Local government pension

Matt_22

Would be the difference between a LGPS employer and a peoples pension employer with contributions 3% employer and 4% employee 

Silvertabby

Matt_22 said:

Would be the difference between a LGPS employer and a peoples pension employer with contributions 3% employer and 4% employee 

The difference would be immense.

Assuming a salary of £30K, 7% into a DC pension scheme would be a one-off total payment of £2,100. 

In the case of the LGPS, the pension accrued in just one year would be £612.24 plus annual revaluation (CPI).  That's more than £612.24 of fully index linked pension every year for the rest of your life. 

Matt_22

Dazed_and_C0nfused said:

Matt_22 said:

Would it be a noticeable decrease in tax payment?

Yes.

In the previous example of £30k salary the tax would normally be £290/month. 

With 10% net pay pension contributions the taxable income would only be £27k and the tax £240/month.

Thank you does the people pension no gain tax relief like the local government pension does? Thank you

Dazed_and_C0nfused

Matt_22 said:

Dazed_and_C0nfused said:

Matt_22 said:

Would it be a noticeable decrease in tax payment?

Yes.

In the previous example of £30k salary the tax would normally be £290/month. 

With 10% net pay pension contributions the taxable income would only be £27k and the tax £240/month.

Thank you does the people pension no gain tax relief like the local government pension does? Thank you

It looks like People's Pension operate both net pay (same as LGPS) and relief at source methods so it will depend on what the employer chooses.

With relief at source they will add 25% to whatever the employee pays.

But People's Pension is a defined contribution scheme and LGPS is defined benefit so it's really comparing apples and pears.

I suspect given the choice plenty of people who understand pensions would pick LGPS even if no tax relief was available.

Matt_22

Ah, I don't think it was relief at source were I used to work the employer contribution was only 3% the minimum permitted 

Matt_22

As in I was taxed on my full wage. Not minus my pension contributions 

Dazed_and_C0nfused

Matt_22 said:

As in I was taxed on my full wage. Not minus my pension contributions 

That would be relief at source, where the pension company adds 25% to what you contribute.

Net pay reduces your taxable income avoiding tax in the first place so nothing is added to your contribution, you get more take home pay.  And very often a better (DB) pension.