EES 5.5% ERS, 19.3% on the pension part of my wage slip...

RedfordML

Total newbie, (see other threads!)

Last one from me on pensions, do these % seem about correct. Ive had these confirmed as employee and employer...

Are these % fair and abut right?

Thanks again all.

JoeCrystal

Please stick with a single thread regarding your questions. That sound like it is a defined benefit scheme.

I would say that for a DB pension scheme, it does sound very generous and you are paying peanuts for something that is far more valuable. After all, the average total contribution rate for private DC schemes are 3.4%, (1.2% from employee & 2.1% from employer) in 2017

Kynthia

You are presumably in a DB pension schene? If so this money isn't going into a pot in your name. These amounts are funding the whole scheme and in return you are promised a pension for life. There are many differences between DB and DC schemes which you may want to read up on. Generally they are viewed as very valuable as they are usually generous compared to the amount you contribute and low risk to you.

hyubh

RedfordML wrote: »

Last one from me on pensions, do these % seem about correct. Ive had these confirmed as employee and employer...

Are these % fair and abut right?

Sounds like LGPS, in which case you aren't as poorly paid as you think you are. It's just that a sizeable chunk of your pay is deferred until retirement, in effect.

PS - LGPS employee rated are banded by salary to benefit the low paid. So even on its own terms, 5.5% isn't much at all for the pension earned. Things are different in a DC scheme, like if you worked in a supermarket, where contributions need to be high to get a decent pension by the end.

Johnnyboy11

The University Lecturer's USS pension contributions are currently 8%/18% and set to increase to 11.4%/24.2% by April 2020 (on earnings up to about £57k). So I'd say you are getting a very good deal.

RedfordML

Apologies, no more theads from me.

It is a LGPS.

Thanks all for all your comments and advice, been fantastic. I’m now sticking in this pension scheme and even though I believe it’s a short term role I will at least have something to start.

I will keep details as even if I only work 6 months, it’s still over a £1k in my pot.

All the best.

Dazed_and_confused

If you leave within 2 years you may not be able to keep the pension (Silvertabby will know for certain I think).

If that happens do not accept a refund of your contributions but transfer them out to another provider. There can be a significant difference in value, generally considered a very poor deal getting the contributions refunded.

And you don't have a pension "pot" with LGPS. JoeCrytal explained this on your other thread. Basically you are paying £770 in a year into the pension. And when you retire you will get £285 a year back as a pension. Every year. For the rest of your life. So if LGPS retirement age is say 68 and you live to 98 you will get £8.5k back and this is ignoring any inflation increases which you no doubt get.

Now you mentioned that you are on 14k, should you spend a whole year working on that salary, you will build up an annual pension of £285 per year. It cost you £770 or £64 per month this year to build up that annual pension which is a peanut. All investment risks rest solely with the fund, and you know that you got an ironclad index-linked pension by 68 or earlier (which will see it actuarially reduced).

RedfordML

Thankyou!

What happens if I leave this role and return to study and do a masters? Do you get a timescale to transfer as I may not be in FT work for the follow 2 years?

Dazed_and_confused

According to the LGPS website you have three options,

https://www.lgpsmember.org/leaving-early.php

Silvertabby

As Dazed says.

Note that if you leave with less than 2 years service, and are tempted by the refund, you would only get back your own contributions (less 20% tax) as your employer's contributions would be forfeit.

Far better to transfer to another scheme - but:

A transfer is only an option if you have at least 3 months service. Less than that, and it's a refund only,

You must transfer your benefits to a new scheme within 5 years of leaving the LGPS - or you will default to the refund only option.

lisyloo

19.3% is fantastic.
Do bear this in mind when comparing with other jobs/options.