value of public sector pension

w00519772

Say you were offered two jobs. One with a salary of 45k and the other with a salary of 50k. You liked both jobs the same.

Both had pension schemes. One were the employer makes 5% contributions (50k job) and the other being the public sector scheme.

The total package of the 50k job would be: £52500. What would the total benefits be of the 45k job with the public sector pension scheme?

JoeCrystal

I would go for public sector pension job right away.

After all, the conservative value of public sector pension fund is 25% on top. Depending on what the public sector pension is, you get ill retirement, death in service benefit and so on. Which you rarely get with the private pension.

Private: You bear all the investment risk yourself with no idea on how good the income is when you retire. If you are unlucky, your income would be bad

Public: The employer bears all the risk and you will get defined benefit. A fixed amount of income and so on. (And it cost a pittance to get it).

warwicktiger

A lot more is the easy answer!

dunstonh

A broad indication is that most public sector defined benefit schemes would require a total contribution of around 25% of your monthly pay if you wanted to match it with a money purchase scheme.

marlot

As someone in my 50s who has reached the top of his tree (salary wise), I value my public sector pension (alpha) at about 40% of salary. I contribute 7.35%, and the government the rest.

I took a major pay cut to take this job, and the pension goes a long way to making up the difference.

Drp8713

I had this recently.

I get £35k and the LGPS at the moment.

Was offered £40k and a 5% DC scheme.

It wasnt enough to get me to move. I just didnt see the point of going to a job with less flexibility and benefits just for £5k more that I would have to stick straight in my pension anyway.

hugheskevi

All public service pension schemes publish their Valuations, which shows the value of the pension benefits accruing in terms of the employer contribution. This is different to the actual employer contribution, which will include things such as past service deficit payments and possibly administration costs.

For example, the NHS Valuation shows the value of the employer contribution to members' pension benefits in the post 2015 period is on average 11.9% (Page 8). That is the contribution for the average member, and will be different based on individual circumstances, for example age, marital status (now and in future), salary, time which will be spent in service and so forth.

Also consider the potential for future advancement - average salary in private sector is increasing at around 3.4% whereas public sector is around 1%, and that is likely to stay the same for the next several years.

232607

If this helps...
I was in a private DB scheme (1/66th) and my company detailed their contribution to my pension on the pay slips. Not sure why they did this because it seemed fairly irrelevant to me.
Anyway this worked out at 27.5% which when combined with my 5% meant that nearly a 1/3rd of my salary was needed to fund the DB. I would certainly expect a public DB scheme to need this sort of funding if not more.

Regards.

Andy_L

w00519772 wrote: »

Both had pension schemes. One were the employer makes 5% contributions (50k job) and the other being the public sector scheme.

Which one is on offer, there's no such thing as the public sector scheme, especially following the latest round of changes.

w00519772

Andy_L wrote: »

Which one is on offer, there's no such thing as the public sector scheme, especially following the latest round of changes.

It is the Public sector pension scheme (LGPS). My department was outsourced last year and we were moved to a new contract of employment.

I accepted a 3K payrise and moved from the LGPS to a private pension scheme (employer contributes 5%). I believe I should of challenged this more than I did.

hyubh

w00519772 wrote: »

It is the Public sector pension scheme (LGPS). My department was outsourced last year and we were moved to a new contract of employment.

Hmm... this will the same LGPS that you freely choose to opt out of prior to the TUPE, right?

I accepted a 3K payrise and moved from the LGPS to a private pension scheme (employer contributes 5%). I believe I should of challenged this more than I did.

So you're not actually mulling up another job, but trying to take the mickey and rip off your currently employer instead...? Insofar as you're looking for 200 quid compensation or so for a payroll cockup, I'm all in you're favour; if however you're trying to retrospectively pretend you valued LGPS membership more than you actually did and are therefore seeking to speciously argue you were bullied out of it, I hope you fail.