Does the state, in effect, not contribute much more than 5% of salary to your pension? How much would you have to contribute to get a similar pension in the private sector?The pay cut would mean also be cutting the private pension and losing the 5% employer contribution.
How so? Your pension fund will stay as it is and likely grow over time. You can still contribute to it if in civil service employment.The pay cut would mean also be cutting the private pension and losing the 5% employer contribution.
There is no simple answer. A few thoughts:I guess what I'm trying to determine is that if I was successful in getting the job, would I be worse or better off pension wise, than if I continued in my current job and with the private pension, or would I still need to be putting substantial amounts in to the private one to get the same pension when I retire, given my age starting in the ps?
The civil service position is 'ap' grade, think 69-85k
Given that I'm 42, would it be madness to consider the civil service position and it's current pension arrangements or am I reading into the negatives too much?
Not quite. He's only 42 now so if retiring at 62 he could only draw down the occupational pension at state pension retirement age (currently 66, but likely to rise by then).If, say, you put in 20 years and remain in the AP grade for all of this time, you would be entitled to half of the full pension i.e. 85k divided by 2 multiplied by 20 fortieths (approximately 21k).
You’re quite right. It changed in 2013Not quite. He's only 42 now so if retiring at 62 he could only draw down the occupational pension at state pension retirement age
the first thing colin79ie needs to know is the age he can retire at, hard to give correct advice until posters know retirement age,Yes but he would be paid his civil service pension at that stage based on 20 years service.
I was wrong on this point and deleted the post.Salvadore said:
Yes but he would be paid his civil service pension at that stage based on 20 years service.
The rates for buying back extra years have gone up over the past 10-15 years or so, so any new contracts for buying years would be of questionable value, compared to the return that you would get if you put the same money into AVCs.What about buying back years to get the full PS pension.
I was advised by two separate pension advisors, both with considerable expertise in public sector pensions, that the rates for new contracts for buying back years since about 2008 were not competitive, and you'd be better off in an AVC fund.I would have assumed (incorrectly perhaps) that a private pension would carry more risk, and the bang for buck would be less than the Public. Even with the increased cost of buying back years.
1 and 2 are coming from the same source, and subject to the same future risks. The question would be whether to add additional resources to 1/2 or 4. It may well depend on the relative scale of 1/2 vs 4.At retirement the OP will probably have in some parts of their wealth in:
This is pretty well diversified. I would focus more on getting best expected return as there will never be too many eggs in one basket.
- A state contributory pension
- Civil service occupational pension
- A house
- Private pension fund
I would disagree that 1 and 2 are subject to the same future risks. There are similar risks relating to pressures on public expenditure, but they are to a large extent independent risks. For example, the state could choose to change the state contributory pension, without touching the civil service occupational pension entitlements for existing scheme members.I was advised by two separate pension advisors, both with considerable expertise in public sector pensions, that the rates for new contracts for buying back years since about 2008 were not competitive, and you'd be better off in an AVC fund.
1 and 2 are coming from the same source, and subject to the same future risks. The question would be whether to add additional resources to 1/2 or 4. It may well depend on the relative scale of 1/2 vs 4.
Agreed, to some extent they are independent.I would disagree that 1 and 2 are subject to the same future risks. There are similar risks relating to pressures on public expenditure, but they are to a large extent independent risks. For example, the state could choose to change the state contributory pension, without touching the civil service occupational pension entitlements for existing scheme members.
But on 1 January 2014, the State Pension (Transition) for 65 year olds was abolished.Agreed, to some extent they are independent.
For example the state contributory pension could fall but your occupational civil service pension would top up the difference.
Bear in mind that state pensions were not cut in the bad years 2008-2013. But public service occupational pensions were all subject to a levy (effectively a cut).
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