Teaching Pension in non teaching job vs no pension in potential new job???

Knotty81

Hi,

I currently work for a well established company that has a scheme where I have been able to bring my teaching pension into the company.

I currently pay 10.1% into my pension and my company pay 14.4%. I have been interviewing for a new job who are a small start up company (established 3 years) but they have no pension scheme in place. They also have no additional benefits other than commission.

I am aiming to ask for an increased salary package if I was to consider the move but realistically what kind of figures would I need to be paying into a non teaching pansion to ensure I get anything like these returns.

Is it worth taking the risk of not paying into a pension for a couple of years and then entering back into one (not a teaching one) at a later date? Possible with another job move in the future?

I am 32, so unfortunately a long way off retirement yet.

The potential new company also dont have a well defined maternity package.

Are these things important or shall I go with an increased salary for a limited period and not worry about the sensible things??

Thanks in advance for your help.

kidmugsy

I gather it's normal for start-ups to offer no benefits.

So ask for a 33% pay rise and be careful not to get pregnant.

Your_Hero

A word of advice - you should consider the whole package of benefits as well as prospects for promotion etc. and not just the headline salary rate.

Knotty81

kidmugsy wrote: »

I gather it's normal for start-ups to offer no benefits.

So ask for a 33% pay rise and be careful not to get pregnant.

Why would I need 33% is that the equivilant of what I would need to save? or pay in elsewhere to match what I have now?

Knotty81

Your_Hero wrote: »

A word of advice - you should consider the whole package of benefits as well as prospects for promotion etc. and not just the headline salary rate.

I have been considering the whole thing but the pension is the main thing I keep coming back too. I think it's such a good one it would be a shame to miss out and I dont think i'd get back into anything like it?

In regards to the prospects it could be great if things take off, i'd be there to help shape things, influence where it goes but as the market is so new it could be a complete flop.

PeacefulWaters

Knotty81 wrote: »

Why would I need 33% is that the equivilant of what I would need to save? or pay in elsewhere to match what I have now?

You'd already said

I currently pay 10.1% into my pension and my company pay 14.4%.

so that suggests 24.5% is a sensible compromise if they reject 33%.

And if you get it, do make sure you use the money to fund a pension.

kangoora

Looks like you need 15% extra on your gross salary just to break even. Your 10% will come from your pay whether you stay or move. Assuming you don't want to move jobs from an established firm to start-up without some benefit then an extra 10% on top isn't unreasonable (total of 25%) jus on the basis of a pension plus 10% pay-rise.

Now, there's a lot of other things to consider that also have an associated cost or quality of life concern.
How many holidays, if less than existing co. these have a cost.
Decent maternity package if you are thinking of a child
Potential subsidised child care a big employer might offer
Again, if a child comes along, does your existing co. Offer job share or part-time in case you decide to do this - less likely in a small company
Is your current pension a salary sacrifice scheme, if it is then you will lose out on 'repayment' of NI contributions
Any other benefits such as free or subsidised Life insurance
What about sick leave allowances? How do they compare?
There's probably more but this is off the top of my head

I can understand the attraction of a small start-up, good luck in whatever you decide to do.

mgdavid

the only benefit the startup can offer which your current position doesn't is a share of the action, i.e a share allocation in the company. Do you know how the company is structured, is it listed or completely private? Their reaction when you ask about share options at interview will tell you a lot.

kidmugsy

Knotty81 wrote: »

Why would I need 33% is that the equivilant of what I would need to save? or pay in elsewhere to match what I have now?

Your teacher's pension is worth more than the apparent 24.5% because it's defined by the benefits it promises, not the contributions made. So you should ask for something bigger than that.

Look at it like this. For every £114.40 your employer pays you £14.40 goes straight from him to your pension. Then of your £100 left over another £10.10 goes into the pension; you are left with £89.90. Now suppose that your start-up pays you £133: to be left with the same £89.90 that would mean paying £43.10 into a pension, which is comfortably above the £24.50 that you consider is being paid to your pension at the moment, but which is actually worth more (if I understood your original post correctly). Of course, you point out to your new employer that you are giving up £114.40 (or more, as already discussed) plus other benefits, so it's clear that if you are to take the gamble of a start-up you can reasonably ask for a clear rise over £114.40: £133 would be a rise of 16% which surely isn't unreasonable?

Of course, depending on your tax rate, you might actually want to pay more, or less, into your pension than £43.10, but you certainly don't want to be out-of-pocket. (I suggest you consider contributing enough to let you avoid higher rate income tax.)

If you think that margin is too tight to compensate you for the loss of other benefits, ask for more.

atush

Bascially an pension like the teachers pension has a lot of things within it, from the indexing, spousal pension, to death in service benefits etc that would equate to an overall cost of around 30% if bought separately by a pot of money.

So this is why you would need at least 30% to pay into a DC pension to worth the same as your current pension.