Advice for son

wrlfc

Hello everyone.
My eldest son has just started work at a local prison.
He was given the option to join the Local government pension scheme that is run there.He used to work in another local prison for about 4years up until 3years ago and was a member of the LGPS scheme(same supplier as his proposed new one).
He has asked for my advise about rejoining the scheme as he is unsure what to do.His contribution is 5.5% with his employers paying 14.4%.I informed him he would be foolish not to rejoin,but he is still not sure.
He is 28 years old but is only on 18.5 hours per week, so therefore I don`t think he will pay income tax,not sure about NI.
I`ve posted on here so that maybe more knowledgeable people might be able to inform him of his options.
Thank you.

somethingcorporate

Do it! It'll be the best decision he will make.

His 5.5% contribution will be gross so only costing him 4.4% in reality and he is getting a final salary pension scheme that are absolute gold dust and worth their weight in saffron!

Do some research into how valuable they are, most folks in the private sector would give limbs to have the chance to join such a generous scheme.

The employers contribution will be whatever it needs to be to make sure they provide the final pension entitlement so saying 14.4% is not strictly true as if the overall pot does not cover the required amount the liability remains with the employer to make up the difference.

JoeCrystal

Join it. In spite of coming changes and such, it is still one of the best pension schemes in the country. Nothing else will come near it in retirement savings.

To put it in context, it generally pointed out that it would cost 20-25% of your income to get something close to 2/3 income but that does not even include ill retirement, death in service death and so on. So the value is much higher as well.

Cheers,
Joe

McKneff

It's free money, no one in their right mind would turn that down.

Tell him to get into the pension scheme at the earliest possible opportunity, he will hopefully get more hours and end up doing full time, and hopefully have a damned good pension at around a third of the cost to him, in retirement.

dunstonh

I informed him he would be foolish not to rejoin,but he is still not sure.

You are correct. Him not joining the schemes would rank amongst one of the worst financial decisions of his life.

hyubh

wrlfc wrote: »

He used to work in another local prison for about 4years up until 3years ago and was a member of the LGPS scheme(same supplier as his proposed new one).

Aside from joining a second time, if (if!) his rate of pay is higher in real terms now than when he left the old job, he should also look to combine the old ('deferred') pension membership. Combining membership means that it will all go against the final pay of the later job; keeping it separate means the first 4 years will be against the final pay of the old job. If the employer doesn't provide it, the administrator will have the necessary form to complete (won't be very complicated).

atush

Tell him we all said to JOIN it!!!

He will not regret it later.

kidmugsy

dunstonh wrote: »

You are correct. Him not joining the schemes would rank amongst one of the worst financial decisions of his life.

Worst for him, but pity the poor taxpayer who has to fund this.

kidmugsy

There's a serious point lurking here. If these horribly expensive schemes - expensive for the taxpayer, that is to say - aren't appreciated by the employees, then it seems likely that they aren't doing their job of attracting and retaining staff.

Might it not be better to offer a 10% pay rise to any employee who agrees to leave the scheme? They could always be offered defined contribution auto-enrolment terms instead.

hyubh

kidmugsy wrote: »

There's a serious point lurking here.

Ooo, I feel a trite 'political' point coming on...

If these horribly expensive schemes - expensive for the taxpayer, that is to say

Bingo!

aren't appreciated by the employees

You realise this thread doesn't actually support that assertion?

Might it not be better to offer a 10% pay rise to any employee who agrees to leaves the scheme? They could always be offered defined contribution auto-enrolment terms instead.

No. (I like easy questions!)

atush

If the govt did offer those terms, I can just see the suing that would occur 30-40 years from now.

I can hear the wailing now about living in poverty.