OP you need to read the pension terms but if its a fairly old scheme it may be final salary, normally the pay out would be something like 50-60% of salary assuming you had worked say 30 years. As others have stated you would accrue say 1/60th of final salary for each year worked upto a maximum of 30 years. So 30/60 = 50% for example

More recenty they switched to career average before largely being discontinued. You should check what it says.

With people living longer and investment returns all over the place its very expensive and even really impossible for the company to “save” enough to pay for such a pension with a degree of certainty. Imagine an employee who is successful and gets some good promotions, in their final years of working they could be earning double, treble or more what they where making earlier in their career. As such final salary is a goldmine for them and a headache for their employer. There used to be a wheeze / understanding where longstanding and loyal employees where given a large payrise in the final 1 or 2 years of their employment, eg 20% plus. Of course this was the also a pension rise of 20% for the rest of your life.

Now such pensions are very rare, almost exclusively government jobs and surprise surprise MPs and EU MEP have very generous final salary pensions, someone like Corbyn with 30 years as an MP will get £50k a year which has a market value of £1.6m of which he has contributed zero. Of course if MPs award themselves some more big payrises his pension will go up some more

someone like Corbyn with 30 years as an MP will get £50k a year which has a market value of £1.6m of which he has contributed zero

Keep making stuff up why don’t you.

MPs’ contribution rates increased by 1.85% to: 13.75% (for members with a 1/40th accrual rate); 9.75% (1/50th accrual rate); and 7.75% (1/60th accrual rate)

My pension was a final salary scheme when I joined.

Then 2 years ago they changed it to a career average scheme when they realised it wasn’t sustainable

Career average schemes are still very good, they are still a defined benefit scheme. If you know you aren’t going to get much of a pay-rise for the rest of your working life, they aren’t that much different from final-salary.

MPs’ contribution rates increased by 1.85% to: 13.75% (for members with a 1/40th accrual rate); 9.75% (1/50th accrual rate); and 7.75% (1/60th accrual rate)

So, an MP, who is paid by the government in the first place, has to pay some of that money back to the government, in order to receive money from the government for ever more after they retire.

I content that public servants don’t pay for their pensions. The government does.

The ‘contribution’ figures only enable a like-for-like comparison of salary with the private sector.

I content that public servants don’t pay for their pensions. The government does.

The ‘contribution’ figures only enable a like-for-like comparison of salary with the private sector.

How would you like the pension provision to be made then?

I pay into a Local Government Scheme, as does my employer (the taxpayer, if you like). This is then invested, by a private company into the market, just like any other private scheme.

I think there’s a bit of a misunderstanding that public servant pensions are ‘paid by the government’, they’re not, they still accumulate funds that are invested and held separate to general pension provision and public spending.

From what I can remember, Corbyn used to give chunk of his salary to the local party plus his expenses were negligible. Why not, for example, have a pop at Cameron or Osborne, and how we reward the failure of the rich kids? Can’t see it somehow.

So the £400+ a month I pay, I dont really pay?

The scariest things about pensions are:

A) that most of the people who have them don’t understand how they work,
B) those that don’t (and some that do) think they can ignore planning for their retirement as it’s ‘too complicated’
C) That the ignorance of A and B is accepted, generally, as okay.

It’s not, especially as it’s not really that difficult to understand and at some point will be pretty important to your financial security

That’s not aimed at the OP by the way, who’s obviously doing the right thing by trying to understand.

The scariest things about pensions are:

I’d say the biggest issue is that most people simply can’t afford to save enough to build a fund which will make any real difference…

I have a civil service pension from the 8yrs I worked there. If I live to 65 then the returns bear no relation to the contributions I made. The lump sum payment significantly exceeds the conributions, let alone the annual payments after that. However, in the next 25 yrs I fully expect the government to find some way to renege on it, whilst moving the state pension age away faster than I’m getting older.

I fully anticipate having to work until I die or no longer possess the mental faculty to. at which point I won’t really care what happens anyway.

logans run anyone?

I’d say the biggest issue is that most people simply can’t afford to save enough to build a fund which will make any real difference…

*sweeping generalisation alert*

Generally, that’s because people leave it too late. If you go by the rule of thumb that you take the age at which you start saving for retirement and halve it to give you the %age of your income that you should be saving, if you start at 20 then that’s 10%, which isn’t a huge amount.

Most people wait until 40+, so they need put away 20%+, which is obviously quite a chunk.

@bunrep I put in 25% and will get nonwhere near an MP’s payout. I’m on the bus on the way to the airport but when I’ve got some time I knock up a spreadsheet to show what MP’s contributions would buy and how much they’d have to save to hit their pension.

An MPs job isn’t the best paid but the pension is very very generous. There are plenty of other examples.

if you start at 20 then that’s 10%, which isn’t a huge amount.

That’s 10% which a lot of people don’t have, e.g. minimum wage job, or sub minimum wag gig-economy job working for Sports Direct etc

I fully anticipate having to work until I die or no longer possess the mental faculty to. at which point I won’t really care what happens anyway.

The only problem with that is that there will be no jobs suitable for us to do at age 75+

Best get saving now.

For any job you consider the full package.

I.e. nobody would do an MPs job without the gold plated pension, it just doesn’t pay enough for the responsibility.

What is upsetting is that I agreed to do my job with a good pension, and that has been taken away from me. Had I taken a different job at the start of my career path, I would now be much better off at retirement age.

Its too late really to retrain.