Local government pension

Nebulous2

Matt_22 said:

So you would kind of say on a 32k wage. The lgps is possibly seen as worth another 9k on ones wage?

More or less. I certainly thought it was worth it. I went from £45k to £36, and was delighted to get back into a public sector pension..... 

Matt_22

So the contribution rate doesn't really matter? Is the acurel rate? I think that what it's call. 1/49 that matters?

Gary1984

The accrual rate is what matters in terms of what pension you'll actually receive but the issue you have is that you're trying to compare the value of additional pension in the future with immediate extra salary now, which is tricky to do.

The employer contribution level is a useful thing to know I'd say as it gives you a ballpark minimum as to what that extra pension is worth. i.e. the extra pension is worth (at least) 20% additional salary, and in reality probably a bit more as the employer is likely to be a bit conservative with their contribution rates.

swindiff

Matt_22 said:

So the contribution rate doesn't really matter? Is the acurel rate? I think that what it's call. 1/49 that matters?

Yes the accrual rate is what matters for the value of a DB pension, how much your employer has to pay for that benefit is totally irrelevant to you.  I used to be in the LGPS many years ago but due to promotion had to move to the USS.  the LGPS has an excellent accrual rate of 1/49th, whereas the USS is currently 1/85th plus 3/85th Lump sum.  I wish now I could have stayed in the LGPS.

Matt_22

Thanks is it seen that a job that offers LGPS  can be seen as worth 30% more then advertised salary?

Matt_22

If one worked for a company that offered LGPS for 49 years. They would receive a pension of there full average salary?

Timbosaurus

Matt_22 said:

If one worked for a company that offered LGPS for 49 years. They would receive a pension of there full average salary?

They'd probably receive more.  Each contribution year would rise by CPI forever, whereas wage growth in local government has been eroding against inflation for decades.  Your pension would quite probably be higher than your final salary, assuming you stayed in the same band/role for your whole career.

SarahB16

Timbosaurus said:

Matt_22 said:

If one worked for a company that offered LGPS for 49 years. They would receive a pension of there full average salary?

They'd probably receive more.  Each contribution year would rise by CPI forever, whereas wage growth in local government has been eroding against inflation for decades.  Your pension would quite probably be higher than your final salary, assuming you stayed in the same band/role for your whole career.

In 2014 when there were a lot of changes to the LGPS some people stayed in final salary pension schemes (typically more senior staff) and the majority of people were moved on to the CARE pension but as you quite rightly say with CPI increases.  

I have often thought of the point that you make that due to lower than CPI salary increases and assuming you stayed at the same band/role (and both pension schemes had the same accrual rate) then the CARE pension would work out better due to the CPI increases being higher than the annual salary increases for the people who are still in the final salary scheme (which some people are).   

Universidad

SarahB16 said:

I have often thought of the point that you make that due to lower than CPI salary increases and assuming you stayed at the same band/role (and both pension schemes had the same accrual rate) then the CARE pension would work out better due to the CPI increases being higher than the annual salary increases for the people who are still in the final salary scheme

I think this may be true, and has certainly done a lot to, in the case of USS for example, diminish the on-paper effects of the transition to a CARE scheme.

Having said that, it hides the underlying issue that affects people regardless of their FS or CARE status: the real terms retirement income that you expected from your career has been reduced.

In the end, this was why I left my role in a University - because I could no longer see a future in which I would be able to comfortably retire - despite this being one of the foundational promises of a University career!

The effects on USS directly are the ones that you'll see me gripe about on here like some jilted lover.

But it was ultimately the combination of both salary supression and continual cuts to the pension which saw me off.

The thing that really got my goat was when calculating affordability for the pension scheme they'd assume an average inflationary increase to salary far, far above what some of the SAME REPRESENTATIVES would, or did, ever sign off on.

hyubh

SarahB16 said:

Timbosaurus said:

Matt_22 said:

If one worked for a company that offered LGPS for 49 years. They would receive a pension of there full average salary?

They'd probably receive more.  Each contribution year would rise by CPI forever, whereas wage growth in local government has been eroding against inflation for decades.  Your pension would quite probably be higher than your final salary, assuming you stayed in the same band/role for your whole career.

In 2014 when there were a lot of changes to the LGPS some people stayed in final salary pension schemes (typically more senior staff) and the majority of people were moved on to the CARE pension

That is incorrect, every active member moved into the CARE scheme on 1 April 2014. Unlike other public sector schemes, the LGPS protected existing members since the cutoff point (2012) with an underpin.

the CARE pension would work out better due to the CPI increases being higher than the annual salary increases for the people who are still in the final salary scheme (which some people are).   

No, that is not correct.