Pay deal choice

strawb_shortcake

Hi all,

So, this is currently hypothetical but a choice I should have at some point on promotion. I am 44, and would like to retire around 63.

I would have the choice of two pay deals

Option 1 stay on current terms

Pay - £63,000 monthly take home £3,693

Pension - DB Alpha, contribute 7.35%

Bonus - part of terms, roughly between £1500-£3000 depending on performance.

Holiday - 30 days leave, 8 BH, 1 privilege day.

Option 2 - accept new terms

Pay - £74,340 monthly take home £4,314

Pension - DC pension 5% + 3% unsure if this can be increased from either myself or employer.

Performance Related pay - up to 15% of base salary - not sure if this is paid as a non consolidated lump sum?

25 days leave, 8 BH, 1 privilege day.

Can purchase an additional 5 days leave.

My current DB pension is currently worth around £15,000 pa if taken at 68. I believe my pension increases if the remedy is not applied as it is on my current ABS but I don't have those figures. I currently earn £49,850

I'm more leaning towards to keeping my current terms, but I also recognise I'm more risk adverse and I don't think I'ma huge fan of change. But I'm interested in other people's perspectives to help me consider all aspects.

Many thanks

Grumpy_chap

What does the employer contribute to current pension scheme? (Noting it is a nominal percentage for DB)

Does the current pension accrued remain DB if you switch to DC for the future?

strawb_shortcake

https://forums.moneysavingexpert.com/discussion/comment/82016433#Comment_82016433

Current employer pays around 28%

I believe my current pension will remain as is, and I'll start afresh, the new pension is called Concord and is with L&G

sheenas

Firstly consider your state pension, which for you is likely to be 67. So you would retire 4 years before that. It work checking that your fully paid up.
it seams you are settled in and maybe what you have works? Push your bonus into the pension. Is the mortgage paid off?

GrumpyDil

Hopefully someone else will be along with more experience of the DB scheme but my initial view is that the cost of providing the same level of pension benefits under the DC scheme is likely to use up all of the increased salary.

That can be seen by the fact that your employer pays 28% to cover the cost of the DB scheme.

So my reading is a roughly 10k increase with less leave, a basic DC pension and a non guaranteed performance related pay of up to 15%.

Based on the information provided I'd be edging towards staying on the current package.

Marcon

I'm more leaning towards to keeping my current terms, but I also recognise I'm more risk adverse and I don't think I'ma huge fan of change. But I'm interested in other people's perspectives to help me consider all aspects.

You're asking people to give a 'perspective' on something when you can't give all the relevant facts - most importantly, those relating to pensions, which is the real 'biggie'. Until you clarify that for both the old and the new terms, it's impossible to make an informed decision; but that's fine, because the decision is currently hypothetical. When it becomes 'real' (hope you get the promotion!), the first thing you do is check the pension position and get some projections.

The new salary might look attractive, but when you really start digging down…it's much less so for someone who is risk averse and doesn't like change. At 44, you could have over 20 years of future pension build up. It's extremely hard to see why you'd move from a gold-plated pension scheme with a payout guaranteed for life to one featuring both change and risk.

LightFlare

really hard to comment

You could potentially be earning £600 a month, but how do the duties and demands of the roles differ ?

How will your home life be affected by additional role demands but also an increased income ?

Pension is but one of a multitude of factors for consideration

strawb_shortcake

https://forums.moneysavingexpert.com/discussion/comment/82016464#Comment_82016464

I believe my state pension is up to date with less than 10 years of NI needed.

I think I'd have to use my bonus and extra pay to get close to what I'd lose in pension. Remaining in the DB scheme on £63k my pension would increase by a guaranteed £1461 per year.

Mmortgage is low, will be paid off within 10 years, we plan to move but even increasing our mortgage long term plan is to have no mortgage by the time I'm 60.

strawb_shortcake

@Macron apologies the quote button didn't work

Thank you, I'm currently caught up in the Capita issue, so trying to get an accurate forecast of my current pension is not possible at the moment.

I think part of my nervousness is that I've always been a CS, on the other terms I'd still be a CS but with terms more closely aligned to the private sector. I feel secure under my current terms, I'm not sure I will on the alternative

strawb_shortcake

https://forums.moneysavingexpert.com/discussion/comment/82016599#Comment_82016599

The roles under both options are exactly the same.

My current role isn't too far off what I'd be doing in a grade higher, I'd have greater accountability, a higher financial delegation, possibly a larger team and more strategy - there isn't always much consistency across the grades but I have quite a good foundation for the more challenging end of the role

Andy_L

What department is this? Why do you have to give up the CS pension if you are promoted