What is the maximum they can make you contribute to pension?

majorwally

I contribute 6% into my pension scheme, yes, I'm public sector-(Boooo-hiss)
Looks like we have a 3% contribution rise on the way (which I can't afford) so I'm thinking of dropping out.

My question though is about contributions.
Is there a maximum contribution for public sector pensions or can they just keep going until 100%, thereby forcing ALL public sector workers out of their schemes? (do you think they have thought of this?

Please say there is a max has any more than 3% and I am definitely out!

hugheskevi

Looks like we have a 3% contribution rise on the way (which I can't afford) so I'm thinking of dropping out.

I think it is an average of 3.2% increase, which lowest earners will be exempted from, another tranche of workers are protected with a cap of 1.5%.

To achieve the 3.2% average, tiered increases will therefore be required, which for some (highest earners) will have to be an increase of more than 3.2%.

Is there a maximum contribution for public sector pensions

No.

Some schemes already have member contribution rates of 11% or so, which after the increase will be something more like 15%.

or can they just keep going until 100%, thereby forcing ALL public sector workers out of their schemes? (do you think they have thought of this?

It would be easier just to close the scheme, which would achieve the same outcome with about the same amount of union pressure.

atush

Majorwally,

Dont; be afarid of having a PS pension- we don't hate you lol! But do find out from your HR dept what increase you are likely to have as has been said, not all will get the same rise.

And think twice before you drop out- even for a year. It might be better to go to the Debt free or old style baords and learn how you are overspending so you can cut back and shave off enough to keep your contributions.

A good start is to see if you can get cheaper insurance, utlilities, internet and phone contracts?

Debbie_A_3

Hi Majorwally,
Please think very carefully before dropping out of a public sector pension scheme. I am a teacher so I am also looking at the 3.?% increase. However, the benefits will still be worthwhile and better than anything you could get by making your own arrangements privately.

Debbie

majorwally

Has this been changed recently then, as I was told when I joined that the maximum contributions were 12% or something like that?

Loughton_Monkey

In general terms, company pension schemes can, after 'due consultation', be amended, or even dropped altogether for the future. Given that it won't be long before employers must offer a very small scheme (in terms of contributions) this is most unlikely.

In the case of Public Sector, you are simply being asked to pay extra for an extremely good benefit you will continue to receive. Most Private Sector workers have seen their Final Salary scheme abolished for the future altogether, and swapped for a much lower value Money Purchase arrangement.

The 'true' overall value of this benefit to you is in the order of 25% or more of your salary. You are telling us you are asking to increase your contribution from 4.8% [after tax] to 7.2% [after tax].

You are free to withdraw voluntarily from the scheme if you wish. I can guarantee that you will, at some future date, regret that decision immensely.

kidmugsy

I'd like to avoid my contribution to public sector pension schemes too, but HMRC would have me jailed if I tried.

gadgetmind

majorwally wrote: »

I contribute 6% into my pension scheme, yes, I'm public sector-(Boooo-hiss)
Looks like we have a 3% contribution rise on the way (which I can't afford) so I'm thinking of dropping out.

OK, here is an experiment, and I do urge you to try it. Go to a pensions calculator such as the one on the Hargreaves Lansdown web site. Punch in your numbers and see what sort of a pension 6% or 9% contributions gets you. It will be very, very small. Now try with the 25%-30% that those who have to fund their own pensions have to contribute unless retiring in poverty appeals. The numbers will look slightly better but still not a patch on the value for money you can get by having the tax payer fund your pension for you.

So, in summary -
1) Leaving your public sector pension scheme will be bad for your wallet but GREAT for tax payers, so I vote you do it.
2) Stop complaining. I don't blame anyone who rides the gravy train as far and fast as they can, but let's just say that complaining about the buffet service to those trudging alongside won't get you much sympathy.

jem16

majorwally wrote: »

Has this been changed recently then, as I was told when I joined that the maximum contributions were 12% or something like that?

I think you are probably thinking back to the time when the maximum contributions you were allowed to make (including Added Years or AVCs) was 9%. So if the main scheme was 6% you could only buy Added Years or AVCs up to 9% of your salary, so an extra 3% was all that was allowed. This was prior to A-Day in 2006. Now there is no maximum and you can pay in whatever you like.

This is very different to the amount you can be asked to pay to provide your pension.

As everyone else has said, you would be very foolish to opt out and will regret it later.

vbm

Tough choice. Either pay an extra 3% or live off tins of out of date cat food in retirement.....

gadgetmind

Yup. Public sector pensions will get cat food. Us ants won't do as well as the grasshoppers: we'll get dog food and sawdust.