New job - 3% contribution vs 10% previously

Motherofcelticdragons

Hi,

I've successfully applied for a new job and am awaiting the offer in terms of salary. I intend to negotiate depending on the amount and one of the things I'd like to be able to understand is the long term impact of leaving my current role with a very generous 10% pension contribution vs the new company's 3%.

I doubt its quite as straight forward as saying 'I need 7% more than I currently earn to compensation for this' because the lose will be compounded over the years... I think?? (I could be wrong... i haven't really paid any attention to pensions before!)

What do you think would be appropriate compensation for this kind of fiscal loss? That sounds quite grabby but I want to make sure I'm thinking mid term (exciting new job opportunity) as well as long term.

thanks,

Karis 

ussdave

It's about as simple as you said initially.  Your current package is salary + 10% plus anything particularly good about the annual leave, benefits, etc.  Use the to guide the figure you ask for.

Marcon

Motherofcelticdragons said:

Hi,

I've successfully applied for a new job and am awaiting the offer in terms of salary. I intend to negotiate depending on the amount and one of the things I'd like to be able to understand is the long term impact of leaving my current role with a very generous 10% pension contribution vs the new company's 3%.

I doubt its quite as straight forward as saying 'I need 7% more than I currently earn to compensation for this' because the lose will be compounded over the years... I think?? (I could be wrong... i haven't really paid any attention to pensions before!)

What do you think would be appropriate compensation for this kind of fiscal loss? That sounds quite grabby but I want to make sure I'm thinking mid term (exciting new job opportunity) as well as long term.

thanks,

Karis 

Exciting as this 'new opportunity' might be, once you've agreed terms, you've lost, or at least severely limited, any negotiating power - so make sure you negotiate hard before you agree.

You need to look at the overall package for your current job, and the overall package for the new job (albeit tempered by the long term prospects the new role brings). Starting point is to ask them to match your current 10% employer contribution; if they won't, check you can salary sacrifice your pension contributions in your new role and then ensure your post-sacrifice salary is acceptable to you.

Motherofcelticdragons

My current employer is a high street bank and the benefits package is fantastic... so yes, there's quite a bit to try and figure out how I put myself in a better position overall rather than a worse!

I dreamt last night that they offered me a £345k package, so anything now is going to be underwhelming 😂

Dazed_and_C0nfused

Don't forget 3% of new, presumably larger, salary may not be as bad as it seems compared to 10% of old, lower, salary.

That's assuming they are both DC pensions.

westv

3% does seem very mean.

MX5huggy

If they are as stingy as only 3% they may also be excluding the first £6240 which they don’t have to pay pension on. 

https://www.nowpensions.com/employers/learn-about-workplace-pensions/qualifying-earnings/

ChocolateWombat

Be prepared to walk away and say you can’t take the job.  Seriously.  The excitement of getting the offer and especially if you like the look of it can be overwhelming…..but you’ll kick yourself it you’re worse off.  Do some serious calculations and be really clear that you can’t come for a worse package.  The pension is only part of it, but you really will need more in other areas if it’s a crap 3%.  And I’d look closely at other employee benefits as they are likely to be mean too.

My souse looked to move from public sector role a a private sector one.  They would have needed to offer him more than £20k more in salary to match his pension.  And that wasn’t even a particularly well paid on job.  And that was before he even looked at 8 days less holiday, job security etc.  He didn’t take the job but stayed with his organisation and got a new job within it to add some spark.

Motherofcelticdragons

Dazed_and_C0nfused said:

Don't forget 3% of new, presumably larger, salary may not be as bad as it seems compared to 10% of old, lower, salary.

That's assuming they are both DC pensions.

Thats a good point. What's DC please? 

Woby_Tide

Does the company offer any matching on top of the 3% that you may not have taken into account  aswell.

I've worked at banks in the past where the core contribution was 10%  but they would only match 4% vs one who offered 6% core with another 6% matched so the perceived 4% difference  between the core contribution was only 2% once a full match was in place

you can still obviously negotiate for more as this is your one opportunity before you are through the door and locked into their remuneration cycles

MX5huggy

Motherofcelticdragons said:

Dazed_and_C0nfused said:

Don't forget 3% of new, presumably larger, salary may not be as bad as it seems compared to 10% of old, lower, salary.

That's assuming they are both DC pensions.

Thats a good point. What's DC please? 

Defined Contribution scheme vs Defined Benefit (DB). 

DB are also known as Final Salary or Career average pension schemes. 

If your existing scheme is DB it is worth significantly more then 10%