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First Pension Choice - Big difference?

dmcl27
Posts: 10 Forumite
Hi, just about to start first proper job and have a choice of two pension options
-an index-linked defined benefit pension scheme, 3.5% member contribution rate
or
-a stakeholder pension with contribution from employer
Any advice on what might be best, hasnt really been something that i would have thought about until now
-an index-linked defined benefit pension scheme, 3.5% member contribution rate
or
-a stakeholder pension with contribution from employer
Any advice on what might be best, hasnt really been something that i would have thought about until now
0
Comments
-
defined benefit at 3.5% is a steal.
Most final salary schemes need around 15-20% in money purchase alternatives.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Civil service by any chance?
If it is the stakeholder employers contributions is 3-12.5% (depending on age) plus up to 3% matching contribution.
The comparassion between that and the new (ie worse) DB scheme is here
http://www.civilservice-pensions.gov.uk/new_entrants_300707/help_me_to_choose/scheme_comparison.aspx0 -
Yeah its civil service. The stakeholder option does have a contribution on age but doesnt give any figures. As you say it also matches up to an additional 3%. Ive just turned 23, thinking that the stakeholder may be the better option0
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The stakeholder numbers are here
http://www.civilservice-pensions.gov.uk/scheme_information/partnership/how_much_does_it_cost.aspx
at age 23 it's 4.5% (plus the matching 3%).
The employers contributions in the DB scheme (called Nuvos) are worth more but provide less flexibility.0
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