No Final Salary Pension in new job

Legacy_user

I am currently looking for a new job and I understand that the new role I am interested in doesn't offer a final salary pension whereas my current role does.

If I get offered the job, what do people think is a fair value to negotiate to make up for the loss of a final salary scheme?

I am interested in finding out your opinions and is there a standard calculation to work out what the annual 'worth' of a final salary scheme is, over a year?

Any advice would be appreciated,

Thanks

Savvy_Sue

I can't answer this with any knowledge, and it might be better on the Pensions board, but you'd want at least the amount which you personally would now put into a personal or stakeholder pension plan to cover not having a final salary scheme, IYSWIM.

jem16

balfralf wrote: »

If I get offered the job, what do people think is a fair value to negotiate to make up for the loss of a final salary scheme?

With employers' contributions on final salary pensions in the region of 15%/20% this is approximately what you would be looking at.

SarEl

balfralf wrote: »

If I get offered the job, what do people think is a fair value to negotiate to make up for the loss of a final salary scheme?

But I would question why you think an employer would want to "make up" such a loss? Employers have generally decided what they want to offer in terms of salary and conditions, and whilst there may be some small amount of give and take, you would have be be a very, very desirable and rare potential employee for them to want you on these terms. There is no requirement for them to compensate you for the "loss" of a pension scheme - you can choose not to loose it by staying where you are, or only consdiering jobs with the (increasingly rare) employers who have one.

FATBALLZ

Final Salary schemes were never meant to be as valuable (ie expensive for the employer) as they have turned out. You are very lucky if you are in one at the moment. Your employer will pay you the market rate for the job and your skills, they aren't going to tack on an extra 20% just because you've abandoned a good pension scheme. Makes far more sense to them to employ somebody else if you start demanding a big chunk extra than you are worth to them.

I lost £10k of tax free share options profit in moving jobs this month, but I haven't asked for compo from my new employer for it, they just pay me what I'm worth, that's how it works.

Running_On_Empty

balfralf wrote: »

I am currently looking for a new job and I understand that the new role I am interested in doesn't offer a final salary pension whereas my current role does.

If I get offered the job, what do people think is a fair value to negotiate to make up for the loss of a final salary scheme?

I am interested in finding out your opinions and is there a standard calculation to work out what the annual 'worth' of a final salary scheme is, over a year?

Any advice would be appreciated,

Thanks

Your new role's gross salary should be at least 22% more than your existing role's salary in order to roughly break even, based on employee contribution of 6% and employer contribution of 16%. This does not factor in the tax relief at your highest rate on your employee contributions.
That is not to say that you could expect 22% more than the employer normally pays for that role.

jem16

Running_On_Empty wrote: »

Your new role's gross salary should be at least 22% more than your existing role's salary in order to roughly break even, based on employee contribution of 6% and employer contribution of 16%.

The employer doesn't pay the employee contribution though.

lincroft1710

Final salary schemes will soon be history for most people. Given the state of the job market, unless the employer thinks you are the greatest thing since sliced bread, you won't have much room for negotiation.

Thought_2

So is it correct 'as a rule of thumb' to say that a final salary pension is worth 10-20% salary extra?

heretolearn_2

Really, like the other posters, I think you are looking at it from the wrong angle here. You might think to yourself that I need to be earning 20% more to make up for losing that pension.

But you can't expect the employer to pay you 20% more than they intended for that role! I can't imagine any employer feeling any need to compensate you for choosing to move to another firm with a different type of pension scheme. If you asked me I'd think you had a bloody cheek. Why should I pay you 20% more than everyone else because of something your old employer did? Your previous employers pension scheme is no concern of mine. I used to have an employer who gave us all a massive Christmas hamper every year, worth a couple of hundred quid. Did I ask my next employer to pay me £200 extra as I was losing that perk?

Seriously, I think you could cause a lot of bad feeling taking this approach. If you want to keep your pension, stay where you are. If you want to move, accept that the vast majority of employers do not offer final pension schemes for a reason, and they will have no intention of paying you the equivalent of one as a special case over all their other employees.

bristol_pilot

Thought wrote: »

So is it correct 'as a rule of thumb' to say that a final salary pension is worth 10-20% salary extra?

Disagree. I would want double, especially if staying in my current role with FS pension is an option. 20% for the extra contributions and 80% for the certainty. You are not going to get this by negotiating a higher salary for a particular role, it would have to be a step up the ladder (or maybe 2 or 3 steps). If this is a move from public to private sector in a professional occupation, it's not impossible.