What is the best pension plan?

[ShinyDysonHereICome]

Finally I'm in a position to pay into a scheme, but I'm just not sure which one is best to go for.

I have the option to pay into a local government pension scheme, but with the contribution estimnated to be a fixed 6% that's more than I can really afford to pay each month and the return doesn't look very good. I know however, that the LGPS is meant to be one of the best around so am very confuddled now!

Thanks in advance!

I pay into my work pension scheme. IME that's generally the best option if you can, as normally your employer pays a certain amount as well - for mine, I pay 5% and my employer matches that. Would your employer contribute?
The public sector pension schemes are often better than private.
I've paid into my current scheme for 7 years. the return's not too bad, but mine of course is less anyway as I'm only P/T.
I'm surprised it would be 6% though, more normal is 5%.

I pay into local govt scheme - 6% at mo, but is going down in april to 5.8%

My dad told me it was good (has been through figures) so that's why I chose mine. He understands this stuff (ex inland revenue, ex accountant adn still does owrk on the side) in a way I can understand (i.e. do this).

Am I right in thinking that the LGPS is a defined benefit scheme?

If so, this means that your pension will be a fraction of your final salary for every year in which you are a member of the scheme.

Your contribution will be taken from your gross salary, so there is a tax advantage there.

If you do not join the LGPS, does your employer offer an alternative scheme? If so, it is likely to be a defined contribution arrangement. Alternatively you could make contributions to a personal pension scheme which is also defined contribution. In a defined contribution scheme, the amount of pension you will get depends on investment return. You are not guaranteed any level of return.

Given the choice, I would go for a defined benefit scheme if I could.

HTH

Thanks everybody-that does help.

I just looked at the calculations online at www.lgps.co.uk and it said that after a 6% contribution for the next 25/30 years I'd get £65 per month which didn't sound like very much at all!

Will read up a bit more but probably go with the LGPS- many thanks!

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Oh Orinoco you absolute angel !

I was being a thicko and instead of entering my annual salary I entered my monthly contribution amount

What a muppet!
What a FAB scheme, will definately sign up!

I really can't thank you enough x

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Shiny dyson - dont forget that with the LGPS not only is it a final salary scheme but you also have free life cover beneift within it 4xdis.
Pensions work 2 worys - 1 a defined benefit ie final salary scheme which for every year worked and contributing to the scheme you will get a defined proportion of your salary - it may be your last yrs or more commonly the average of the last 5 yrs salary. If you die in service your dependents will get a lump sum and also a dependents pensions as well.

A defined contribution scheme - this is whereby you put into a pension pot every month and when you retire that pot of money is used to go and buy you an annuity (in other words an income for the rest of your life )
The things to consider are a the final salary scheme is USUALLY better as the provider (lcl GVt) has to provide a defined benefit upon your retirement despite whatever happens to their underlying investments over the yrs. - This is the reason why most schemes now are closing their final salary option to new members and even converting them to defined benefit schemes as their actual contribution in order to fulfill that promise to you can fluctuate wildly dependent on investments and also annuity rates)
A defined contribution scheme is as it says you put it to the pot and it grows (hopefully over time) into a big pot and then you go out with your Open Market Option on retirement and secure the best income level you can get with your pot. Pensions can be very confusing and I could go on into the other contributing factors ( I used to work for a Pension company pre Child) The best thing for you to do is see an IFA (Independent Financial Adviser - ideally qualified to AFPC - Pensions G60 level. As a rul of thumb however a defined benefit scheme is better then any scheme in which your employer contributes to in addition to you this can either match your contributions or a set level then your own individual pension pot into which only you contribute (stakeholder pensions are pretty good in this area as they have less charges.)