What’s A Public Sector Pension Scheme?

Understanding The Public Sector Pension Scheme

You’ve heard the advice a thousand times. ‘You need to get into retirement planning as soon as possible.’ ‘Without one, you’ll struggle to make ends meet in retirement.’ It’s become an earworm that you can’t shake off. Well, despite the cliché-nature of these words, it’s crucial to have a future-proof plan for your sunset years. It not only ensures that you can go on that vacation destination or fund that much-needed home project, but it also allows you to have financial security for your sunset years. If you don’t have a robust financial plan, yet, don’t stress. There are a variety of pension schemes on the market ready to allow you to save the cash for your future (they’re practically like a bunker, prepared to serve you in time of danger). With that, here’s a comprehensive guide into one of the best pension schemes for civil service works, armed forces, and other government-based employees; the public sector pension scheme.
What’s A Public Sector Pension Scheme

Public Sector Pensions Explained

Imagine this:

If you’re in the public sector or quit the public sector a few years back, you might have a public sector pension scheme. Public sector workers include:

  • NHS workers
  • Teachers
  • Armed forces employees
  • The police
  • Civil servants

Here’s an interesting fact:

Most of the public sector pensions are defined benefits pension schemes, and almost 20% of them are unfinanced. Like all the workplace pensions, your employer sets up a public sector pension for you and the contributions made are usually take from your monthly income before it’s transferred into your account.

Defined Benefit Pensions

Defined Benefit Pensions

As mentioned, most public sector pension schemes are defined benefits pension plans. It means that the amount you’ll receive upon retiring is dependent on your final income and how long you’ve worked in your sector, rather than the amount you’ve contributed into your pension pot.

You see:

Some public sector pension plans, like the Local Government Pension Scheme1, are sponsored. However, almost 20% of these pension funds are unfinanced final salary schemes. It means that they offer you a substantial retirement income from your boss ‘current income- tax income in case you’re in the public sector – instead of putting away to cater to the pension plans.

Can You Transfer A Public Sector Pension

Can You Transfer A Public Sector Pension?

The question of whether you can transfer a public sector pension is one that many potential retirees are asking. The answer to this really comes down to the specifics of your particular situation and what kind of benefits package you have with your employer.

If you are a pensioner and your employer is in the private sector, then many of these benefits will transfer with you when you retire.

How to Move A Public Sector Pension

If you have an unfinanced public sector pension scheme, as of April 2015, you’re not permitted to transfer it to another pension fund. If you’re uncertain about whether your pension scheme isn’t funded or not, you can contact your boss and the Pensions Advisory Service2. You can also visit your employer’s pension scheme website and find out if you’re included.

Now:

If you, however, have a sponsored public sector pension, you can transfer it to another pension lender of your choosing. Nevertheless, you have to receive credible financial advice from an independent source, before you move to a defined benefits pension plan that’s valued at over £30,000.

Got Questions? Check These First

Do Public Sector Workers Get the Full State Pension?

Is the Public Sector Pension Better Than the Private Pension?

How Much Do Public Sector Pensions Cost in the UK?

Are Public Pensions Safe?

In conclusion

In short:

The Public Sector Pension Scheme is a great way to save for retirement. It’s easy and affordable to set up an account with this pension scheme through your employer or yourself as long as you are employed in one of the participating provinces. Hopefully, these points have helped shed some light on what the PSPS entails and how it can help you retire more comfortably.

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