One of the biggest — and most overlooked — parts of a public-sector job offer is the pension. Public-sector schemes are typically defined-benefit, which means your pension is based on your salary and service rather than on investment returns. Understanding the basics helps you compare a public-sector salary fairly against a private-sector one.
Defined benefit vs defined contribution
In a defined-contribution pension (common in the private sector) you and your employer pay into a pot that is invested, and your retirement income depends on how that pot grows. In a defined-benefit scheme you are promised a specified income in retirement, calculated by a formula. Public-sector schemes are defined benefit, which is valuable and hard to replicate privately.
Career average (CARE)
The main public-sector schemes now build your pension on a career-average revalued earnings (CARE) basis. Each year you earn a fraction of that year's pensionable pay as pension, and past years are revalued (uprated) to protect them against inflation. The total is the sum of those building blocks across your career.
The main schemes
- NHS Pension Scheme: covers most NHS staff; contributions are tiered by salary.
- Local Government Pension Scheme (LGPS): for council and many other local public-sector staff; it is a funded scheme.
- Teachers' Pension Scheme (TPS): for teachers in schools, colleges and many universities.
- Civil Service pension (alpha): for central-government civil servants.
Why it matters when comparing offers
Your employer contributes a large amount on top of your salary into these schemes — often far more than a typical private-sector employer match. A public-sector salary that looks lower than a private-sector one can be worth more once the guaranteed pension is counted. When you weigh two offers, treat the pension as part of total reward, not an afterthought.
Things to check
- Your contribution rate, which is usually tiered by salary.
- Whether the role is pensionable (most permanent public-sector roles are).
- Death-in-service and ill-health benefits, which these schemes typically include.
- How transferring in previous pension service works if you are moving schemes.
This is general information, not financial advice. For decisions about your own pension, check the official scheme website and consider regulated guidance such as MoneyHelper.