To ask what a 'good' pension is?

[2birdsonawire]

What is considered 'good' as a pension contribution from you and your employer percentage wise?

I know this will be pro rata on a salary basis, just want to see if what I get is good or if I should look at other saving schemes.

Thanks

@titchy thank you, I'm going to have a look in to it, I just took everything at face value so glad I asked.

@Mia85 the scheme is called Alpha but there's also partnership but I didn't go with that one.

Grateful to all the helpful comments on here, especially @BillMasen.
OP don't apologise, if you can't get your head around it by doing your own reading, then this is a forum to ask for the thoughts of others. Just accept that you will get degrees of what you're after.

It depends what age you are someone who is a public sector worker in their 60s will have a very different view of what is good compared to a 20 yr old!

It makes me very grateful for my teacher pension. I put in 9.8% and my employer puts in 23.68%. I also choose to put away 5% in an AVC to make up for the years I was part time.
DHs work pension is him paying 10% and his employer 5%. Luckiou he started a (small) private pension early in his career too.

But only a minority of public sector pensioners would have a 30k pension. You'd have to be on a salary of 50/60k to end up with a pension that size and have had 40+ years of service. Most don't earn anywhere near that amount or have that length of service so actual pensions are usually much smaller.

I'm not sure that's right. The people I work with who earn 60k have much better pensions than 30k a year.

My friends employer triples your contributions up to 6%. So you pay 6% they pay 18%.

There are so many public sector pensions so it is unfair to say that pay freezes across the board are reasonable.

You also have to take into account that public sector wages are lower than comparable jobs in the private sector. So although the % may seem generous the amount is not so different.

@2birdsonawire
See if you can sign up for a Pension Power seminar. They are helpful at de-mystimifying the terms.

You also have to take into account that public sector wages are lower than comparable jobs in the private sector. So although the % may seem generous the amount is not so different.

i'm not sure that's true. I'm in the public sector. Plus the maternity, holiday & sick pay is far better.

Basically the alpha is the defined benefit civil service scheme. Your pension will NOT be based on contributions, it will be based on your average salary throughout your career whilst at civil service and the number of full time equivalent years you work. Every year of work gets you 2.3% of your salary guaranteed when you retire.

So if you work for 20 years averaging £25,000 a year, your pension will be 2.3% x 25,000 x 20 = £11,500 a year.

@titchy plus CPI adjustment each year. Compound interest element.

Contribution rate is irrelevant for a defined benefit pension like yours. You’re not building up a pot. You’re building up a guaranteed yearly payment for life & it’s based on your salary and number of years worked.

You can basically just ignore the 27% as it means nothing in regard to the amount you’ll receive at retirement.

Extra holiday, longer maternity do not increase the amount in a pension pot. They are benefits but don't increase the amount payable.

Titchy has explained it well plus there are death in service/ill health benefits that you hopefully won't need but could be incredibly valuable if you do.

Essentially it is one of the best schemes you could be in. It would cost you hundreds of thousands to replicate the advantages in titchy's example yourself.

You would essentially be taking a huge paycut if you didn't join.

10% from your employer is not the norm at all. The public sector unbelievably amazing pension skews what people think is normal.

@DrMadelineMaxwell

It makes me very grateful for my teacher pension. I put in 9.8% and my employer puts in 23.68%. I also choose to put away 5% in an AVC to make up for the years I was part time. DHs work pension is him paying 10% and his employer 5%. Luckiou he started a (small) private pension early in his career too.

Your employers contribution is actually irrelevant though & has no impact on the amount you’ll receive in retirement.

Not all public sector pensions are as amazing as that. Mine they contribute 8% which is good tbf but they don’t do any matching for under 40s which is so stupid. I’m currently contributing 6% on top.

Death in service et al do not increase the amount of cash the employer pays into to the employees pension pot.

If you are paid 10000 in the public sector and they make a contribution of 25% to your pension they put in 2,500.
If your salary is 15,000 in the private sector and they put in 10% it is £1500.
Which is comparable to 15% of the public sector salary. So the pension generosity is not as great as it seems.

From the 2019 ONS comparison of public and private sector earnings:

The results based on total remuneration showed that, on average, employees in the public sector received a larger remuneration package than their counterparts in the private sector in almost every occupation grouping regardless of company size.

The main reason it's so good is the enormous (hidden) pension contributions that public sector workers get plus the excellent terms and conditions.

OP, stay in the pension scheme but while you are young you can put any additional money into a LISA, you get more free money that way.

The other thing I would say OP is that you should join the scheme now because there's no guarantee that benefits this good will be on offer forever. Schemes seem to be revised every few years and they never seem to get more generous when they are! Your future self will thank you for joining now.

@PattyPan

Not all public sector pensions are as amazing as that. Mine they contribute 8% which is good tbf but they don’t do any matching for under 40s which is so stupid. I’m currently contributing 6% on top.

That's very low for public sector - what sector?

Extra holiday, longer maternity do not increase the amount in a pension pot.

who said they did?

@titchy don’t want to say the sector as it’s a bit outing but it’s one of the regulatory bodies and needless to say the salaries are also much lower than in the corresponding private sector 😑

No one gets taught about pensions. They ask around and do their own research . Some pension companies or investment companies do presentations about retirement options - well worth a look.

Charity sector - 7.5% from my employer.

Laughing at 10% being the norm in the private sector. My employer contribution is 3% and that's not unusual.

I'm currently putting 20% into my pension and am changing jobs specifically to get a better employer contribution (which will be 10%).