New Job..Is the pension they're offering worth it?

sara_501

They're offering me a Index-linked final salary pension which I must contribute 6% of my salary to

Having heard all the scare stories recently about missing pension funds and the fact that I have so long to go before I'm of an age when I can claim it....

I just wondered what your personal opinions were on it? Should I go for it or opt out in favour of savings or something else?

Appreciate your advice, even after doing a bit of research I'm none the wiser.

dunstonh

Having heard all the scare stories recently about missing pension funds

There have been no scare stories of any Govt pension schemes losing any money.

I just wondered what your personal opinions were on it?

One of the best schemes in the country. As a tax payer, I dont want you to join it

Should I go for it or opt out in favour of savings or something else?

To match the benefits that your 6% contribution will give you, you would need to put aside around 15-20% of your income into any alternative.

Thats how good it is.

It's a no brainer - get in it as soon as possible.

brasso

Yes. Do it. In years to come you'll be glad you did.

Poppy9

As a LA worker, yes join. It's extremely likely that the 6% rate is going to increase in the near future and they are increasing the retirement age to 65.

Do a google on LA superannuation and you should find some useful information. Do not get confused with the Civil Service pension scheme which is different.

seven-day-weekend

The Local Government Pension Scheme is one of the best in the country.

I only paid into it for just under ten years and have a deferred pension of £2.5k pa and a lump sum of £5k (in today's money) to come in 2014. This is index-linked and has a spouse's pension if I die before him.

Thin how much you'll get if you pay into it for thirty years! You wouldn't get this mush for under ten years in most pension schemes.

CAE

The pnsion and lump sum figures quoted by seven-day-weekend will have been based on the full time equivalent salary. There are very many low paid jobs in the local government sector, and many peope do not get a very high pension. Also there is a very high proportion of part time workers.

The lump sum figure is normally three times the annual pension, so not sure where a pension of £2500 and lump sum of £5000 comes from.

I do agree however that the LGPS is a very good scheme, although there are proposed changes. For more information use the Nationsl LGPS website

www.lgps.org.uk

CAE

Under the current regulations your benefits would be calculated as follows.

Annual pension -1/80th of FTE final pay for each year of reckonable pensionable service

Pension commencement Lump Sum - Annual Pension x 3

As you work half time (18.50 / 37.00), each year that you work counts as half a year for the calculation of benefits. Therefore, for every two years that you work, one year would be used in the calculation. However, your Full Time equivalent salary is used in the calculation.

If you work term time only your reckonable membership would be reduced further as would not be paid for 52 weeks of the year.

As an example, if you were in the pension scheme for 10 years, based on a FTE salary at leaving of £13854 the pension benefits would be as follows:

5/80th x £13854 = £865 per annum, plus a lump sum of £2597

Benefits would be payable at age 65.

Here is the link to the lgps website calculator, but it appears to only cater for full time employees.

http://www.lgps.org.uk/joining/cost-calculator.html

This link explains the calculation with an explanation for part time employees at the bottom of the page.

http://www.lgps.org.uk/contributing/calculate-retirement-benefits.html

As a member of the LGPS you are also covered for a lump sum death gratuity to be paid in the event of your death, at twice your actual rate of pay.

The regulations are due to change in April 2008, so the actual calculations will be different from then.

Hope this helps. Please feel free to PM me if you require any further info.

EdInvestor

To give you another idea of the value, to get an income equivalent to the index linked basic state pension (84 pounds a week) as a woman retiring at age 65, you would need to save up a pension fund of approx 130,000 pounds.