LGPS (police)

Dazed_and_C0nfused

lisyloo said:

Dazed_and_C0nfused said:

That’s why I’m trying to convert db to dc so I can compare.

I don't think you can really do that.

dc job = £50k salary + £3k employer contributions = £53k
db job = £38k salary + £7.6k pension equivalent - £2470 pension cost = £43130

Don't really understand that to be honest.

What is the + £7.6k pension equivalent??

If your job with LGPS pays £38k then you will be contributing £2,584 gross, £2067 after tax relief so a net cost per month of £172.

In return you will accrue a pension of £775.

The £7.6k is the value of the “circa 20%” I.e. £38k * 20%.
My understanding of what you said is that he LGPS is worth approx 20% of annual salary. Is that what you meant?
if not do you have a suggestion how I can compare the two?

No, I just meant I would ignore the employer contribution as it practice it has no bearing on what you will accrue.

If you contributed 6.5% and the employer 30% you would still get 1/49th (unless the scheme rules changed).

I think you are looking at this from a different perspective and I'm not sure how I would/could quantify, for your purposes, what one job is paying compared to the other.

lisyloo

OldBeanz said:

Glisyloo said:

Dazed_and_C0nfused said:

lisyloo said:

ZeroSum said:

Salary sacrifice isn't allowed in public sector. 

The accrual rate is 1/49th's of career average salary. 
What do you mean by 6% employer contributions? 
The employer contributions are largely irrelevant as its defined benefit, but typically they're circa 20%
The employee contributions are below
https://www.lgpsmember.org/toj/thinking-joining-how.php

6% of salary into dc means if I earn say £50k then my employer puts £3k into my personal pot. (I’m sure you knew that just making sure we’re talking about the same thing).

right so will it still be circa 20% if a few years off retirement and work for say 3 years?
the circa is really useful

What the employer contributes is of no real relevance to you though.  

You aren't building up a pension pot, the LGPS is a promise to pay the pension you accrue.

I’m trying to compare a job with dc pension (current job) with a new proposed job with db pension.
That’s why I’m trying to convert db to dc so I can compare.
so to put numbers on it.

dc job = £50k salary + £3k employer contributions = £53k
db job = £38k salary + £7.6k pension equivalent - £2470 pension cost = £43130

does that look approx correct?

if it’s correct then the generous pension does not make up for the poor salary 

It depends on how secure you want your pension. The benefits of a db pension include being able to forget how your money is 'invested' as the LGPS takes care of that and will pay you whatever happens (if the LGPS stops paying pensions then we would all be in trouble).
The LGPS tends to offer very generous transfer-in terms from dc pensions although you would have to check your employer but you may have hit the jackpot depending on how much dc you have.
Most also allow you to pay into an AVC whereby you can take 25% cash on top of this.
If you search further on this site you will find many a person wishing they had a Govt Based DB pension. 

Thank you.
the transfer in bit may be extremely valuable (life changing) advice 

lisyloo

Dazed_and_C0nfused said:

lisyloo said:

Dazed_and_C0nfused said:

That’s why I’m trying to convert db to dc so I can compare.

I don't think you can really do that.

dc job = £50k salary + £3k employer contributions = £53k
db job = £38k salary + £7.6k pension equivalent - £2470 pension cost = £43130

Don't really understand that to be honest.

What is the + £7.6k pension equivalent??

If your job with LGPS pays £38k then you will be contributing £2,584 gross, £2067 after tax relief so a net cost per month of £172.

In return you will accrue a pension of £775.

The £7.6k is the value of the “circa 20%” I.e. £38k * 20%.
My understanding of what you said is that he LGPS is worth approx 20% of annual salary. Is that what you meant?
if not do you have a suggestion how I can compare the two?

No, I just meant I would ignore the employer contribution as it practice it has no bearing on what you will accrue.

If you contributed 6.5% and the employer 30% you would still get 1/49th (unless the scheme rules changed).

I think you are looking at this from a different perspective and I'm not sure how I would/could quantify, for your purposes, what one job is paying compared to the other.

I was referring to “employer contribution” as a dc employer contribution. 
I am open minded as to how to approach it but just wanted some idea of comparison.
another way is as follows
for my dc I’m using 4% withdrawal rate
so to provide £775 needs £19,375
this is approx 50% of £38k, so looks a great deal more attractive
although I presume this is £775 at age 67 and not age 55

ZeroSum

lisyloo said:

Dazed_and_C0nfused said:

lisyloo said:

Dazed_and_C0nfused said:

That’s why I’m trying to convert db to dc so I can compare.

I don't think you can really do that.

dc job = £50k salary + £3k employer contributions = £53k
db job = £38k salary + £7.6k pension equivalent - £2470 pension cost = £43130

Don't really understand that to be honest.

What is the + £7.6k pension equivalent??

If your job with LGPS pays £38k then you will be contributing £2,584 gross, £2067 after tax relief so a net cost per month of £172.

In return you will accrue a pension of £775.

The £7.6k is the value of the “circa 20%” I.e. £38k * 20%.
My understanding of what you said is that he LGPS is worth approx 20% of annual salary. Is that what you meant?
if not do you have a suggestion how I can compare the two?

No, I just meant I would ignore the employer contribution as it practice it has no bearing on what you will accrue.

If you contributed 6.5% and the employer 30% you would still get 1/49th (unless the scheme rules changed).

I think you are looking at this from a different perspective and I'm not sure how I would/could quantify, for your purposes, what one job is paying compared to the other.

I was referring to “employer contribution” as a dc employer contribution. 
I am open minded as to how to approach it but just wanted some idea of comparison.
another way is as follows
for my dc I’m using 4% withdrawal rate
so to provide £775 needs £19,375
this is approx 50% of £38k, so looks a great deal more attractive
although I presume this is £775 at age 67 and not age 55

If you took at 55, then the £775 would drop to about £475-£500 as the notional pot would need spreading out over an extra 12 years. 

lisyloo

ZeroSum said:lisyloo said:

Dazed_and_C0nfused said:

lisyloo said:

Dazed_and_C0nfused said:

That’s why I’m trying to convert db to dc so I can compare.

I don't think you can really do that.

dc job = £50k salary + £3k employer contributions = £53k
db job = £38k salary + £7.6k pension equivalent - £2470 pension cost = £43130

Don't really understand that to be honest.

What is the + £7.6k pension equivalent??

If your job with LGPS pays £38k then you will be contributing £2,584 gross, £2067 after tax relief so a net cost per month of £172.

In return you will accrue a pension of £775.

The £7.6k is the value of the “circa 20%” I.e. £38k * 20%.
My understanding of what you said is that he LGPS is worth approx 20% of annual salary. Is that what you meant?
if not do you have a suggestion how I can compare the two?

No, I just meant I would ignore the employer contribution as it practice it has no bearing on what you will accrue.

If you contributed 6.5% and the employer 30% you would still get 1/49th (unless the scheme rules changed).

I think you are looking at this from a different perspective and I'm not sure how I would/could quantify, for your purposes, what one job is paying compared to the other.

I was referring to “employer contribution” as a dc employer contribution. 
I am open minded as to how to approach it but just wanted some idea of comparison.
another way is as follows
for my dc I’m using 4% withdrawal rate
so to provide £775 needs £19,375
this is approx 50% of £38k, so looks a great deal more attractive
although I presume this is £775 at age 67 and not age 55

If you took at 55, then the £775 would drop to about £475-£500 as the notional pot would need spreading out over an extra 12 years. 

Ok, so 32% at an uncautious swr.
thanks, that gives me a better idea

ZeroSum

lisyloo said:

ZeroSum said:lisyloo said:

Dazed_and_C0nfused said:

lisyloo said:

Dazed_and_C0nfused said:

That’s why I’m trying to convert db to dc so I can compare.

I don't think you can really do that.

dc job = £50k salary + £3k employer contributions = £53k
db job = £38k salary + £7.6k pension equivalent - £2470 pension cost = £43130

Don't really understand that to be honest.

What is the + £7.6k pension equivalent??

If your job with LGPS pays £38k then you will be contributing £2,584 gross, £2067 after tax relief so a net cost per month of £172.

In return you will accrue a pension of £775.

The £7.6k is the value of the “circa 20%” I.e. £38k * 20%.
My understanding of what you said is that he LGPS is worth approx 20% of annual salary. Is that what you meant?
if not do you have a suggestion how I can compare the two?

No, I just meant I would ignore the employer contribution as it practice it has no bearing on what you will accrue.

If you contributed 6.5% and the employer 30% you would still get 1/49th (unless the scheme rules changed).

I think you are looking at this from a different perspective and I'm not sure how I would/could quantify, for your purposes, what one job is paying compared to the other.

I was referring to “employer contribution” as a dc employer contribution. 
I am open minded as to how to approach it but just wanted some idea of comparison.
another way is as follows
for my dc I’m using 4% withdrawal rate
so to provide £775 needs £19,375
this is approx 50% of £38k, so looks a great deal more attractive
although I presume this is £775 at age 67 and not age 55

If you took at 55, then the £775 would drop to about £475-£500 as the notional pot would need spreading out over an extra 12 years. 

Ok, so 32% at an uncautious swr.
thanks, that gives me a better idea

Unless you can get out on redundancy or ill health then it's not reduced

german_keeper

Sorry I have nothing of any value to add but I have to say I love the description of a £38k salary as "poor". The maximum me and my wife have ever earned between us is only a couple of grand more than that. I had a bit of a chuckle at that so thank you for brightening up an otherwise fairly dull day.

lisyloo

It’s poor wrt the market rate for the role, but glad it cheered you up.
I have a good salary right now but commute that I don’t like hence you have to weigh these things up.

OldBeanz

lisyloo said:

OldBeanz said:

Glisyloo said:

Dazed_and_C0nfused said:

lisyloo said:

ZeroSum said:

Salary sacrifice isn't allowed in public sector. 

The accrual rate is 1/49th's of career average salary. 
What do you mean by 6% employer contributions? 
The employer contributions are largely irrelevant as its defined benefit, but typically they're circa 20%
The employee contributions are below
https://www.lgpsmember.org/toj/thinking-joining-how.php

6% of salary into dc means if I earn say £50k then my employer puts £3k into my personal pot. (I’m sure you knew that just making sure we’re talking about the same thing).

right so will it still be circa 20% if a few years off retirement and work for say 3 years?
the circa is really useful

What the employer contributes is of no real relevance to you though.  

You aren't building up a pension pot, the LGPS is a promise to pay the pension you accrue.

I’m trying to compare a job with dc pension (current job) with a new proposed job with db pension.
That’s why I’m trying to convert db to dc so I can compare.
so to put numbers on it.

dc job = £50k salary + £3k employer contributions = £53k
db job = £38k salary + £7.6k pension equivalent - £2470 pension cost = £43130

does that look approx correct?

if it’s correct then the generous pension does not make up for the poor salary 

It depends on how secure you want your pension. The benefits of a db pension include being able to forget how your money is 'invested' as the LGPS takes care of that and will pay you whatever happens (if the LGPS stops paying pensions then we would all be in trouble).
The LGPS tends to offer very generous transfer-in terms from dc pensions although you would have to check your employer but you may have hit the jackpot depending on how much dc you have.
Most also allow you to pay into an AVC whereby you can take 25% cash on top of this.
If you search further on this site you will find many a person wishing they had a Govt Based DB pension. 

Thank you.
the transfer in bit may be extremely valuable (life changing) advice 

Do a search on here. Others have done it and the rate was very good, indeed life changing.

OldBeanz

Might be worth a read 
https://forums.moneysavingexpert.com/discussion/6178909/lgps-benefit-from-155-k-transfer-in-from-personal-pension