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Local Government Pension Scheme - any good?

(16 Posts)
Snorbs Wed 15-Jun-11 14:36:51

I've been offered a job at a university and it is part of the Local Government Pension Scheme. Does anyone have any opinions on whether this is a worthwhile pension scheme to join?

swanker Wed 15-Jun-11 14:39:04

Is this a joke snorbs?

Seriously- if you pay in now, it is likely to be bankrupt by the time you retire, assuming you are under 40.

Our local universities are offering 10% uplift on your salary if you're not in the pension scheme.

TheFantasticFixit Wed 15-Jun-11 14:44:36

Swanker I know I am being a bit thick but can you explain why? I had a LGPS pension and recently stopped it but very interested to know. I thought it was seen as one of the safest for some reason?

Disclaimer: I have temporarily lost my sensible, logical mind to the effects of pregnancy so please don't hold me accountable for my increased level of stupidity!

Snorbs Wed 15-Jun-11 14:56:58

No joke. I know bugger all about pensions in general and even less about the LGPS in particular. So it's doomed, is it?

azazello Wed 15-Jun-11 14:58:27

Its about the best one there is. It is funded (not from future taxation) and usually final salary.

swanker Wed 15-Jun-11 14:59:14

Well, they are divided up regionally of course, but ours is heavily invested in companies which have gone down the swanee recently!

You are also about to be asked to pay in more (% of your salary) for longer (more years), for fewer benefits (lower payout)- now why would they ask that if they weren't struggling?

There are going to be massive shortfalls over the next 20 years- so many people will be retiring, but they are not being replaced, local government is trying to halve its workforce so not enough money will be going in to keep the schemes afloat.

swanker Wed 15-Jun-11 15:02:28

X-posts- azazello what do you mean by funded please?

azazello Wed 15-Jun-11 15:06:51

By funded I mean it has generally enough contributions to meet its future liabilities, unlike the civil service pension scheme which is funded by taxation.

Anyway. if is is a final salary or even career average salary, it is worth joining.

Snorbs Wed 15-Jun-11 15:24:11

I think it's final salary.

azazello Wed 15-Jun-11 15:31:29

Then take it. Quick.

swanker Wed 15-Jun-11 16:05:16

What will happen if LGPS go bankrupt?

Snorbs Wed 15-Jun-11 18:56:20

Dunno. Probably the same as when other pension funds have gone bankrupt - the recipients get boned. But that could happen to pretty much any pension scheme these days, couldn't it?

MovingAndScared Wed 15-Jun-11 20:05:46

Swanker - I think something - maybe your polictical views - is getting in the way of giving good advice - its very unlikely that a public sector pension scheme would be allowed to go bankrupt - and any pension scheme whether now public or not is cover by the pension protection thingy - which means your contributions are alot more protected in the past.

Snorbs - the local goverment pension scheme is a good one -currently final salery - may change but my DH is in and went to a meeting recently and they said that might not be for a couple of year
and is basically free money as your employer will be making significant contributions - more than 10%

swanker Wed 15-Jun-11 21:27:21

I don't have any political views per se- I vote for the policies I most agree with.
I think my recent LGPS statement and accompanying literature may be colouring my views somewhat though, particularly the pie chart showing incoming contributions for last year vs outgoing pension payments, and the chart showing the performance over the last 3 years of the largest funds the pension pot is invested in.

This BBC article suggests the council pension deficit would hit £60bn last year (2010).

I think the biggest impact on pensions over the next 40 years will be the effect of inflation. £8k p.a. sounds like a great pension now, but in 40 years time what will it actually buy you?

Snorbs Wed 15-Jun-11 21:50:30

Swanker, I take your point about the potential long-term security or lack thereof. I will give it some thought. I do remember the pensions miss-selling scandals of the 90s, and the failed pension schemes of the 90s and beyond, so I must admit to being more than a bit suspicious of all pensions these days. If I had the option of just sticking money in a savings account then I'd prefer that but, sadly, that isn't a choice any more.

Other than the possible long-term safety, though, it sounds like a moderately good scheme inasmuch as it being final salary (at least for now) and that my employer will put in a fair amount on my behalf. I suppose that will go some way to making up for the lower overall wages compared to working for a private company grin

Thanks everyone for your thoughts. It really has helped!

swanker Wed 15-Jun-11 22:11:48

Another factor to consider is how long you'll be in the scheme- if you think you'll be there for the long-haul then yes you're probably right to go for it, but if it is a temporary contract, it may not be the best option.

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