Re: Only for the pension?
@Like a badger, if you click through to the job ad it says: A Civil Service Pension with an employer contribution of 28.97%
With respect, I'm a civil servant, I'm a member of the CSPS scheme, and I do know how my pension scheme works. I agree the ad says "employer contribution", but the CSPS is entirely unfunded. Taxpayers pay the benefits to scheme pensions, but don't have to pony up the employer contributions up front, and that's why I said benefits are notional. It's all paper money and promises, and that claimed 28.97% simply isn't paid to anywhere. Even the employee contribution of 7-8% isn't saved anywhere, it simply means the Treasury (and thus taxpayer) pay the employee less each month. The purpose of the indicated employer contribution is to try and evidence to employees roughly what their total package is worth. That notional employer and employer contributions together are about the level that you'd have to find to buy an index linked annuity of that value.
To contribute £47k a year yourself into a SIPP or equivalent is well beyond the realms of what most people can afford to do.
Hold on, that £47k is for somebody with a £150-250k package, and they certainly could easily afford that. In most private sector jobs at that level of base pay there's bonus potential in the 30-40% range, sometimes up to several hundred percent potential - based on my experience of working with execs at a range of blue chip UK corporates. But let's take the £162k cash element as all that's at stake, they'll be paying a staggering 45% marginal tax rate, and that means to put £47k into a pension they only need to pay in £30.5k because of tax relief. Now, if you were on £162k gross, and then took off 30, that's say £131k gross, and you're telling me these poor, poor people can't survive on that? Hands up everybody here who can't survive on £131k gross? C'mon, there must be somebody here living a life of sackcloth and ashes, eating gruel because they're trapped in £131k poverty a year?
There's also an important difference that if a private sector employee were choosing to putting extra money into a tracker, they'll beat inflation by quite a lot, and in the longer term compounding makes that difference worth far more. Meanwhile the CSPS merely keeps pace with inflation. Last five years the FTSE100 has delivered total returns of about 84% (as at August last year), and that compares with inflation of around 32% over a similar period.
And a little off-topic diversion: You can open a pension at any age, including on behalf of a child. If you've got the money, put £4k in a tracker/pension fund as a gift for a family newborn, they will get tax relief at standard rate (20%), so that's worth £5k, by the time they're 55 that'll be a pension pot worth about £100k, by age 65 it'd be £160k. You (and I) will be long gone, but imagine you had a relative had done that for you? Every grandparent ought to be thinking that they can't take it with them....