to make.

I believe the maximum contribution you can be asked to make is 7.5%. It is not easy to calculate the price of a final salary scheme but it used to be thought that total contributions of towards 25% of salary were required. Because of the way the stockmarket has performed many schemes which try to fund such promises are paying in 30% or more. So your contribution is cheap compared to the promised benefit. You are benefitting from the fact that public sector schemes are unfunded and so the costs are not shown until people retire.

dunstonh

Baring in mind that I may not be a council employee in less than a years time, should I pay into the pension scheme or not? Or should I simple save the contributions myself?

To get the same level of benefits you would have to pay around 20-25% of your income into an alternative personal pension.

Join the scheme, its too good to miss out on.

glosmatt

Thanks, I understand that it is one of the best pensions around but my only concern was that I may only be a council employee for a year and am unsure of its value if i was to move to a private company and transfer my pension over to their scheme?

shaunrc

Hi

It is probably best left where it is. Although it may be only one years pension and so you get paperwork etc. from the scheme it is such a good deal it is unlikely to be wise to shift it.

Keeping the council taxpayers funding your pension is likely to be wise!