Private sector to civil service - Advice needed

Tenenbaum

Hi folks,

I've recently been in discussions about a role with the civil service. The role itself seems very interesting, it would provide long-term stability, better work-life balance, and the pension is good. I'm 46 and the latter two are becoming more important to me.

I'm going through the numbers and I need some help in getting clarity on what is best for me.

I'm currently on £100k in the private sector. My pension is 5% contribution by me with 10% by employer. The industry is cyclical and I have been looking for a move for the past year.

The civil service role would be around £72k.

Clearly, this would be a significant drop in salary but the pension and work-life balance is pulling me in.

I have a couple of different private pensions with a total pot of around £260k. I also have 7 years of military service (junior rank) and believe I will be entitled to some form of military pension.

Any help or advice would be greatly appreciated.

la531983

The DB pension you are going to get is likely much better than any private pension you currently pay into.

xylophone

 I also have 7 years of military service (junior rank) and believe I will be entitled to some form of military pension.

Would be as well to check?

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/313089/20140501_deferred_pension_advice.pdf

Do you have a statement of deferred benefits from when you left service?

You could obtain a state pension forecast.

https://www.gov.uk/check-state-pension

See (click on joining the scheme)

https://www.civilservicepensionscheme.org.uk/

It be possible to transfer in other pensions but you need to work out whether or not this would be to your advantage or whether you would wish to keep options open with mix and match DC/DB  arrangements.

Linton

I am not sure what help or advice you need, but some thoughts....

Maximum income is not necessarily the sole or even the primary reason for choosing a particular job.  Provided you will get sufficient income to meet your objectives then factors like stress and security could well be more important. Of course you need to know what those objectives are and their cost to make a rational decision. At 46 you should be planning your retirement, especially if you want to retire well before State Pension Age.

I do not think there is a simple answer to whether to transfer in your old pension(s) to a CS pension.  You will need to find out the Ts&Cs for transferring in each pension and compare the details with those for the pension you would be losing. and the effect on your retirement plan.

There is a benefit in having a separate DC pension in that you can take it independently of the DB pension.  So for example you could use it to retire early eithout incurring an actuarial drop in DB pension.

Silvertabby

xylophone said:

 I also have 7 years of military service (junior rank) and believe I will be entitled to some form of military pension.

Would be as well to check?

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/313089/20140501_deferred_pension_advice.pdf

Do you have a statement of deferred benefits from when you left service?

You could obtain a state pension forecast.

https://www.gov.uk/check-state-pension

See (click on joining the scheme)

https://www.civilservicepensionscheme.org.uk/

It be possible to transfer in other pensions but you need to work out whether or not this would be to your advantage or whether you would wish to keep options open with mix and match DC/DB  arrangements.

Unless OP means 'junior commissioned officer' who opted to serve a short service commission on gratuity earning terms rather than pensionable.  Particularly popular with legal and dental service officers, who use the gratuity lump sum as a leg up into private practice.

Only mention this because it would be unusual for  junior non-commissioned ex forces to move into a job paying £100K private sector,  £72K civil service.  But all kudos to OP if I'm wrong.

Tenenbaum

I was junior non-commissioned. 

michaels

I joined closer to retirement (earlyish 50s), partly to port in a chunk of DC pension as I was all DC at that point.  This has currently put me with about 800k of savings including pension and 25k of DB (at 67) as I approach 55.  I value the split given I want to retire soon so unless you plan to work to SPA probably no worth transferring in (despite the generous terms - much better value than an annuity).

I joined at a lower salary (easier to get in) which means my contributions were lower towards the pension, yours would be 7.35% compared to your current 5%.  Personally I valued the the overall pension package as being equal to about 30% on top of salary but perhaps a bit less for you given the higher contributions so for you perhaps civil service is worth 72k+25% = 90k compared to 100k+10% =110k in your current role.

So then you can do the trade off re lifestyle factors (2 days a week only in the office, less need to work the hours needed rather than contracted hours, flexible working).  For me this means seeing my kids school football matches and school plays etc, walking football at 5.30 on Mondays etc.

Albermarle

Tenenbaum said:

Hi folks,

I've recently been in discussions about a role with the civil service. The role itself seems very interesting, it would provide long-term stability, better work-life balance, and the pension is good. I'm 46 and the latter two are becoming more important to me.

I'm going through the numbers and I need some help in getting clarity on what is best for me.

I'm currently on £100k in the private sector. My pension is 5% contribution by me with 10% by employer. The industry is cyclical and I have been looking for a move for the past year.

The civil service role would be around £72k.

Clearly, this would be a significant drop in salary but the pension and work-life balance is pulling me in.

I have a couple of different private pensions with a total pot of around £260k. I also have 7 years of military service (junior rank) and believe I will be entitled to some form of military pension.

Any help or advice would be greatly appreciated.

To look at it from a different angle.
As said, public sector pensions are in general much better than private sector DC pensions.
However the real reason for this is because a lot more money is contributed to them each year, mainly by the employer. If a similar level of contributions were to be made to a DC pension, it would also very likely produce a very good pension income.
So a key question here is why is someone with a £100K salary only putting 5% into their pension?
Pension contributions from a higher rate taxpayer attract higher rate tax relief, which is vey generous.
You could increase your pension contributions from 5% to  25%, which would only reduce your net income by about 12 %.
So then you would be building up a nice big pot, and still taking home more money than you would with the Civil service job.
Of course it would need more looking into the detail of the figures, how big your pot would be when you retired etc but I think you should be able to see my point.

Tenenbaum

Thanks for the input so far. 

On the most recent post.

I use AVC contributions and add 2%. I also have a bonus that is usually around 12% and for the past two years, I've put that into my pension. I'd be continuing to do so similar if I stayed here.

QrizB

Tenenbaum said:

I've recently been in discussions about a role with the civil service. The role itself seems very interesting, it would provide long-term stability, better work-life balance, and the pension is good. I'm 46 and the latter two are becoming more important to me.

Let's ignore the money for now (as others have said, if you put another 25% into your pension you'd have a similar take-home to the CS role and the pension difference would be much smaller). Let's think about the things from your first post that I've put in bold.

If you are looking for long-term stability, work-life balance and the role is going to engage you for years, I think you should take it.

Andy_L

What are pay rises/promotion opportunities like in your current job? How will that compare to the CS?