Pension for dummies

[superplumb]

So I've had a good pension for 15 years but want a career change. I'm 43 so still have years and years to pay into it. If I work for say another 3 companies until I retire how badly will this affect my work pension.

Is your work pension final salary? Those are the gold standard and difficult to match if the new employers aren't final salary. But it also depends on whether a new job would pay you a lot more. And how much a new employer matches your own contributions.

One of the best things I did was to make additional voluntary contributions, which were stock market investments and gave me a good tax free lump sum on top of my occupational pension.

There's no simple answer to your question because of these different factors.

Yes it's a police salary currently but I wont get the full whack as I'll be too old come 35 years. I would expect more salary wise in my next role but it's the jumping around which worries me

Then look at a pension forecast for the age you'd like to retire (you should be able to get this from your scheme) and work out what the shortfall is that you'd need to make up in any new job. Is it doable?

The (very good)index linked police pension will still be there but you won't be paying into it any more of course. Whatever you do, don't let anyone persuade you to 'transfer out' of that unless you thoroughly understand the implications.

It may be that hanging on in your police job for a few more years would be more advantageous but not at the expense of health and happiness. Remember bot having enough money in retirement can make people very unhappy though!

Start looking at the MSE pension forums and Money Magpie website and podcast - I've learned a lot from those.

Thank you. Will do.

You have such a specific scheme that I think you need to look at the fine detail.

I’m guessing you joined in 2007, and have 9 years in the 2006 scheme and 6 in the 2015 scheme?

Leaving the 2015 scheme won’t have an impact on what you get from it. It’s care average and based on what your actual salary was in each year - updated by CPI + 1.25% (don’t take that as gospel!). So whether you leave tomorrow or in 10 years, you’ll still get the same pension for what you earned in “2022” for example.

What you might miss out on is a good pension scheme going forward - but no-one can tell you about that, it’s new job dependent. You could get a higher salary in another care scheme. If you get any public sector job, your pension could be similar.

The issue is your 2006 scheme. Again, it’s your pension not mine, so don’t take this as gospel! Do I understand correctly that your “final salary” for the 2006 portion is not your salary in 2014, but your salary on leaving? So at the moment, your current salary. If you don’t expect any further salary progression in the police above current + CPI, then it makes no difference if you leave. But you’re very unlikely to find a final salary scheme anywhere now, so if you could have stayed and been promoted then you very likely will lose out in pure £ terms.

Life is too short to stay where you’re unhappy and with 15 years police pension you have an amazing guaranteed pension to be able to take some risks. But with 9 years accrual in a final salary scheme that still looks at your current salary… I would maximise the shit out of increasing your salary before you leave. Not to the detriment of your health, but sticking out a promotion you don’t really want long enough for it to count as your final salary could be an excellent strategic move!

Yes joined in 2008. So I have some 2006 scheme but mostly the care one now. Tbh although the pension is a consideration it's not enough to keep me I'm a job for 20+ years I no longer enjoy. Who knows what the pension will be by the time I leave, it could change again
I'd like quality of life back, but it's more what happens to my new work place pension if I join a role in company x then leave for company y.

“it's more what happens to my new work place pension if I join a role in company x then leave for company y.“

The only kind of scheme where you benefit from longevity is final salary. Because your early years of accrual pay out based on your leaving salary. Good luck finding any FS scheme open to new entrants!
Even if you go into a new CARE scheme, it isn’t generally average over the full period - it means each year is captured at the salary at the time it was accrued, then upgraded by an inflation related mechanism.

So you just accrue pension with your new employer. Then when you make again, you become a deferred member of that, just as you would be with your police pension.

If it’s CARE you’re unlikely to want to transfer it. If it’s DC, at some point it can be worth consolidating - higher pots sometimes have lower fees.

If you change company a lot and there’s a qualifying period for anything more than legal minimum then you’ll miss out… but that’s a case by case decision.