Economic uncertainty seems to be here to stay, with the cost-of-living crisis well into its second year. As household budgets have already tightened across the country, many are looking to the long-term for stability.
Your pension is the most effective route to long-term and later-life savings – which begs the question, which jobs are best for their pension plans?
Before we continue to the substance of this piece, a point demands to be made. Any job decisions you make should not be based entirely on the strength of their pension programmes and potential.
This should form a key part of a wider decision-making process but should not be your sole motivation. Not only might there be skills and passions to consider, but also personal ethics and comfort with the nature of certain roles.
Teacher
Teaching is one of the hardest roles in the UK at present, not in the least due to funding troubles facing teachers and schools across the country.
It is also one of the most underpaid, with teachers fulfilling senior duties being paid far less than their worth – owing largely to a decade of wage stagnation.
However, teacher pensions remain a lucrative long-term option for those in education, being schemes based less on the amount you contribute from your pay packet and more on the salary you earn.
This means that as you progress as a teacher, your institution pays more into your pot. There are also provisions for ill-health early retirement.
Armed Forces Member
The armed forces are notably generous with regard to the pension programme available to members.
It is one of the only pension schemes into which you do not pay a penny, instead being a publicly-funded pension pot that accrues in line with your annual earnings.
According to the 2015 guidance for the AFP (Armed Forces Pension), pension money is accrued at a rate of 1/47th of your annual taxable income within the service.
Payments from prior years are indexed to protect against inflation, and your contributions grow as you rise up the ranks and pay scales.
You are eligible to collect this pension immediately if you retire at or after the age of 60; if you retire from service before, your pension is deferred to the State Pension age. Another tricky aspect is that taking a lump sum of your pension requires you to forfeit £1 of your pot per £12 withdrawn.
If you are hoping to use your pension for a large one-off payment, be it a home renovation or a holiday, equity release would be a better-placed route that protected the value of your accrued pension.
Politician
Finally, politicians enjoy both relatively high rates of pay and relatively generous lifetime pensions.
The pension scheme for Members of Parliament in the UK is called the Parliamentary Contributory Pension Fund and consists of two sub-schemes that operate for cabinet ministers and MPs respectively.
The schemes are defined benefit schemes, based on the final amount accrued over a career over the amount contributed during said career. With this in mind, longer-serving politicians can rack up impressive pension pots that equate to some salaries in average annual pay-out.
