Pension: LGPS or TPS

[TVa]

Which is better in the long term?

Tried to search for advice, but can't get a clear answer.

Context. I've been teaching (therefore in TPS) about a decade, am on UPS, still have 30+ years until retirement. I'm looking at taking a job which is in the LGPS. It would pay the same as I am now.

The TPS is a guaranteed pension for life. I doubt the other one is? That is what you need to check.

What you have already paid into TPS will increase in value slower once you leave TPS too!

Could you transfer your TPS across? That might be the best option if you intend to stay in the new role long term?

Local government pensions are a lot better. The percentage paid in at the same wage is lower (so less of your wage goes into it) but the accrual rate is much higher so you are paid a higher pension once you retire.

For example, at a salary of £40k, you'd pay 6.5% in the LGPS but 9.6% in the TPS. In the LGPS, each year you pay in earns you 1/49 as accural but in the TPS, it's 1/57.

I admit I know nothing about the LGPS. What is the employer contribution rate? TPS is over 23% and we keep getting told it is gold plated!

The employer contribution rate doesn't matter because it's not a contribution-based pension. It's a defined-benefit pension. Whether the employer rate for TPS was 5%, 25% or 95%, it wouldn't affect the amount that was paid to you once you retired. It also doesn't matter how much you pay in: only the accrual rate matters.

Lots of people in the private sector or with private pensions get confused by this because those pensions are contribution-based so the more the employer pays in and more you pay in, the better the pension becomes. They see the employer contribution in the TPS and say it's amazing and so much better than their pensions but that's comparing apples and oranges: totally different things.

Thank you, that makes perfect sense now.