Best DB pension scheme?

ChocolateWombat

I think people get sidetracked by the ‘downside’ of the actuarial reductions for retiring early.

Quite simply, anyone retiring early needs more years of retirement funding.  Whether you are in DC or DB, you have to work out if you can afford to retire early.  Some can and some can’t….and it’s not really because they have an actuarial reduction that they won’t be able to.

What is ‘best’ depends on circumstances.  Someone who is in their 50s and who has many years of DB with lots in an NPA 60 scheme, might find the better accrual rates of some schemes useful.  Someone else who has lots of money in DB pensions might decide that in their last couple of years of work, actually amassing a sizeable amount in DC could be useful to bridge gaps to taking the DB pension or state retirement age.  Many people suggest the sweet spot is to have a good sized DB pension and the state pension due a bit later, with a DC pension for bridging the gap to state pension for its flexibility.

To me, the Civil Service pension seems extremely good.  The contribution rates seem lower and the accrual rates better than in the TPS and NHS pensions.

However, I’d agree that they are all good, so it’s best to go for a job that you will enjoy and of course, if you can earn more in one sector than another, that will lead to better DB pension accrual overall anyway.

p00hsticks

Universidad said:

p00hsticks said:

In my personal opinion, we really don't want people in the NHS, Civil service whose prime motivation for being there is that they see it as the best way to retire from work early. 

You're not wrong that it would be good if people went into jobs because they wanted to do them well.

But it's not incentivised,  and I find it hard to expect individuals to act selflessly in seeking employment opportunities.

I'm not expecting the OP to act selflessly, and I realise that for nearly all of us we have to earn a living and have to compromise on our ideal job and accept what is available.

But the OP is only in their 40's and it seems to me quite sad that they seem to accept potentially grinding out over a decade in a job chosen mainly on the basis of getting a pension that will enable them to leave it as soon as possible....

Gary1984

Doesn't seem sad to me at all. Having a clear plan to be able to retire early and have more time for their passions and loved ones seems sounds great. For a lot of people (including me) a job will always just be a job. As long as it's tolerable and you work at it to the best of your abilities I don't see an issue.

DBdoobydoo

ChocolateWombat said:

I think people get sidetracked by the ‘downside’ of the actuarial reductions for retiring early.

Quite simply, anyone retiring early needs more years of retirement funding.  Whether you are in DC or DB, you have to work out if you can afford to retire early.  Some can and some can’t….and it’s not really because they have an actuarial reduction that they won’t be able to.

What is ‘best’ depends on circumstances.  Someone who is in their 50s and who has many years of DB with lots in an NPA 60 scheme, might find the better accrual rates of some schemes useful.  Someone else who has lots of money in DB pensions might decide that in their last couple of years of work, actually amassing a sizeable amount in DC could be useful to bridge gaps to taking the DB pension or state retirement age.  Many people suggest the sweet spot is to have a good sized DB pension and the state pension due a bit later, with a DC pension for bridging the gap to state pension for its flexibility.

To me, the Civil Service pension seems extremely good.  The contribution rates seem lower and the accrual rates better than in the TPS and NHS pensions.

However, I’d agree that they are all good, so it’s best to go for a job that you will enjoy and of course, if you can earn more in one sector than another, that will lead to better DB pension accrual overall anyway.

I took a DB pension at 58 when the normal retirement age was 65. From memory I got £10K whereas if I had waited another seven years it would have been about £13.5K. I ran the calculations & with average life expectancy at 84 the effect on total pension received was neutral whereas I have a 1:4 chance of surviving to 92 & then I will be down about 6% or £20K in total pension received during my retirement.

Malthusian

daveyjp said:

Any DB is a benefit not to be turned down, but the LGPS isn't what it once was.  My grandfather retired in the early 80s with over 30 years service.

Under the current system that would get you 60% of your average pay. Which for most people would be a pretty good living. As a senior manager your pensionable salary would be lower under "career average" than under "final salary", but the accrual rate is higher, and there's little moral case to be made for a system that disproportionately benefits high-earning senior managers at the expense of the rank-and-file (whose salaries increase by relatively little in real terms).
He could still commute some of his pension for a lump sum. The LGPS terms for commutation aren't particularly good, but you'd still likely be better off than if you'd paid equivalent contributions into a private sector defined contribution scheme.

p00hsticks said:

But the OP is only in their 40's and it seems to me quite sad that they seem to accept potentially grinding out over a decade in a job chosen mainly on the basis of getting a pension that will enable them to leave it as soon as possible....

I don't see anything sad at all. The OP seems to have a free choice, given the variety between the potential employers they've mentioned. They haven't said it's a dilemma between "dream job / lower pension v. grindstone job / higher pension".
They are in the final stage of their career (or so they hope; currently in mid-40s, aiming to retire at 55), and if you are going to work in the public sector for part of your career, it makes perfect sense to do it towards the end. One year earned by a 40-something in a defined benefit pension is worth exactly the same as the same year earned by a 20-something. Unlike in defined contribution schemes, where a year's worth of the same pension contributions are worth much more to a 20-something than a 40-something. 
Don't hate the playa, hate the game.

Somebody

A friend started on the shopfloor and worked his way up to GM, so his DB pension which started with a 1/60th accrual ended up in the "executive section" that had an accrual rate of 1/45th, latterly increased to 1/50th when they closed the scheme to new entrants, and NRA of 62. 

After working 32 years at the firm he ended up with a pot well over the LTA. The scheme paid the tax.

Personally speaking, I would stay in a job just for the DB pension.