Casual Contract & Near Retirement - Worth Contributing to Employeers Pension Scheme

TennisFan

Hi,
I took early retirement from my previous employer a couple of years ago and get an occupational pension from them. I've just started doing some very occasional casual work at a local school (just a few hrs per month) and have been told that I will automatically be enroled in the Local Government Pension Scheme unless I request to opt out. From what I can tell I would be paying out 5% of my tiny pay pkt if I join the Scheme. So the question is - is it worth my while joining the Government Scheme or am I better contributing to SERPS?
For example, given the recently announced flat rate state pension which I'll receive in 6 years time, is there any advantage one way or the other?
I've read the various Govenment guidelines about the new flat rate pension but have to admit I'm finding it challanging to get to grips with at the moment!!
Many thanks for any advice.

xylophone

The STSP legislation has now been passed. Have you seen this https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

http://www.scottishlife.co.uk/scotlife/web/site/Adviser/TechnicalCentralArea/Informationguidance/General/TheStateSecondPensionExplainedPage.asp worth a read.

If you intend to stay in the job for the next six years you might as well take advantage of the employer's contribution in what is now a CARE defined benefits scheme?

http://www.lgps.org.uk/lge/aio/17364756

hyubh

TennisFan wrote: »

From what I can tell I would be paying out 5%

The band for the lowest paid is 5.5% gross, so you'll be paying that.

So the question is - is it worth my while joining the Government Scheme

Yes, and you will effectively be taking a sizeable pay cut otherwise (the CARE LGPS is deliberately most beneficial for the lower paid). On the basis of what you've reported, when the time comes you'll be able to take the pension in one go as a lump sum ('trivial commutation'), so you won't end up with something silly like two pounds a month or whatever.

or am I better contributing to SERPS?

Contracting out is scheduled to be abolished completely shortly - it's only with DB schemes like the LGPS that it still exists - so that question will soon be academic. (Strictly speaking SERPS was replaced by S2P a few years back, but you're right that joining the LGPS currently means contracting out of SERPS/S2P.)

TennisFan

Thanks xylophone and hyubh, both helpful responses. Now much clearer re' my best course of action. Great forum support yet again!!