Top 10 jobs for pensions

The abolition of the dividend tax credit, new pension reporting rules and a cut in pension tax relief have made it harder to save for a decent retirement income, as well as forcing many final salary schemes to close. So, as many of us struggle to set enough aside, it's ironic that the most generous pension scheme in the UK goes to the politicians who decided on these policies.

More than ever nowadays, the job you do and the company pension you're offered will make all the difference to your eventual income in retirement. Here are the top 10 jobs for pension benefits, both in terms of their generosity and their guaranteed longevity. You never know, you might just consider it's worth re-thinking your career.

1. Politicians

While most occupations have seen their pension schemes become less generous in the last few years, MPs have benefited from a change in the way their pensions are built up, switching from a scheme entitling them to 1/50th of their final salary for each year in office to one offering 1/40th.

This means it only takes 26 years, rather than 33 years, to build up the maximum two-thirds pension. This is funded by some £2.5 million a year of taxpayers' money.

Typical retirement income:
After 26 years, an MP can expect to retire on £40,045 a year (based on a current salary of £60,675), a minister of state £65,939 (salary £99,908) and the prime minister, £123,823 (salary £187,611).

2. Firefighters

Firemen and women enjoy a final salary scheme, although what they are entitled to depends on whether they are members of the old scheme (closed to new members in April 2006) or the new scheme.

Under the old scheme, in return for an annual contribution of 11%, members can enjoy a full pension of two-thirds of their salary from the age of 50, providing they have put in at least 30 years' service. New scheme members still enjoy generous benefits, paying in less - 8.5% rather than 11% - but they will need to work until age 60 with 40 years' service to get the full two-thirds pension.

Typical retirement income:
A firefighter retiring now on £27,000 with 30 years' service can expect two-thirds of their income - £17,800 - at age 50. However, a 20-year-old joining the service will need to work until 60 to enjoy the same pension.

3. NHS employees

Nurses, surgeons and other NHS employees enjoy a defined benefit scheme entitling them to 1/80th of their final salary plus three times their annual pension as a tax-free lump sum. For this, they pay in 6% of their salary (5% for manual workers), although estimates in their pension literature put the value of this benefit at around 20% of salary.

It's a generous scheme, backed up by a strong promise. Many will argue, however, that average NHS pay and conditions reduce its sheen somewhat.

Typical retirement income:
A senior nurse earning £30,000 a year with 10 years' service can expect a pension income of £3,750 a year and a lump sum of £11,250.

4. Road sweepers

Road sweepers are members of the local government pension scheme, which provides generous benefits - although these have recently been diminished. Under the old scheme, members would build up 1/80th of final salary for every year they work plus a lump sum equivalent to three times their annual pension in exchange for a contribution of 6%. The normal retirement age was 65, but they could also benefit from the 'Rule of 85', which enabled them to retire earlier providing their age plus their service equalled age 85 or more.

With the new scheme, the benefits are the same, but the Rule of 85 has been removed, pushing up the minimum retirement age to 65.

Typical retirement income:
A 40-year-old road sweeper earning £15,000 and joining the pension scheme can look forward to an annual income of £4,632 plus a tax-free lump sum of £13,905 at age 65.

5. BBC employees

In return for a 4% pension contribution, BBC employees receive 1/60th of their career average salary as a pension. The scheme is open to employees with at least two years' service and the normal retirement age is 65, although a reduced pension can be taken from age 55.

As the BBC is publicly funded it is one of the safer occupational schemes, but there are downsides. In particular, employee contributions could be increased - although this is capped at 6% of salary and benefits have already been revised downwards from a final salary scheme to a 'career average' benefits scheme.

Typical retirement income:
After 20 years' pension membership on a salary starting at £30,000 and rising by £1,000 a year, an employee would build up a minimum annual pension income of £13,193. This could be enhanced further by discretionary increases in line with price inflation. These depend on the performance of the scheme, although once awarded they cannot be taken away.

6. Teachers

One of the largest public sector pensions, teachers pay 6.4% of their salary into this final salary scheme, with their employer paying a further 14.1%. This gives them 1/80th of their average salary for every year they contribute plus a tax-free lump sum equivalent to three times their annual pension.

Benefits have also been reduced recently, with new entrants given a retirement age of 65 rather than 60 for its existing members.

Typical retirement income:
A head teacher earning £50,000 with 40 years' service would retire on 40/80th of their salary - £25,000 - as a pension income, which would be index-linked to inflation-proof it. In addition, they would receive a tax-free lump sum of £75,000.

7. Police officers

Like many of those occupations with generous pension schemes, there are two plans in operation at the police force, with the newer one offering fewer benefits.

The first, which closed in April 2006, gives members 1/60th of their final salary for each year's service with accelerated accrual at the rate of 2/60ths for each year after 20 years' service. The maximum pension entitlement is two-thirds of final salary, which can be achieved after 30 years' service, and members pay in 11% of their salary.

More recent entrants, however, join the newer scheme. With this, in return for a contribution of 9.5% of salary, a member will receive 1/70th of their final salary for each year's service. The maximum pension is half of final salary, requiring 35 years' service, and there's also a tax-free lump sum of four times the annual pension income.

Typical retirement income:
A 52-year-old police inspector on a salary of £45,000 and with 30 years' service can retire and receive an annual pension of two thirds of his salary, £30,000.

8. Dinner ladies

Like road sweepers, dinner ladies are members of the local government pension scheme. Retiring at age 65, they would receive 1/80th of their final salary for every year's service, plus a lump sum of three times their annual pension in exchange for 6% of their income.

Typical retirement income:
A 25-year-old starting as a dinner lady on £16,000 would receive an annual pension worth £7,945 plus a tax-free lump sum equivalent to £23,837 if she stayed in the same job and retired at 65. This would cost her £565 a year or a total of £22,446.

9. Tax inspectors

Tax inspectors, as with any member of the civil service, enjoy healthy pension benefits, although these were made less generous earlier this year.

Anyone joining now will be a member of Nuvos, which has a retirement age of 65 rather than the previous one of 60. The scheme entitles them to 2.3% of their salary as pension income for each year's service, subject to a maximum of 75% of income. A tax-free lump sum can be taken but this will reduce the pension income at the rate of a £1 in annual pension for every £12 taken.

Typical retirement income:
An administration officer starting on £10,000 and seeing their income increase by £2,000 a year can expect to earn pension
benefits of £9,252.38 after 15 years' service, assuming an RPI of 2% throughout the term of employment.

10. Armed forces

Members of the armed forces enjoy a final salary scheme, with their pension based on the greatest amount of annual pay they received in their final three years of service.

Each year's service entitles a member to 1/70th of their pay up to a maximum of 40/70ths. This income is index-linked to keep it in line with inflation. Tax-free cash is also paid, at the rate of three times the annual pension income.

Typical retirement income:
A 29-year-old army major expecting to retire at 65 as a major general (current salary £102,561) with the full 40 years' service, can expect a retirement income of £58,606 and tax-free cash of £175,818.

Find out everything you need to know about the new pension rules and how to plan ahead for the retirement you deserve with our new magazine, How to Retire in Style. The magazine is available to buy now from all leading newsagents, or can be ordered online at

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