Pension ~ WWYD

[Ramshack]

I've been offered a new job that I really want. Senior management role. It's a departure from my current, very safe job, it's a role that I would find rewarding and I want to do. The new job is in a new, small business. My current role (that I pretty much hate) is in a very established multi-national. New job has matched old job's salary + bonus. I've managed to negotiate benefits that are acceptable in the new role (healthcare etc.). But the pension in the new job is a disaster. Statutory employer contributions only, vs up to 15% in my current role (base and matched). New job says they won't budge on pension. I'm in my early 40s so I am thinking more carefully about these things. WWYD?

Unfortunately they are probably not able to change the basis of your pension, unless they have a secret squirrel exec pension that they only let the senior echelons become members of. The only thing they might do is allow you to use your bonus for AVCs into the company scheme.

I personally would think twice before moving away from a job where the pension scheme is good, as it's a significant investment in the future, esp if the employer contribution is generous.

If the new role pension scheme is one of those basic government mandatory ones that enable them to contribute the bare minimum, they'd have to do a lot to make me swap from a good scheme. It would feel like a pay cut. But if you are unhappy in your current company and need to get out, then happiness and wellbeing are important priorities to weigh up.

Why is the new job only matching your current salary?

If you could negotiate more salary, you could/should divert it straight into your pension & consider it their pension contribution.

Your only option is to work out how much salary you need to make up the difference (don't forget the tax relief on pension contributions as that can go straight into the pension as well at the point you pay in) and ask for the extra cash. Get some advise from an IFA about how much you would need if necessary.

If it's a start up type company then they probably are trying to avoid spending cash as much as possible, unfortunately a common way they do this is by doing the bare minimum on pensions. I've seen it a few times and it cuts them off from hiring a lot of experienced and very good staff at the more senior levels. Some will offer equity etc but that is a huge risk in a start up as it may never realise any significant value if no decent exit event comes along.

I'd keep the safe job, tbh. Economic uncertainty is very real in this country right now.

Negotiate a higher salary and contribute that to a pension yourself. You have to make them understand that they are not matching your current salary.

Thanks for your replies. Yes, the additional salary option (and then pay into a
pension myself) seems to be the only option. Or to stay in my tedious job. Sigh. I had got really excited about a new challenge but now I'm back to the should I/shouldn't I stage. Really appreciate all the advice here, though

Simply look how much money you want in retirement and how much pension pot you have already built up. If you can afford to do it and live out the retirement you want do it. After all its possible you may get hit by a bus tomorrow. However if leaving is going to see you stretched, stay put. Like my grandma used to say if you can afford it you can't have it, I guess that applies here.

Can afford it you can have it*

Indeed, you have to think of the pension contributions as part of your salary, albeit salary you can't access for a good few years yet.

If it's a deal breaker for you, it would seem wise as a PP has suggested, to ask for the contribution you would lose back in the form of extra salary. You can then make your own arrangements and the provider should be able to reclaim the tax (as you'll have had to pay in take home pay). If you've nothing to lose then it's worth a try?

You live now. I'd go for the more interesting job, personally.

Pensions are important but it's not worth having a boring job for a good one unless you are very close to retirement. Otherwise, live a bit for the moment. As someone said, you could go under a bus. Not tomorrow but before you need to worry about whether your pension pot is going to see you out.