New job (less pay) LGPS starting to doubt my decision

Clownfish68

Hi all, recently accepted a job offer with a local authority which I’m starting to doubt. I suppose the drop in wages has got me a bit freaked out to be honest with inflation/energy prices (I’ve put a 1000 on my energy bill to cover energy rates for this year) but jobs locally to me do not come around and I genuinely think I will be facing redundancy in the next 12 months (company recently acquired a couple months ago). 

I managed to secure the top of the band so my earnings will be capped at 30k. This is 10k (gross) less than what I am earning or (around 6k net depending on bonus) but then I don’t have to do a 100 mile commute, travel, be away from family etc. I’m finally paying off all credit card/car loan this month so will only have mortgage payment as debt. I’ve done a cost comparison and would leave me with about 450 a month as my own money after bills. This is slightly more than I’m use to with having to pay my debts off. 


I have 9 years experience in the private sector but with no public sector experience using this to bridge the gap and to hopefully promote from within eventually or move to a different LA when a job becomes available. I’m looking at public sector for the long term. 

My current pension is worth about 20k. To get it up to where I want it to be on retirement would mean salary sacrificing about £650 a month with 10% employer contributions on top.  The big selling point with this job was the LGPS meaning I pay a fraction of the costs to get the same return if I was salary sacrificing by my maths would equal out in terms of monthly earnings. 

So my question really is - is the LGPS a good deal in the long term and worth the drop in wages?

WillowLea1962

https://forums.moneysavingexpert.com/discussion/5737413/lgps-and-private-pension

Kim1965

How old are you? 

Clownfish68

Kim1965 said:

How old are you? 

Turned 35 today so got at least another 33 years working life ahead of me 

Dazed_and_C0nfused

Do you understand the basic principles of how the LGPS works?

If you earn £30k you will be contributing £1,950 however LGPS operate a net pay scheme so the real cost after tax relief is only £1,560.

In return you will accrue an inflation proofed pension of £612.

Carry on like that for 33 years and you will be retiring on the same money as you were earning*
*including full State Pension as part of your retirement income

There is less flexibility with LGPS than a DC pension but it isn't inflexible, for example you can opt to take your pension early if you wish.

MX5huggy

That’s £612 every year of retirement not a 1 off £612. So if you do 33 years on the same pay you’ll accrue an annual pension of £20196. All index linked so actually worth that in the future.
you Can retire early (but you would get less). 

£30k vs £40k is probably the tipping point between the 2 but once you add in the cost and time commuting I think the LG job sounds worth at least trying.

You can transfer any existing pension to LGPS, but only in the first year, get a quote it’s good value. 

Then look at the additional options particularly AVC’s which you may get via Salary Sacrifice saving NI and tax. 

hobo_baggins

One thing to consider is looking at transferring your existing pension into LGPS.  I have just had a transfer quote for a small DB pension I had with a previous private sector employer and the LGPS offer is more than double the income with better inflation uprating.  Depends on your overall timeline plan (I have a seperate SIPP I am planning on using for bridging the gap from my planned retirement age to when I plan to take LGPS and State Pensions)

daveyjp

You also need to look into the AVC options, especially if early retirement is an aim.  Salary sacrifice in particular is one perk not to be ignored if its available. Income tax and NI savings added to the AVC pension.

Even just £50 a month salary sacrifice will grow to a handsome amount after 25 years and could cover the reduction in LGPS if you decide to retire early.

JoeCrystal

It is generally considered that your LGPS pension is worth a third of your salary as well. Very outstanding deal indeed.

k6chris

Clownfish68 said:

So my question really is - is the LGPS a good deal in the long term and worth the drop in wages?

Yes.  Lots of jam tomorrow for a bit less today.  Good luck with the new role and dealing with the politics!

Roxburgh_rose

As an aside from the pension question. I took voluntary redundancy from the private sector after 28 years and moved to a Local Govt position, sadly just on a temp agency contract. The drop in pay and benefits were terrifying (particularly not being eligible for the LGPS and having to take the agency's NEST scheme). But I'm still there 2.5 years later and can honestly say it was the best decision I could have made, despite the deeply frustrating politics and endless need to consult!! My work life balance has improved beyond measure and the finances have worked themselves out. My take home pay and pension contributions have tumbled, but I've cut back where I can without stopping the fun stuff (I keep a horse - hardly cheap!) and, thanks to a lot of reading on this forum, I'm pretty confident I'll be able to retire early.  All the very best with the move!