Should I withdraw from Public Pension Scheme

Krach78

I pay £187 Per Month into my public sector pension. I am 33, and can not retire until I am 68!(at the moment)
I have two young children, a mortgage, and child care costs as my wife and I both work.

The question is, should I consider withdrawn from the Pension Scheme for the next 4 years, in order to make our lives less stressful money wise, then put back into the scheme once the kids are in school?

My pension pot would remain frozen, then I can start in the same scheme with same benefits, and start adding to that pot again after 4 years.

I am struggling to see a down side to this, but am concerned I have missed something? Any advice appreciated.

CannySaver_2

Hi

I'd stay in the scheme for the following reasons:

1. Even a four year break in service will mean less pension when you hit retirement

2. I assume you are in a defined benefit scheme (aka final salary), this is without doubt the finest type of pension you can be a member of as you bear no investment risk, with every other pension the returns are dependent on the investment returns. Most people in the private sector would sell their granny to be in such a scheme (a fact the unions don't seem to recognise)

3. Perhaps you could find other ways to save money, I would not srimp on your pension though

4. If you withdraw there is always the possibility that you might not be able to return to the scheme on the same terms

5. Not sure about this one but would you still qualify for valuable death in service benefits if you withdraw from the scheme, the widows pension might be affacted too

6. You might be able to retire sooner than 68

Grin and bear it, things are tough at the moment, but they won't always be and come retirement you won't regret making those contributions.

The Canny Saver

atush

No. You are missing everything.

Keep paying in.

Even if that means robbing peter to pay paul and your OH may not be working full time? If not, they need to or you need to find another solution.

there will always be more stress to your finances while you have children and a mtg. Your finances are under stress to afford your children. So you need to find a way around it (grandparents/other relatives) or some other solution such as part time work, lowering your costs (will save you hundreds).

Try posting an SOA incl child care at the budget or Debt free boards.

CLAPTON

well

public sector pensions don't have a 'pot'

you pay 187 per month but that is tax free so you will only get 149 in your salary
plus you NI will increase form 10.4% to 12%
plus you will lose valuable life insurance
and you lose child benefits if you die

have you actually read the benefits of the scheme

and who knows you may not be able to rejoin in 4 years time
and anyway in 4 years time there will be other reasons not to rejoin

madness

dtr1001

Keep paying it, just consider it essential, as one day it will keep you afloat, even if it seems like years away. I'm 49 now and was your age just last week

Krach78

Sound advice from everyone, thank-you. You have really given me a different perspective on the situation now. dtr1001, I know the feeling, just last week I was 21! The pension stays, thanks again guys.

dunstonh

dtr1001, I know the feeling, just last week I was 21!

And it only speeds up I'm afraid.

Pixieboy

It's always heartening when posters listen to sound reasoning. Well done OP!

On a different tack, you mention child care costs. Would you be able to use childcare vouchers, if your employer offers them of course?

I know the tax benefits have reduced now, but may still be worth a look. Every little helps as I think I've heard somewhere...

oldwiring

A bit OT, and I am not directly concerned, just interested, as my married daughter works for a county council.
Will benefits earned so far under the exiting scheme be protected with only those earned after the introduction of the new subject to career averaging?

I hope so as anything else seems unfair, if not fraudulent.

Yorkie1

oldwiring wrote: »

A bit OT, and I am not directly concerned, just interested, as my married daughter works for a county council.
Will benefits earned so far under the exiting scheme be protected with only those earned after the introduction of the new subject to career averaging?

I hope so as anything else seems unfair, if not fraudulent.

As far as I am aware, yes. Subject to the downrating from RPI to CPI.

atush

oldwiring wrote: »

A bit OT, and I am not directly concerned, just interested, as my married daughter works for a county council.
Will benefits earned so far under the exiting scheme be protected with only those earned after the introduction of the new subject to career averaging?

I hope so as anything else seems unfair, if not fraudulent.

It is fair and not fradualent.

It is keeping your daughter in the style to which she has become accusotmed to rather than tossing her out as unaffordable. And right this may be as I am sure her work for the country is worthwhile.

But as she and her co-hort are living many years longer than yours, and for the last decade or so have not been underpaid as they were in the past, it is better to have a few changes and keep as many as possible in their jobs. If we dont, it could be sacking all round as in Greece.

If your daughter is a fat cat at the top in management, she may be worse off than before, but career average is better for the rank and file who don't end up their working lives in the top tier but go up quickly then stay at plateau. And they go from one year/80ths to one year/60ths.

We value public sector workers, but need to keep their total remuneration incl pensions affordable so as to keep as many of them working as possible.