Financial Advice on Career Move

S

scarr187

Registered User
Messages
9
Hello all,

I am in need of some financial advice essentially relating to Public Sector pension.

I've worked for the public sector(PS) for a number of years and have a defined benefit(DB) pension.

Currently I am looking to leave the PS to start a new career in tech in the private sector (I want something more long-term and satisfying)

My new career will initially necessitate a sizeable pay-cut initially. I would like to understand the broader implications of leaving my PS job, relating to my pension and future payments etc.

The way it was laid out for me by a financially literate acquaintance is; if I'm on €45k in the PS with a DB pension, then I would have to get a job worth €55k in the medium term, in order to not be at a financial loss overall. Effectively, I can't go from a €45k PS job to a €45k private sector job or else I'll be down money.

Can you shed any light on this?
 
cremeegg said:
What could be more long term than the public sector ?
Click to expand...

That had originally said:
Currently I am looking to leave the PS to start a new career in tech in the private sector (I want something more long-term and I don't mean tenure)

Maybe I should have left it as it was.

In any case, I'm looking for a career as opposed to a job and to get away from the crushing beauracracy
 
I have never worked in the public sector, but I would have thought that it provided a career more than a job to a much greater extent than the private sector.

Pay increments, a structured ladder of promotion, promotion based on objective competitive criteria, training opportunities.
 
Thanks for the reply.
cremeegg said:
I have never worked in the public sector, but I would have thought that it provided a career more than a job to a much greater extent than the private sector.

Pay increments, a structured ladder of promotion, promotion based on objective competitive criteria, training opportunities.
Click to expand...

The PS is so large that its not a definitive 'good' or 'bad' place to work, there are pockets of both categories. I'm looking for something that I am actively interested in (Coding) instead of the Admin-centric busy-work that I currently do (it's not all busy-work, but still...). I'm after a dynamic environment to see out the rest of my career as opposed to collecting a cheque, so to speak. Something fulfilling and a definitive skill I can use if/when the bottom falls out of the economy again.
The PS does offer security and financial certainty.
Structured ladder of promotion? Not in my experience, unless I'm misunderstanding what you mean.
Objective competitive criteria? In the main that is true, though not perfectly executed in my opinion. There can still be instances, for a variety of reasons of the job being gone before you apply.
Training opportunities? Non-existant since 2008; still rare; getting less rare; staff not actively encouraged to pursue (probably fair enough what with budget to staff ratios.)
I will say it does provide greater scope to move sideways to another dept and effectively start a new job/career with same terms and conditions (for better or worse); and that is another avenue I'm looking into - but longer term I would like to get a decent career, programming for a medium - large software development team.
 
scarr187 said:
The way it was laid out for me by a financially literate acquaintance is; if I'm on €45k in the PS with a DB pension, then I would have to get a job worth €55k in the medium term, in order to not be at a financial loss overall.
Click to expand...
While this may be true right now, you are talking long term right ? I'm not sure how qualified you are but with a few years under your belt you could earn more than 55k and would be able to add more to your future pension. The problem here is do you have a degree under your belt ?
 
elcato said:
While this may be true right now, you are talking long term right ? I'm not sure how qualified you are but with a few years under your belt you could earn more than 55k and would be able to add more to your future pension. The problem here is do you have a degree under your belt ?
Click to expand...

Thanks for the reply. True. That's what I'd like to confirm.
I've recently qualified in a tech field and am now trying to bridge the experience gap.
 
Maybe you should give your age and qualification so that the pension wizards here could actually give you a breakdown on what your pension would be like and how much of a differance in salary you would need to contrbute to a pension of about 35k a year on finishing in the civil service. There is the added risk that the PS pension may degrade considerably as the country may not have enough money I suppose.
 
The State carries all the risk for the PS pension. Private sector employers won't take on the same level of risk. Depending on the company you work for, you may get a defined contribution pension. But what is your human capital in the tech industry against the public service ie how much could you potentially earn in either careers?

And don't worry about being down financially in the initial years. If there is potential and you are doing a job you love, isn't that better?

Reminds me of a conversation I had with someone recently. He has given out about his job to me a few times. Last time we met, he told me he'd turned down a job offer with a really good company because the financials weren't as good as he currently had. "Why would I move for less money?", he said. "Because you hate your current job" was my reply.

It's not all pounds & pence. Look at the whole package and lifestyle.


Steven
www.bluewaterfp.ie
 
Thanks for all the replies.
For general info; I'm 35 and recently qualified with a QQI level 8 in Cloud Computing. I may go back for more study next year depending on other factors.
At present I'm honing my programming skills and developing something of a portfoio

SBarrett said:
But what is your human capital in the tech industry against the public service ie how much could you potentially earn in either careers?

And don't worry about being down financially in the initial years. If there is potential and you are doing a job you love, isn't that better?
Click to expand...

My estimated capital would be somewhere in the 55 - 70k, 5 to 8 years along the career path. That is something else I need to confirm, how definitive that is?, how much of that salary scale is based on skillsmix etc. But thats another thread, I guess.

Regarding my current career path, it's feasible that I could eventually end up on 60 - 70k but that is very slow incremental growth, that would likely be over a 10+ year period. My plan B is to move sideways within the organisation to a Business Intelligence role, which would give me somewhat of a tech credential.

At this stage I'm trying to get a grasp of what my potential net loss would be. If I drop from 45 to 30k, because of my pension, is that a 15k drop or a 25k drop? Getting back to the 45k mark in about 2-3 years would be my goal, but I'd like to know in my own head, would I still technically be down 10k?
 
You may not live long enough to draw down your pension! Do not let something payable in 30 years time dictate your career path!!!

If writing code is what you love doing, take the leap now when you are young and go for it.

The cost of the public service pension will be massive. You have 30 years service left to give, so if you end up on €60,000, that's €22,500, less State pension of €12,000 = €10,500. You are also giving up the tax free lump sum of €67,500. The cost of the pension you are giving up is €438,200.

Where are you going to get a job and do they have a pension scheme to help you meet that shortfall? Can you make lots of more money that you can as a public servant and put more money in to a pension over the years? Is there an opportunity to go on daily rate in the future and earn €500 - €800 a day?

Lots of things to consider.


Steven
www.bluewaterfp.ie
 
SBarrett said:
The cost of the public service pension will be massive. You have 30 years service left to give, so if you end up on €60,000, that's €22,500, less State pension of €12,000 = €10,500. You are also giving up the tax free lump sum of €67,500. The cost of the pension you are giving up is €438,200.
Click to expand...

Is this correct? I understood that the public service pension was 50% of the average salary over last 3 years, so €30,000 rather than €22,500, and that the tax free lump sum is 18 months salary so €90,000 rather than €67,500. Please let me know if I am wrong.

Also deducting the state pension is not exactly right. The public service pension is linked to future ps earnings, no such luck with the state pension. It may not be €12k when the op comes to retire but the ps pension will be 50%

I would value the €30,000 pension at €1.2million discounting at 2.5% plus the lump sum €1.29 million. That is the true value (cost to the rest of us) of the ps pension. The state pension whatever it will be worth would be deducted from this.
 
If he leaves the public service now, he will miss out on 30 years service i.e. 30/80ths = €22,500. The benefits he has already accrued will still be payable.

The old age pension is deducted from the pension payable. As my crystal ball is in being serviced :rolleyes:, I can only use the figures that we have today, so deducting €12,000 from the €22,500 is a perfectly reasonable assumption.

The total cost of €1.29m is correct if again, he has 40 years service and no old pension to be deducted. Using the same rate of 2.5%, the OAP is valued at €480,000.


Steven
www.bluewaterfp.ie
 
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