OT: job offers and pensions

[dieselnutjob]

Sorry I know that this is a car forum, but there are some sensible people on here so...

 

I went for a job interview today. The nature of the job and the commute is much the same. The people are nice so much the same.

 

So it comes down to ££s.

 

I was hoping that they would offer me more, but they did offer me more than what I am currently earning. Specifically they offered me 15% more that what I currently earn. However there is one big difference:-

 

My current job comes with a final salary pension. The company take about 6% of my income to cover this.

The job being offered comes with a normal "money earned" pension. The company match whatever I put in out of my income.

 

Is 15% enough to cover the loss of a final salary pension?

[Bobthebeard]

Sorry I know that this is a car forum, but there are some sensible people on here so...

 

I went for a job interview today. The nature of the job and the commute is much the same. The people are nice so much the same.

 

So it comes down to ££s.

 

I was hoping that they would offer me more, but they did offer me more than what I am currently earning. Specifically they offered me 15% more that what I currently earn. However there is one big difference:-

 

My current job comes with a final salary pension. The company take about 6% of my income to cover this.

The job being offered comes with a normal "money earned" pension. The company match whatever I put in out of my income.

 

Is 15% enough to cover the loss of a final salary pension?

 

I suspect that your questions may be answered quite soon, though possibly* not in the way you had hoped!

Mr B may well be along soon to offer advice in these matters....

[Cheggers]

I'm pretty sure we have a HR professional on here...Luxobhaji's_r_us perhaps??

[Caffiend]

I'd suggest speak to an independent financial advisor face to face, because it's not just about the math, YMMV.

 

Depends on how long you've been where you are working now, how long you would be there if you didn't take this new job offer, how old you are and how much of your salary your proposed employer would be willing to match (bet there's an upper max % that you could pay in that they would equal).

[skattrd]

With the current economic climate and the way things are changing, are you sure your position and both companies will be in existence come pension time?

[Micrashed]

I have or I should say had a final salary pension up until last year, I put in 6% and hoped to retire at 60 having done 40 years on the NHS shovel.

 

This is being eroded away, by the end of next year I will be putting in 8%, will no longer have a pension based on the best of my final 3 years salary and will have to work until I am 74 to get the same out of it. Given that I already have chronic health problems myself its quite unlikely I will make it to 74.

 

Dont think this is a rant about the NHS / public sector pensions - its not. Its merely to illustrate that nothing, no matter what you think it is, nor how good you think it is, is set in stone nor is it likely to last until you hit retirement age.

Look at all the Daily Mirror employees who lost their pension.

 

To be honest I very much doubt there will be an NHS by the time Im 74 - its on its arse already.

[seacow]

There are many variables at play so it's not a straight forward decision. Is your current pension capped in any way? If not the it may be or it may be stopped at any time. So in some ways the money purchase scheme may be better. Do you have to contribute to the new scheme? If not then its a 21% pay rise. Some proper advice as has been suggested would be worth it. How far away from retirement are you, see more and more variables!!!

[dieselnutjob]

I'm 42 and have about 4 years SERPs, 8 years from a previous employer and 10 years in the current one.

[barefoot]

Is 15% enough to cover the loss of a final salary pension?

 

No

[seacow]

I would seriously get some independent advice if you are seriously considering the job. Given there isn't really much to chose between them its difficult. On the face of it 15% doesn't cover losing the final salary but you are paying 6% for that now and personally in 20-25 years when you will be needing it I very much doubt that the final salary pension will exist. Also unless you think you will stay in the job forever then when you do move you will likely lose it anyway so you will then be in the same position so its a choice of whether you go now or in a bit! Would be easier if the job was either much better or a shit load of money!!! Another thing to consider is that if you are near a tax band at the moment and the 15% knocks you over it then you could actually be worse off!!

[HillmanImp]

I am an occupational pensions consultant. I am at the pub but will do some figures for you if you want. Will pm you tomorrow if thats okay.

[dieselnutjob]

thanks yes

 

if the current employer wants to freeze the final salary pension and force everyone over to defined contribution (there is no suggestion of it yet) would they normally compensate employees for the change of benefits? The current company is not allowing new employees into the final salary pension, and I'm not sure what proportion of current employees are in there. Maybe 1/4 or 1/3. I know other companies have done it but I'm not sure how they appease people.

 

If the answer is that they are likely to not compensate in any way then I might as well go now while an offer is on the table.

 

On the other hand they might decide that the number of people in the final salary pension is small enough to not bother making a fuss about it.

 

My skills are quite specific and job offers don't come around that often.

[Micrashed]

I know other companies have done it but I'm not sure how they appease people.

I dont think they do.

[Cavcraft]

Ordinarily I think they would give you notice then invite you to join their scheme, which is (probably) going to be a sack of discarded dog cocks from the vetinary hospital compared to what you were used to.

FSPs are going to become a thing of the past quite soon methinks: just like when some companies all of a sudden decided they weren't actually making good money/doing well when the recession came round, then started pay freezes etc, other companies are going to follow suit giving FSPs the heave ho.

 

I'd stay where you are (assuming you have a few years in) and then 'double dip' as soon as that's possible. I have another 6 years and 19 days before I can.

[Luxobarges_Are_Us]

I'm a HR professional, but pensions essentially are an insurance product and, while I may be able to quote loads of tangentially relevant legislation etc, I have no idea about the actuarial side of things. Mr Imp will definitely have a better idea than me.

 

FWIW, my general hunch is that 'money purchase' pensions are not really worth bothering with. A 15% increase in gross pay is probably about 9% once you 've taken out the marginal cost of tax and NI on it. A final salary pension's got to be worth more than that.

[dieselnutjob]

The deal with the job offer is that the minimum pension contribution is 4% of pay. The company matches whatever the employee puts in up to a max of 10%.

 

What is difficult to figure out is how much one has to sacrifice (between 4% and 10%) in order to get something near to the current final salary pension. Is it possible that 10% of pay and another 10% from the company actually results in a higher pension than the final salary one would from my current employer?

[andrew e]

The pension is irrelevant - if it is a specialised field I'd be backing which employer looks most likely to go the distance...