Pension Opt out

Al_Barino

I'm 35, I have been working in a school for 3 years (not as a teacher) and have been contributing to the LGPS pension scheme. I'm wondering if I should opt out purely because I don't plan on maintaining a career within the public sector and I feel I should maximise my income in order to save to invest. I know normally it's financially reckless to opt out but is it worth staying in if I leave in, say, a year's time?

El_Torro

The money you invest in your LGPS pension will most likely give you a much better return than investing in a SIPP or ISA.


So no, you shouldn't opt out.

crv1963

Pension you're in will as El Torro says give you a much better return than any investment you would make because it also gets your employer contribution and sits waiting for you.

I work with some who never joined our pension scheme thinking that they wouldn't stay long in the job, one now 20 years in the role is regretting never joining the scheme when she started.

Life events alter plans, stick with it and if you leave there is a little bit of deferred income for your future self.

JoeCrystal

Al_Barino wrote: »

I'm 35, I have been working in a school for 3 years (not as a teacher) and have been contributing to the LGPS pension scheme. I'm wondering if I should opt out purely because I don't plan on maintaining a career within the public sector and I feel I should maximise my income in order to save to invest. I know normally it's financially reckless to opt out but is it worth staying in if I leave in, say, a year's time?

Umm, no it is an idiotic idea most of the time. (There are some scarce exception like over the Lifetime Allowance and so on). In term of retirement savings, LGPS is an excellent DB pension scheme with a lot of additional features like a death in service, ill-health retirement and other functions.

Al_Barino

Ok, well that answers that then. Thanks everyone!

capital0ne

I left a job with a 1/60th FS scheme back in 1990's - I'd only been in it for a couple of years, got made redundant so moved on.

Roll forward to a few years ago and I retired and this scheme now pays me £270/month - that covers my rates and a bit more and I'd entirely forgotten about it! I only paid in about £1500! So well worth just leaving it.

JGB1955

Your minimum contribution of 5.5% of salary is topped up by an average employer contribution of around 19%..... which makes it a very good scheme to stay in. And then there’s the death in service benefits and widow(ers) pensions to consider.

AnotherJoe

Its a common misconception that if a pension is just for a few years its "not worth it".

Its like walking along a pavement with a fifty quid notes every hundred metres and not picking each one up "because that one wont make much difference"

MankyVegSoup

I was in LGPS for 7 years when I first started work (many years ago).

In 2 years time I'll be getting a tax free lump sum of around £11,000 plus £300 a month pension. Not a lot in the scheme of things, but enough to let me think about retiring early now my pension age has shifted from 60 to 67.

So glad I stayed in when several of my colleagues were opting out.

Brynsam

Al_Barino wrote: »

I feel I should maximise my income in order to save to invest.

You ARE investing - in a truly excellent pension scheme. Go on doing so for as long as you can!

Aretnap

Speaking as a taxpayer, I for one think you should opt out!