Final salary or employer's scheme - which to pay into?

Craig_W_2

I have some spare cash at the moment and want to make some extra pension payments to increase my meagre provision.

I have two jobs both of which have pension schemes: one is with a county council who pay 5.9% of my salary into the Local Government final salary pension scheme; the other is with the National Trust who will match any contributions I make into their Legal & General pension scheme up to a maximum of 90% of my income.

Am I right in thinking that the NT option is the most efficient way of increasing my pension provision because of the matched contributions and tax benefits?

Or could it somehow be more lucrative to put the extra money into the county council scheme?

dunstonh

Are you a member of both schemes already?

Craig_W_2

Only the final salary scheme, though I make no contributions over the automatic 5.9%.

dunstonh

Its a no brainer then. You should be on both because nothing else beats free money.

Craig_W_2

I was just wondering if the additional payments I want to make would be more efficiently employed going to one scheme or the other?

molerat

LGPS, excellent pension but you will be funding 80% of the extra contributions
NT, possibly not so good a pension but you will only be funding 40% of the contribution

jamesd

It's tough to compare but with 100% matching and the flexibility to take the full pension from age 55 the National Trust deal looks like the better of the two. That's an exceptionally generous money purchase deal!

If you have a mortgage that NT deal is wonderfully good for using an interest only mortgage and paying it off with the pension lump sum. If you'll be 55 soon enough.

Shimrod

Craig_W wrote: »

the other is with the National Trust who will match any contributions I make into their Legal & General pension scheme up to a maximum of 90% of my income.

Are you certain of that? This is what is quoted on the nationaltrust website
"Pension scheme > Through our pension provider, Legal & General, you can join our stakeholder pension scheme (the scheme also provides generous ill-health and death-in-service benefits). For your 3% contribution - you can, of course, pay more - we'll contribute 6%"

That implies a maximum contribution of 6% regardless of how much you put in. What you are quoting above sounds too good to be true!

http://www.nationaltrustjobs.org.uk/about_us/rewards_and_benefits

edinburgher

That implies a maximum contribution of 6% regardless of how much you put in. What you are quoting above sounds too good to be true!

It does sound a bit too good to be true!

Craig_W_2

Thanks for all the replies.

Judging by your incredulous responses, I suspect I have probably misunderstood the NT pension offer.

Here is the quote that led me to the 90% conclusion:

"You must reduce your contractual pay by at least 3% of your basic salary each month. The Trust will then make a contribution to the Scheme equal to this amount. You can increase the amount exchanged to up to 90% of your basic salary each month."

I took this to mean I could pay up to 90% of my salary into my pension and it would be matched by the Trust. If it doesn't mean that, what does it mean?

Annisele

Craig_W wrote: »

Here is the quote that led me to the 90% conclusion:

"You must reduce your contractual pay by at least 3% of your basic salary each month. The Trust will then make a contribution to the Scheme equal to this amount. You can increase the amount exchanged to up to 90% of your basic salary each month."

I took this to mean I could pay up to 90% of my salary into my pension and it would be matched by the Trust. If it doesn't mean that, what does it mean?

I think it means that you'll be the one paying for your contributions.

Assuming you earn £100 per month (for easy maths!) then I think it's saying that you must reduce your contractual pay by at least £3. The Trust would then pay that £3 to the pension scheme.

If you wanted to, you could reduce your pay to £10 per month, and the Trust would pay £90 to the pension scheme.