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Pension for Short-Term Job?
liam01
Posts: 4 Newbie
Hi all.
Just looking for a bit of advice really. I’m in my early 20s and just about to finish university. I have a job starting in September within the Civil Service and I’ve received some information through about a pension. I’m entitled to join either alpha (which requires contributions) or partnership (which doesn’t). The job is a fixed term contract for a year (with possibility of renewal). I’ll most likely stay in the role for a year, maybe two. I was just wondering whether it’s worth paying into a pension when I’m only going to be there for a relatively short amount of time?
I had a part time job throughout university but opted out of the pension. I was always going to pay into a pension of some kind when I settle down in my ‘career’ (ie the job I’ll most likely be in for life), but I was just unsure whether it’s worth starting to pay into this pension now, when the pension I’ll inevitably start paying into will be with a different provider? Will it get confusing? I read somewhere that opting out of the pension is effectively like missing out on pay (as you get tax relief, your employer has to contribute etc) - but would I earn enough over a year or two for it to make *that* beneficial?
Hope this makes sense, and any advice would be appreciated!
Just looking for a bit of advice really. I’m in my early 20s and just about to finish university. I have a job starting in September within the Civil Service and I’ve received some information through about a pension. I’m entitled to join either alpha (which requires contributions) or partnership (which doesn’t). The job is a fixed term contract for a year (with possibility of renewal). I’ll most likely stay in the role for a year, maybe two. I was just wondering whether it’s worth paying into a pension when I’m only going to be there for a relatively short amount of time?
I had a part time job throughout university but opted out of the pension. I was always going to pay into a pension of some kind when I settle down in my ‘career’ (ie the job I’ll most likely be in for life), but I was just unsure whether it’s worth starting to pay into this pension now, when the pension I’ll inevitably start paying into will be with a different provider? Will it get confusing? I read somewhere that opting out of the pension is effectively like missing out on pay (as you get tax relief, your employer has to contribute etc) - but would I earn enough over a year or two for it to make *that* beneficial?
Hope this makes sense, and any advice would be appreciated!
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Comments
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I start the pensions when I'm able to in all the jobs I've had, it means I've many little pots and have the option of potentially consolidating them if I fancy it in the future.
What happens if you don't get your career kick-started for 5 years, that's 5 years of pension you have missed out on.
Sign up as it's also a bit of free money added to your retirement pot!Mortgage started 2020, aiming to clear it in 2026.0 -
I have a job starting in September within the Civil Service and I’ve received some information through about a pension. I’m entitled to join either alpha (which requires contributions) or partnership (which doesn’t). The job is a fixed term contract for a year (with possibility of renewal). I’ll most likely stay in the role for a year, maybe two.
Partnership is a DC scheme more generous than is typical in the private sector, Alpha a DB one where you need to be in the scheme for at least two years to earn a pension. However, if are in Alpha for between 3 months and 2 years, you at least get the option of a CETV when you leave (i.e. a cash amount to transfer into another pension scheme), which will represent both your and your employer's contributions.
If you opt out completely, you don't get the employer contributions as extra pay, so clearly that wouldn't be sensible.I was just wondering whether it’s worth paying into a pension when I’m only going to be there for a relatively short amount of time?
It's perfectly normal nowadays to be multiple pension schemes over time.I had a part time job throughout university but opted out of the pension.
Even though the amounts wouldn't have been huge, that was unlikely to be a good idea. Hopefully this wasn't an ex-poly that offered the LGPS...?0 -
MovingForwards wrote: »I start the pensions when I'm able to in all the jobs I've had, it means I've many little pots and have the option of potentially consolidating them if I fancy it in the future.
What happens if you don't get your career kick-started for 5 years, that's 5 years of pension you have missed out on.
Sign up as it's also a bit of free money added to your retirement pot!
Hi! Thanks for this. I have to go back to uni for my 'career' so I won't be settled for at least 3-5 years - so you're probably right. I'll have to research some more about how you can transfer/consolidate pensions as I didn't know you could do that. Thanks again!0 -
Partnership is a DC scheme more generous than is typical in the private sector, Alpha a DB one where you need to be in the scheme for at least two years to earn a pension. However, if are in Alpha for between 3 months and 2 years, you at least get the option of a CETV when you leave (i.e. a cash amount to transfer into another pension scheme), which will represent both your and your employer's contributions.
If you opt out completely, you don't get the employer contributions as extra pay, so clearly that wouldn't be sensible.
It's perfectly normal nowadays to be multiple pension schemes over time.
Even though the amounts wouldn't have been huge, that was unlikely to be a good idea. Hopefully this wasn't an ex-poly that offered the LGPS...?
Hi! Thanks! I'll have to research between Partnership and Alpha which I want to join as I'm now convinced to join one. What happens if I am in Alpha for over two years - am I not able to transfer it to another pension then? Can I not transfer the Partnership one to another pension? And why would I want to transfer a pension over anyway? Sorry - I will do research so I'm sure I'll answer these myself!
I didn't know about the multiple pensions so that's helpful.
And as for the pension I didn't do throughout uni, I didn't earn enough for my employer to have to contribute (and knowing them, I doubt they would have anyway - but can't remember the forms we were given to sign). So I doubt it would've come under the LGPS, and if so - too late now haha!0 -
APartnership is a DC scheme more generous than is typical in the private sector, Alpha a DB one where you need to be in the scheme for at least two years to earn a pension
A DC ( direct contribution ) scheme is one where normally the employee and employer contribute a % of salary each month .( in this case it seems only the employer contributes which is unusual) The pot of money is invested ( in the stock market for example ) and after a few years becomes a large sum of money ( hopefully) . When you retire you can use this pot of money to create a pension income .
If you leave the employer then the pot of money generated goes with you , which is why you can end up with different pension pots from different jobs . These can be combined together relatively easily at a later stage if you want .
With a DB ( direct benefit ) there is no specific pot of money for you . What you get is a promise to pay you a pension that is a % of your salary . The more years you are in the DB scheme the bigger this % is . A DB scheme is almost always better than a DC scheme but they are very expensive for the employer to fund which is why you need to contribute yourself to join it in this case ,
Have a look at this:https://www.moneysavingexpert.com/savings/discount-pensions/0 -
Albermarle wrote: »A
A DC ( direct contribution ) scheme is one where normally the employee and employer contribute a % of salary each month .( in this case it seems only the employer contributes which is unusual) The pot of money is invested ( in the stock market for example ) and after a few years becomes a large sum of money ( hopefully) . When you retire you can use this pot of money to create a pension income .
If you leave the employer then the pot of money generated goes with you , which is why you can end up with different pension pots from different jobs . These can be combined together relatively easily at a later stage if you want .
With a DB ( direct benefit ) there is no specific pot of money for you . What you get is a promise to pay you a pension that is a % of your salary . The more years you are in the DB scheme the bigger this % is . A DB scheme is almost always better than a DC scheme but they are very expensive for the employer to fund which is why you need to contribute yourself to join it in this case ,
Have a look at this:
Thank you! Much appreciated. I'll have a look!0 -
The job is a fixed term contract for a year (with possibility of renewal). I’ll most likely stay in the role for a year, maybe two. I was just wondering whether it’s worth paying into a pension when I’m only going to be there for a relatively short amount of time?
Well.........see post 11
https://forums.moneysavingexpert.com/showthread.php?p=75959536#post759595360
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