10k salary increase, but DB pension changes to DC pension, worth it?

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Feb 23rd, 2018 2:51 pm

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Feb 20th, 2018 4:45 pm

braveblade [OP]: Deal Addict; Jan 22, 2009; 3334 posts; 1122 upvotes

Feb 20th, 2018 4:45 pm

10k salary increase, but DB pension changes to DC pension, worth it?

Not sure if this thread should be in career section, or personal finance section. Basically I'm earning close to 80k annual salary with a government DB pension (public sector). I was offered a new position within a new employer (private sector), 10k annual salary increase with 5% bonus at the year-end. But I will lose my DB pension to DC pension, also yearly vacation cuts from 5 weeks to 3 weeks. I'm not sure if I should take it or not, in the long run. Any advice will be appreciated.

38 replies

Feb 20th, 2018 4:59 pm

xblackrainbow: Deal Addict; Jul 7, 2013; 1361 posts; 1163 upvotes; North York

Feb 20th, 2018 4:59 pm

Basically comes down to the work life balance at the new place as well as job security. If 10k before tax means a lot to you then I guess it's worth the move..

+1

Feb 20th, 2018 5:10 pm

gobseck: Member; Nov 10, 2013; 420 posts; 436 upvotes; Richmond Hill, ON

Feb 20th, 2018 5:10 pm

DB provides more benefits the older you are... Purely number wise, DC might be better for a younger person, and DB for older.
I am talking about benefits accumulation rate. The cut off is around 40-45, based on interest rate env. This is very rough estimate.
how old are you? where do you see yourself? never take a job for the $$$

+1

Feb 20th, 2018 5:19 pm

frozenmelon: Deal Addict; Sep 4, 2007; 1500 posts; 1693 upvotes; Edmonton

Feb 20th, 2018 5:19 pm

Personally, I wouldn't do it based on the info provided. The 2 weeks vacation alone is worth at least $3000. So you are taking home at best $7000 more a year gross, maybe $5000 after tax. Work/life balance and job security decreases are basically guaranteed. Bonuses are not guaranteed.

You provided 0 detail on the pensions. You would get the best result if you use the pension calculator tools to run scenarios and determine the differential in value yourself. DBPP is usually a hot deal.

It may be worth it if there's a path upwards. If you can realistically hit the 180k+ mark (basically not obtainable for most public servants) at the private organization in 10-15 years, then totally worth it. Be honest with yourself. Can you push up the ladder or not? You're probably nearing your career max in public sector. I think any public servant worth their salt and willing to work can eventually hit 100k in their lifetime. Any higher and there are diminishing returns to effort. If you're willling to put in huge effort and suffer huge pain, then you may as well be on the private sector path where adequate rewards may exist. If you're a middle of the road kind of guy, stick to public sector.

+5

Feb 20th, 2018 5:25 pm

braveblade [OP]: Deal Addict; Jan 22, 2009; 3334 posts; 1122 upvotes

Feb 20th, 2018 5:25 pm

gobseck wrote: ↑ DB provides more benefits the older you are... Purely number wise, DC might be better for a younger person, and DB for older.
I am talking about benefits accumulation rate. The cut off is around 40-45, based on interest rate env. This is very rough estimate.
how old are you? where do you see yourself? never take a job for the $$$

Thank you! I'm 35. The reason I want to switch is because of salary freeze set by the AB government. They first announced the salary would be frozen by end of 2017, then in dec 2017 they announced they will continue to freeze salary until 2019. I'm find of losing hope.

Feb 20th, 2018 5:32 pm

braveblade [OP]: Deal Addict; Jan 22, 2009; 3334 posts; 1122 upvotes

Feb 20th, 2018 5:32 pm

frozenmelon wrote: ↑ Personally, I wouldn't do it based on the info provided. The 2 weeks vacation alone is worth at least $3000. So you are taking home at best $7000 more a year gross, maybe $5000 after tax. Work/life balance and job security decreases are basically guaranteed. Bonuses are not guaranteed.

You provided 0 detail on the pensions. You would get the best result if you use the pension calculator tools to run scenarios and determine the differential in value yourself. DBPP is usually a hot deal.

It may be worth it if there's a path upwards. If you can realistically hit the 180k+ mark (basically not obtainable for most public servants) at the private organization in 10-15 years, then totally worth it. Be honest with yourself. Can you push up the ladder or not? You're probably nearing your career max in public sector. I think any public servant worth their salt and willing to work can eventually hit 100k in their lifetime. Any higher and there are diminishing returns to effort. If you're willling to put in huge effort and suffer huge pain, then you may as well be on the private sector path where adequate rewards may exist. If you're a middle of the road kind of guy, stick to public sector.

That's very valuable information. Thank you!

Feb 20th, 2018 5:38 pm

frozenmelon: Deal Addict; Sep 4, 2007; 1500 posts; 1693 upvotes; Edmonton

Feb 20th, 2018 5:38 pm

braveblade wrote: ↑ Thank you! I'm 35. The reason I want to switch is because of salary freeze set by the AB government. They first announced the salary would be frozen by end of 2017, then in dec 2017 they announced they will continue to freeze salary until 2019. I'm find of losing hope.

If you're talking about the Alberta Public Service, I believe the salary freeze applies to management and non-union staff. At 80k, you still have some room to grow. You can also always try out the private sector job for 1-2 years and then go back to the public service as an external applicant. Then you can negotiate your salary again to be at the highest end of the salary range. You will also get your vacation days back if you jump back from private. Easiest thing would be to simply swap over to a union position and then you will get increases.

+1

Feb 20th, 2018 5:45 pm

Chickinvic: Deal Fanatic; Dec 27, 2009; 7617 posts; 5027 upvotes; Victoria, BC

Feb 20th, 2018 5:45 pm

I wouldn't. That DB pension (gov't) is sweet, as well as all the other perks (time off, sick days, etc). I don't think 10K increase is worth losing everything you will be losing.

+1

Feb 20th, 2018 5:47 pm

Chickinvic: Deal Fanatic; Dec 27, 2009; 7617 posts; 5027 upvotes; Victoria, BC

Feb 20th, 2018 5:47 pm

braveblade wrote: ↑ Thank you! I'm 35. The reason I want to switch is because of salary freeze set by the AB government. They first announced the salary would be frozen by end of 2017, then in dec 2017 they announced they will continue to freeze salary until 2019. I'm find of losing hope.

If that makes you lose hope then lol, wait until you hit the private sector dude.

+1

Feb 20th, 2018 6:02 pm

MP3_SKY: Deal Guru; Jul 12, 2003; 12320 posts; 4837 upvotes; Toronto

Feb 20th, 2018 6:02 pm

Other than the salary freeze, is there anything at your current job that make you quit or switch jobs?

Retired Forum Moderator February 2009 - June 2015

Feb 20th, 2018 6:22 pm

braveblade [OP]: Deal Addict; Jan 22, 2009; 3334 posts; 1122 upvotes

Feb 20th, 2018 6:22 pm

MP3_SKY wrote: ↑ Other than the salary freeze, is there anything at your current job that make you quit or switch jobs?

That's pretty much about it. I think my skill set and quality of my work should bring me more salary. There are some people literally sitting there everyday doing nothing are earning the same as me. Manager cannot do anything due to the salary freeze. I'm applying higher positions internally as well.

Feb 20th, 2018 6:27 pm

MP3_SKY: Deal Guru; Jul 12, 2003; 12320 posts; 4837 upvotes; Toronto

Feb 20th, 2018 6:27 pm

It will be also depending your stage of life, I think you mentioned that you are at your mid 30s?
If so, this maybe the stage that you want to go further and not struck in a place and limit your future. You have at least another 20-25 years of working life ahead of you.
If you have the ambition and confidence that you can achieve more outside, go ahead. You build your future.
For the 3 weeks vacation, have you try to negotiate that?

If one at 50s, I may tell him to stay where you are and wait for the retirement.

Last edited by MP3_SKY on Feb 20th, 2018 6:27 pm, edited 1 time in total.

Retired Forum Moderator February 2009 - June 2015

+1

Feb 20th, 2018 6:27 pm

abc123yyz: Deal Addict; Apr 21, 2014; 2298 posts; 1052 upvotes; Alberta

Feb 20th, 2018 6:27 pm

braveblade wrote: ↑ That's pretty much about it. I think my skill set and quality of my work should bring me more salary. There are some people literally sitting there everyday doing nothing are earning the same as me. Manager cannot do anything due to the salary freeze. I'm applying higher positions internally as well.

Effectively it’s a 7k increase with the lost two weeks of vacation. Not worth it in my opinion. I would only leave for 100k plus 15 percent bonus. I’m assuming no paid overtime for the private sector job (hence the small bonus).

That’s strictly from a financial point of view. In terms of career growth etc only you can decide that.

+2

Feb 20th, 2018 7:17 pm

JayLove06: Deal Expert; Feb 29, 2008; 17768 posts; 15436 upvotes; Tarrana & The Ri…

Feb 20th, 2018 7:17 pm

I'd stay. Public sector = job security, great benefits, excellent pension, more relaxed. You aren't getting enough of a bump from private sector to leave IMO.

Last edited by JayLove06 on Feb 20th, 2018 7:17 pm, edited 1 time in total.

+3

Feb 20th, 2018 7:23 pm

hermit1988: Sr. Member; Mar 6, 2010; 748 posts; 109 upvotes

Feb 20th, 2018 7:23 pm

Lol. there is no job security in Alberta private sector. OP should stay in the current position. Rule of the thumb, the older u r, the unlikey you can keep ur position in the privite sector. Check out the financal post today about the middle class, as soon as that guy who was a programmer got laid off when he turned age 50 15years ago, he never got back to the field.

+3

Feb 21st, 2018 7:44 am

TrafficEng: Banned; Dec 22, 2017; 322 posts; 134 upvotes

Feb 21st, 2018 7:44 am

braveblade wrote: ↑ Not sure if this thread should be in career section, or personal finance section. Basically I'm earning close to 80k annual salary with a government DB pension (public sector). I was offered a new position within a new employer (private sector), 10k annual salary increase with 5% bonus at the year-end. But I will lose my DB pension to DC pension, also yearly vacation cuts from 5 weeks to 3 weeks. I'm not sure if I should take it or not, in the long run. Any advice will be appreciated.

How much is bonus in private (is it just 5%?) What's stock options or stock matching like?

What's DC contribution %?

If bonus really is just 5%, that's lowest I've ever heard except for jr employees

Feb 21st, 2018 7:46 am

TrafficEng: Banned; Dec 22, 2017; 322 posts; 134 upvotes

Feb 21st, 2018 7:46 am

Chickinvic wrote: ↑ If that makes you lose hope then lol, wait until you hit the private sector dude.

Private sector is way better for compensation and benefits. Bonuses and stock matching and much more flexible along with higher annual raises and salaries to start with

+1

Feb 21st, 2018 8:07 am

michelb: Deal Fanatic; Jul 4, 2004; 6965 posts; 3608 upvotes; Ottawa

Feb 21st, 2018 8:07 am

As others have mentioned, you have to look at all the factors (enjoyment of work, work-life balance, benefits, future opportunity) but from a purely financial side, you really have to look at the details of the pension. My gut feeling is that a DB pension is worth a lot more than a DC pension + $10k / year but it really depends on the numbers.

From my very gross calculations, I suspect that my DB pension is worth at least $30k+/year. There's also a lot of piece of mind with a DB pension. How often to you hear of retirees worry that they'll outlive their savings even if they have a significant savings so they end up depriving themselves. Personally, I know that when I retire with a DB pension, I'll get $X per year (+ indexing) so if I live to 100, I'll keep getting that amount every year, if I live to 125, I'll keep getting it so I won't need to worry about what happens if I outlive my savings. IMO, that's very precious.

+1

Feb 21st, 2018 8:26 am

speedyforme: Deal Guru; Dec 11, 2008; 10676 posts; 1870 upvotes

Feb 21st, 2018 8:26 am

If I were you and I am at your age, I would not move. You have to decide on work/life balance and longer term security.

+1

Feb 21st, 2018 11:41 am

Chickinvic: Deal Fanatic; Dec 27, 2009; 7617 posts; 5027 upvotes; Victoria, BC

Feb 21st, 2018 11:41 am

TrafficEng wrote: ↑ Private sector is way better for compensation and benefits. Bonuses and stock matching and much more flexible along with higher annual raises and salaries to start with

I've worked in private sector my entire life and would love the perks of the public sector (which my husband has).

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