Nuvos or Partnership Pension?

pickleman

Ive just been offered a civil service pension and am confused which is the best option the Nuvos or Partnership?
Im a 39 year old man,I have a frozen 16 year royal mail pension,soon to be married any advice welcome Cheers

Debt_Free_Chick

pickleman wrote: »

Ive just been offered a civil service pension and am confused which is the best option the Nuvos or Partnership?
Im a 39 year old man,I have a frozen 16 year royal mail pension,soon to be married any advice welcome Cheers

Have you been through the comparison?


The Nuvos is more like the Royal Mail pension you already have. However, you build up a "slice" of pension each year. Currently each slice is 2.3% of your earnings, so if your earnings are £20,000 this year, you'll build up a pension of £460. Then, this amount increases in line with inflation until retirement age. If you earn £23,000 next year, the slice you earn then would be £529.

The Partnership scheme is a stakeholder pension, so you and your employer pay contributions into a special "pension savings plan". You decide how the plan is invested. It should grow until retirement when you use the proceeds to provide youself with a pension.

Andy_L

As a 39 year old the employers contribution will be 10% plus, up to, 3% matching your contributions. This will rise to 11.5% at 41.

In nuvos the employers "pseudo contribution" is worth between 17.1-25.5% depending on your salary, sex, age etc, whilst you pay in 3.5%.

IMO now that the final salary "pension trap" has gone Partnership is an obsolescent scheme and exists only because it's a legal requirement to provide it & for those on certain contracts who aren't eleigble to join Nuvos

probison

I know this is an old thread, but I face the same choice as pickleman. I've read the Cabinet Office pages and another thread here, but I was intrigued by:
'In nuvos the employers "pseudo contribution" is worth between 17.1-25.5% depending on your salary, sex, age etc, whilst you pay in 3.5%.'

Excuse my ignorance, but what do you mean by "pseudo contribution", and what would it be for a 44 year-old married man with no kids? (about to start a 2 year [maybe extendable] contract with DfT)

And:
'IMO now that the final salary "pension trap" has gone Partnership is an obsolescent scheme and exists only because it's a legal requirement to provide it & for those on certain contracts who aren't eleigble to join Nuvos'

if that opinion is widely shared then I can stop reading about it all! (I am apparently eligible to join Nuvos according to my appointment letter)
Any contradictory opinions?
Thanks.

Andy_L

Private sector (and some(one?) public schemes like Local Gov) pay members & employers contributions into a fund & use that and investment returns to pay pensions when they are due.

In "unfunded" schemes like the CS the Government Actuarial Department calculates the cost of providing the pension using a notional fund of Government Gilts to come up with a percentage figure. This figure is then deducted from each departments pay bill & that money used to pay the pensions of current retirees rather than being invested for the pensions of the current workers.

The value is based on pay rather than age:
Employer’s Share of Contribution Rate

£18,500 and under 17.1%
£18,501 to £38,000 19.5%
£38,001 to £65,000 23.2%
£65,001 and above 25.5%

http://www.civilservice-pensions.gov.uk/~/media/assets/www.civilservice_pensions.gov.uk/publications/csra_2006_2007%20pdf.ashx

probison

Thanks for explaining it Andy - that makes sense.
I was trying to decide on the basis of your previous reply to Porto in another thread (because I too am unlikely to stay in the civil service for the rest of my working life):

"With Nuvos you don't lose out if you leave early as you did with the final salary scheme so it's down to you (or your IFA) whether you think investing 9.5% of this years salary over 36 years will give you more pension than 2.3% of this years salary with 36 years of RPI increase."

Because I'm older (44) :cool: for me it was 11.5% [+ (up to ) 3%] compared to 2.3% of this year's salary and 21 years of RPI increase. But your "pseudo contribution" explanation is a different way of looking at it and tips me toward nuvos.
Thank you.