LGPS vs pay increase

Blackcat29

Hi. After a little advice.

I've no career progression open to me in my current role so need to move to progress. 

I'm currently in a LGPS via a MAT, but have been contacted about a job with a private pension.

The new job would pay £3-4k per year more than I'm on now but pension would be standard 5%.

How much am I losing if I take this role?

Is the loss of pension worth the career progression?

I'm 48, would love to retire at 55 but will probably keep working till I'm at least 65, although may decide to go part time at some point after hitting 55.

hyubh

Blackcat29 said:

Hi. After a little advice.

I've no career progression open to me in my current role so need to move to progress. 

I'm currently in a LGPS via a MAT, but have been contacted about a job with a private pension.

The new job would pay £3-4k per year more than I'm on now but pension would be standard 5%.

How much am I losing if I take this role?

Is the loss of pension worth the career progression?

I'm 48, would love to retire at 55 but will probably keep working till I'm at least 65, although may decide to go part time at some point after hitting 55.

You haven't said what you're on currently. A £3-4k increase if you were currently on £18K would be somewhat different to if you were currently on £80K.

Universidad

Blackcat29 said:

Hi. After a little advice.

I've no career progression open to me in my current role so need to move to progress. 

I'm currently in a LGPS via a MAT, but have been contacted about a job with a private pension.

The new job would pay £3-4k per year more than I'm on now but pension would be standard 5%.

How much am I losing if I take this role?

There's no right answer here, because so much of this is subjective. But I'll show you how I'de decide in your position, and how I would make my peace with it.

Let's say your current salary is 35000, because that's a round number close to the average salary for a full time employee.

In LGPS at 1/49 accrual rate, each year you add about 718 pounds to the value of your annual pension.

If you expect to draw this for ~20 years, that's (718x20) about 14,300 extra that your pension is worth each year, on top of the 35K, and it keeps its value in real terms over time.

But it's not free, your contribution rate is 6.5% at that salary, so you're paying 2300 per year towards it.

So the pension is worth about 12000 extra on top of your salary.

Again this is fanciful maths, because an annuity would cost more, and you as a person might value it less. But it's a ballpark number.

So going by that, your 35000 job is actually like a 47000 job with no pension attached.

(Better actually, because this maths doesn't account for the fact that you don't pay tax on that 2300 pounds)

The new job, paying 4000 more, has a salary of 39000.

They will also give you 5% of 39000 per year. That's just money that goes into a pot, which means that the new job is worth about 41000 per year.

That's a 6000 difference in favour of the LGPS job.

So in terms of value, the career progression should be worth about 6000 pounds per year to you. And it easily could be, if it ups your earning potential over time.

But for a straight switch, to another dead end job, it could be a pretty bad deal.