Moved from Public to private sector.. question on pension.

isotonic_uk

Hi

I am 29 and have recently changed my job and moved from a city council job to work in the private sector. I had a pension for 6 years with the city council.

My new company doesn't have a pension of their own instead they have some sort of partnership with Aviva where you can have a pension with them....

You have to excuse me.. I may have been putting into a pension but have never really understood whether I have been getting a good deal from the city council pension...I think I was one of the last ones to get a final salary pension though.

I am deciding what to do now... I have been told to leave my public sector pension alone and effectively freeze it and start a new pension with my new company.. Is this a good option?

I appreciate I probably havent given enough information about my previous pension and what the contributions are for the new one.. but Im happy to reveal this if anyone can assist me...I am bit unsure what to provide but would be happy to respond back....

Please help one confused person.....

Thanks

jamesd

Public sector pensions, now and with the proposed changes, are just about the best around. You should leave it where it is. It'll be of more value to you left alone than anything you could with the money if you tried transferring it.

For almost all private sector pensions for new employees the deal is that you get a pension scheme and you and possibly your employer pay money into it. You then pick investments and manage those so that our money in the pension grows. When you take an income from the pension you can either use income from investments, called income drawdown, or buy one or more annuities that pay out a regular income.

For these private sector defined contribution schemes the key factors to consider are the investment choices available and the cost of those investments compared to other options. So we'd need to know about the investment options and charges for those options to give an opinion about whether the Aviva offering was a good one or whether you'd be better off ignoring it and just picking one of your own. If your employer was paying any money in it would be easy in part, we'd tell you to pay in enough to get the full employer match at a minimum. Then we'd consider charge and range of investments to decide whether it was worth using it for any other pension contribution money.

To start, you'll need to work out how much you should be paying in to the pension. To do that use the Hargreaves Lansdown pension calculator. Your target income is however much you want to have as an income in today's money in retirement. You can assume that you will have £7,000 from the state pensions and whatever the projected value of the council pension is, so subtract those two numbers from your target. The calculated contribution value and projected pension value from the calculator aren't guaranteed, they are just an estimate to help to get you into the right range of contribution values.

JoeCrystal

Well, to show how good the value of final salary pension is, in order to simulate it within the private pension scheme, it requires contribution of 25% of your salary throughout your working life.

Cheers

Joe

atush

Keep your current PS pension 'frozen' or paid up. Your old one (and even the new ones that everyone is striking over) are far better than you can or will get in the Private sector. Those 6 years of pying in on your (I rpesume low starting salary) will be the best money you ever spent.

Start a new one with new employer. Are they contributing? If not, check the charges of the nwe scheme. If only your money going in, you may be able to do better elsewhere charges wise. but if the scheme is large enough you will do better with the company one as they negotiate lower charges.

Save elsewhere in isa etc as well.

isotonic_uk

Hi All

I like to follow up onnthe original thread which i posted as im still in a confused state about what to do with my pension and im about to take the plunge with my company pension as i dont want to keep holding back otherwise i will never sort it out.

So i have been with my new company for nearly 6 months and they will now contribute towards my pension where before 6 months they didnt. There are effectively 3 tariffs on offer from the company..... bronze, silver or gold package.

The bronze tariff is based on me putting 3% in and the company will put the same %. If however i go for the gold package (which is the one i am particularly interested in) if i put in 7.5% the company will initially put 3% but then after 1 year this will increase to 5% and then in year 3 it will match my contribution at 7.5%. This at the moment seems the best offer available to me but before i commit i just wanted to enquire whether i could get a better deal with a private pension.

With my current company the longer i am with them the better the pension will be. The question i have for someone who is particularly knowledgable about pensions is this is a good deal? Any recommendations with another private pension? This company pension is underwritten by Aviva.

I already have 5/6 years with my public council pension which i have decided to freeze... Is there anything else i need to do with my public pension in terms of form filling or paperwork i need to receive from them?

Any advice would be most appreciated.
Thanks

CLAPTON

as your company is giving you 'free' money into your pension scheme you will not do better going it alone; take the gold package; not as good as your local government scheme though

RichandJ

I can't comment on your new arrangement as I'm not a DC specialist, but you should have received a deferred (deferred, not "frozen" or "paid up") statement from your public sector scheme.

If you have > 2 years service this PS pension is automatically deferred & you shouldn't have to do anything else until the scheme's retirement date except keep them informed of any change of address. I'd also suggest you keep a file with all communications you receive from the PS scheme - there may be many changes before you hit NR age.

atush

Yes, go for the Gold to maximise your employers contribs (known here as 'free money') and can't do better elsewhere.

As dor your FS pension of 6 years not sure what you need to do but you can call and ask. And it will be worth it just sitting there for years as it will grow with inflation.