Reply With QuoteWhich environment will you be happier in?
I've always been given useful advice and fantastic help (one member sacrificed several hours of his own time) from the member of this great forum so once again i'm calling upon this resource.
Having had a terrible last 12 months at work involving several rounds of redundancy, my whole team being removed and all prospects of a future annihilated I have managed to start the new year off on a high with 2 job offers on the table. The trouble is that they offer very different possible futures and I cannot decide which one makes the most sense. I've discussed it with my wife but rather annoyingly she just says she'll support whatever I decide. So i'm looking for any similar personal experiences or wisdom from you guys.
The give a rough idea. Both jobs are specialising in the same area, the same work just for different companies.
Job 1 offers a considerable increase in salary. This is an initial 12 month contract with this likely to be extended (most people there doing this role have been there for 2+ years). As it is a contract there is no pension, no holiday pay etc but as I say, the day rate will more or less double my current salary. My worry is that if I take this position and get a good 5 years out of it although i will have made good money I won't be comfortable enough or old enough to retire but will essentially be an old man in a young mans industry and could really struggle to get another role.
Job 2 offers a decrease in salary which will mean tightening our belts. We will still get by, but it won't be comfortable. However, this role is with a government body and as such offers a shorter working day, more holidays, guaranteed incremental pay rises every year as well as many other benefits. There is potential to advance myself within this role but it's all "what if's" and I tend not to reply on those.
So I guess it's a case of instant gratification or play the long game. What would/have you done?
Which environment will you be happier in?
Not a huge amount of info on the job type given, but I would go for option 1. If you are good at what you do, then you should be able to get another contract there or elsewhere. Option 2 will only provide stability, but with it comes a salary decrease and a bunch of what ifs. Sounds like no guarantees with option 2
I'm a bit of a risk taker so i would almost always go with more money but as our friend Biggy once said; "Mo money, mo problems".
Realistically it comes down to your circumstances. If you're 25 and have nothing to worry about; go for the former, however if you're over 40, and have a family to support; be sensible. They'd rather spend more time with you than you buying them off for a couple of years.
Hope this helps
GM
I would go option 1. The death spiral of option 2 working for public sector urgh, can you put up with seeing colleagues that have less skills than you who work half arsed getting the same pay rise because of time served?
Go for Option 1 and put 50% into your pension (so you don't get used to a higher standard of living) and once maxed in a tax year other investments to create long term income producing assets e.g. ISA's, P2P, Bonds etc.
I must admit I'd look at the Viper Stripes option.
Here is a question to consider. Can you adapt to the Civil Service mentality and work out how to climb the greasy pole? This will have little to do with your skills and everything to do with becoming a "good man". If you can play the game you may be able to rise to a great height.
You need to do some research about the T&C's of the civil service job. In particular those around pension and redundancy.
When I was a civil servant I could only be made redundant "in the public interest". The loose translation of that was "job for life" or a huge ongoing annuity payment.
I still got out and once I started contracting (at age 50) I never looked back.
I did public sector for a few years, while the holiday/flexi time was excellent the money was adequate! However the internal politics/rules/regulations were draining me of every ounce of life in me...
so i sacked it !-)
To answer a few of the questions...
The government role is more or less a guaranteed job for life, I would go in with every intention of climbing the "greasy pole". An opportunity that i have never had in my industry as it's usually a very flat structure.
For the last 20 years in the private sector i've worked with a wide variety of useless and/or lazy people (usually in other disciplines) who have been getting paid a lot more than me so I've learned to live with such things.
Regarding the job type. It's a design/technology based role and as said, it tends to be a young mans industry. I'm over 40 now and have a young family to support. While it's not so much easy, but possible to find roles in your 30s it becomes increasingly difficult when you are in your 40s. As a guide, It's taken me 7 months to finally get a job offer and i've had 4 rejections in the last month due to being "too senior" when applying for senior/lead positions. As I said, its an industry with a flat structure so there's nothing beyond senior/lead so being told your "too senior" generally can be taken one way.
Also to add.
Option 1 is with Morgan Stanley. I just thought it worth adding as i know many here work within such companies.
Thank you all so far.
Depending what the contracting rate is you can certainly consider putting 40k into a pension, and with expenses etc. it can work well for retention.
Do be sure to search for the "24 month rule" and IR35 as I think the reforms from the civil service are coming to the private sector which could mean no expenses allowed.
Also look at your mortage renewal etc. as I think you need 2 years accounts if become an ltd
Have you checked both potential employers in Glassdoor.com; sometimes it's unreliable but other times you can pick up useful insights?
I'm not sure I recognise guaranteed incremental pay rises as a "thing" in the public sector but maybe I'm being unnecessarily cycnical.
In the Sotadic Zone, apparently.
Having once taken a job which I sensed was wrong, because it was more money and they simply removed every issue I had (And I raised a few before accepting the job), I would say 100% go for the role that will make you most happy.
If money is important to where you are in life, right now, take the contract (I would say, I was very happy as a contractor for many years), if you want a better quality of life now, take the 'permanent' job (no such thing these days!).
I had a year without proper work after being made redundant from that job, which wasn't appealing at the time, but things sorted themselves out eventually.
I would never take one job over another JUST for money, though.
I'm facing redundancy again and, realistically, don't know if I'll ever find a well paid job again, but there are things I definitely will NOT do.
Luckily I could probably (just about) afford to retire (with some significant belt tightening), but that's not my intention - This time I intend to find a job I enjoy
M
PS I would view Glassdoor with deep scepticism...
After running my own businesses for years I’m in a lower paid job now but the freedom this gives me with work hours, holiday, security etc is a no brainier. I’m very happy working 8am-4.30/5pm mon-fri and no weekends, no overtime etc. Allows me to focus on other activities. If your chasing money go for option one, if your pretty comfortable in life and want a stress free life go for option 2. Nice to know you have a safe and regular job then one that may crash and burn at any time. “A bird in hand is worth two in the bush”
i dont even see a decision to be made here,
Job 1, back yourself
Live dangerously. Option 1.
Go for option 1.
Government bodies are increasingly tightening their belts and redundancies are now not unusual and the ethos is no longer on the job but saving every penny on the job.
With Option 1 you will earn money with the possibility of contract renewal, option 2 realistically gives no greater security and unless you are 20 and looking to stay there 40 years a government pension is no longer the future proof security it was. (Pension, a whole other topic...just make sure you are paying in to your own now, at a good rate as retirement comes round real quick).
The incremental pay rises.....1% 2%? generally government pay rises do not keep up with inflation.
Also should you be looking for another job in 1 or 2 years i suspect option 1 will put in in a stronger position that option 2 will ever do.
Invest the excess money from 1 in a pension..
Seriously, it depends on what type of person you are - I have been a contractor in IT for some 30+ years and have been resting for some 12 months in that time. I have also seen many people that are just not cut out for contracting try it for a year while they are looking for other better permie jobs. I only do work from personal contacts now rarely through agents - unless the clients has a mandatory supplier agreement in force but I can often screw them down (a lot).
My wife is the government type and hates my contracting unpredicability ( she loves the cash though )
Go with what you feel you can cope with; unpredicability or everything mapped out
Good luck
Last edited by Brian; 8th January 2018 at 14:06.
When I was a contractor, I can recall the permanent employees saying they couldn't cope with the 'unreliability' of contracting.Originally Posted by Brian
In 8 years, I had 2 weeks without work, and a number of those permanent employees were made redundant while they kept us contractors on (Wall St hates 'head count' and contractors are just a 'cost').
I gave it up because I found sitting in an office, writing code had got a bit dull after 20 years and I wanted to get out and work directly with clients more, the type of role is less likely to be contractor staffed, but I always found contracting was less stressful in many ways than working directly for a company.
Ideally, I'd like to go back to contracting part time in my next role - I rather like the idea of telling people I'm semi-retired
M
Option 1. Morgan Stanley is a good name to have on your CV and could open doors to further contracts elsewhere down the line. Also while working at option 1 you can always continue to look for alternative long term “secure” positions that don’t have the same salary compromises as option 2. Whereas jumping from option 2 too quickly if it turns out to be a crap job as well as paying poorly would give you a black mark on your CV.
I'm planning on leaving Gov to contract this year. Will double my salary and some, doing the same work...probably back in Gov! The perks are not what they were and the people can be frustrating to put in mildly. It doesn't help that it's so hard to fire anyone that incompetence just gets moved around...although I'm sure you get that in the private sector. You also get sucked in to internal politics and empire building which you can avoid to a large extent as a contractor. My dad is in his late 50's and is still getting contracts (in PPM). I'd go option 1.
Definitely option 1. A bit of discipline and putting money aside for the things you say you won't get, believe in yourself and do the best you can. If it ends you will be in that mindset and probably find something similar quickly.
I work in a similar industry, am 46 and don't see the area as a young mans industry. You get to the later years and you move into consultancy anyway.
Go for it
I always chased the money and never regretted it. I liked driving big cars and taking decent holidays and you don't do that on a low paid job.
Only the OP can decide what his priorities are and in the final analysis, it is his choice entirely.
Based on all the info that you've shared OP then defo option no.1. Having said that...
I took on a new job 7 months ago after being made redundant, I had some time off work between roles and thought it time to get back on the saddle a) for the income and b) so there wasn't too large a gap in my CV. An old work colleague forwarded my name to his new boss, I went in for an interview and site tour, was offered the job on the spot and I accepted. The wage offered was great (relative to responsibility), potential to climb the ladder, millions being invested in the site etc etc yet, despite accepting the offer, my gut was telling me to hold back. Head said take the money, heart said something's not quite sitting right.
Well, just over half a year later I'm glad I went for the role but only because of the initial salary/income. Since the start of this year my hours (along with some of my colleagues) have been lowered along with a respective drop in salary, some people who I work with are damn-right lazy, I've since discovered that my contract (along with other newbies) means that I have fewer benefits than longer standing colleagues (and we'll never be equals) and yesterday's end of year performance review was a complete and utter shambles. All "new" staff score "below average" performance on the basis that we're less experienced than everyone else therefore "cannot be as productive", this has a negative effect on my annual bonus... I've never felt so demotivated in my entire working life.
My apologies, I've just realised that this has turned into a bit of a personal rant, however I have learnt that money isn't absolutely everything. If you're not getting any gut feeling for one option over another then I'd still recommend going for option 1, be disciplined with your increased income and then see how things pan out for you.
Good luck with whichever road you travel.
A long time ago, in a galaxy far away I would of taken option one every time.
These days, I always play the long game.
Got home tonight and proudly announced to my wife that i'd made my mind up. I was going for the Morgan Stanley role.
She immediately said "no you're not". When I asked why, she replied "because you are a worrier so you'll spend the next year worrying about when the contracts going to end. Next Christmas will be ruined with you worrying about the contract being renewed and you'll not enjoy the money as you'll be terrified saving enough for a spell with no job... it'll be pointless" she qualified all this with a simple "i know you"
So i'm still undecided.
As a late comment, the longer game will always be the anchor in the ground.
What will happen if you go for the short game is you will grow the spend and lifestyle to suit - if it cracks then the solution is far more difficult to resolve.
Easy risk with no kids/wife/family/mortgage.
Difficult risk with the above.
When you look long into an abyss, the abyss looks long into you.........
A personal rant but it certainly strikes a chord with me. I feel like i've spent most of my working life in situations like that. Stagnating salaries, bosses that keep shifting the goal posts, always feeling like you're just one email away from that company wide "due to external market influences...." message.
Security is a wonderful thing. If your wife is right, and you will worry about getting your contract renewed, go for the safe option and try and move up the ladder.
I’d definitely be in the option 1 camp, but do not forget MB2’s excellent comment...
There’s no such thing as job security, realistically. The most secure I’ve ever been is during the last 15-16 years of having my own business. I’d go for option 1 because if I had to work for someone else it might as well be for more money.
I made many job changes during my 40+ year corporate career. The choice you offer is simple: select Morgan Stanley!
No way should you take a "double-whammy" by accepting lower pay AND being branded as a government "loser!" Your future options would pretty much dissolve.
However, by joining Morgan Stanley, you are seen as a "winner," you are earning a lot more money, and you are positioned well to move upwards again in a year (or three) if you see an opportunity you like better.
Reading your initial post i would say Option 1, presumably you would still have a crack at option 2 later if it went tits up.
However, i would also listen to the wife. Maybe talk it over with her again in more detail. Presumably she knows you best and has your best interests at heart. Even if they are not right, they are usually right.
Good luck everybody. Have a good one.
You need to do some long range calculations to help you make your mind up.
Factor in the following:
Earnings from each path
Pension savings from each path
Earnings after pension savings from each path
Benefits you'll have in retirement from each path
You should also do some risk analysis on each option. Bit like some Monte Carlo simulation but it does not need to be that sophisticated.
You'll end up with a range of outcomes for each option (error bars) that get bigger with time. Plot them out and see how much they overlap. If the Morgan Stanley option powers away from the HMG option over time then you have your answer. If the error bars on your two lines continue to overlap then the question becomes by how much?
Note it's not a case of how much you can earn while working. It's a case of having enough income until you die. That means you need to factor in the retirement benefits you've already accrued. You need to look at any investments you have as well. That's why I said earlier it's imperative to know how the pension scheme you'll be joining works.
Either way the analysis will validate the decision. (Oh - your wife is right - it is a joint decision.)
Remember that the salary may be low for option 2, but civil service pension contributions will be equivalent to around 50+% of the salary.
So factor that in, and decrease option 2 day rate by the equivalent amount you’d have to put in a private pension.
I work in oil and gas and have had the same dilemma, as day rates where fantastic for best part of 15 years, before the recent slump. All my friends went contract and I’ve stayed staff.
I now have an enviable final salary pension which will leave me comfortably retired at 55, or earlier if I want.
Whereas my friend have plenty of cash, their DC pension will probably see them working to 60+. Also their day rates have now been cut by 33% (given the O&G slump) for the last two years, whereas my salary has just steadily increased. The tables have turned.
It’s always tempting to take the King’s shilling, but study the maths hard before you do, as the headline contract day rate can put dollar signs in your eyes, without taking into all other considerations - lower hours, less stress, more holiday, DB pension etc. This is all worth a lot (we’ll to me anyway).
This is all especially true if a DB pension is on offer, like the civil service.
If it’s just a DC pension with a private company, it’s a no brainer to go contract if you are useful and in demand.
Last edited by noTAGlove; 9th January 2018 at 10:34.
I second Morgan Stanley. Finance names don't carry the same kudos that they once did (and probably for good reason), but a year of MS on the CV still has cache.
In my experience with friends who have contracted to banks, there is almost always an extension offered and if not, a parachute into another bank.
Civil service have long moved away from DB pensions for new joiners so he'll be on a DC pension, albeit one with above average employer contributions but in no way close to 50% of salary.
No, they have moved away from a final salary scheme. Alpha is DB and Partnership is DC, both are open to new joiners. Alpha is a Career average scheme and members pay in as well as the employer. Partnership has no required contribution from the individual.
Just answering a few more questions.
The pension is a defined benefit scheme. Described to me as a "contributory final salary scheme". Its Scottish government so maybe its different. I have a small personal pension pot that's worth bugger all at present.
There is zero pension with option 1. The pay would allow maybe £2.5k a month to go into a pension but realistically some of that would need to be invested elsewhere that made it accessible should I end up out of contract. The story about the oil & gas workers strikes a chord with me. I have several friends that work in that industry and their boom n bust lifestyle has always seemed mental to me.
I've got until Friday to decide. I went back to option 2 and asked if they could break policy and increase the scale. So they are seeing what they can do. Might also be worth noting that option 2 has come about as they are replacing all their contractors with permies. So could it be the industry is changing?
Read up on IR35 - the contractors are leaving the civil service due to no longer being able to claim expenses. It is also coming to private sector I believe.
Agreed re the war chest - first priority should be saving 6 months living expenses for time between contracts.
The second contract is always meant to be the hardest to get.
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Had a look. A lot of the info is beyond my simple mind but I think i get the general jist. So people that were contracting through their own limited company were paying a lot less tax? Was there not some fuss with that at the BBC a while back?
I'd be contracting through a recruitment agency so I assume I'll be paying tax and ni as normal. This one agency seems to place every contractor in my line of work in this city (probably only about 50 people mind), the girl seems to be very good at her job. The contractors at the government office that are being let go are also her people.
The Scottish gov't pension scheme looks OK from what I can see. Also lets you roll a current pension pot in (You'll get a credit of so many years if you do. This can be useful as it tells you how the scheme values a cash injection which can tell you about how much you need in money purchase to match their pension.) You can also buy added years as far as I can tell or you can make additional free-standing contributions. The former is good, the latter less so.
Also death in service and widows benefits which is quite generous. It adds up to a tidy benefit in the modern world IMHO. Retirement age 65 but you can work longer to match state retirement and accrue further benefit while doing so.
Some of my friends are contractors so it is slight hearsay but they cite two main sticking points. When they were originally contracting for the PS they could claim their travel to the site and subsistence against tax - so not free but a 20% or so discount. Whilst PAYE people of course bear the cost of getting to work themselves as well as added security they probably consider that when they take the job.
The 24 month rule is all about location. Once you have been there 24 months and spent over 40% of your time there (so would need 2 days a week WFH) then you cannot claim expenses as is no longer a "temporary workplace" once you know your contract will (or is "likely to") take you over 24 months.
The worry is the location as some feel after 2 years they can no longer claim travel expenses to say London. So a 2nd finance role could well mean no expenses if is in London for a different bank and one was in the City and the other Canary Wharf.
Again all OK if you live in an easily commutable distance but otherwise can cause significant extra costs - so for anyone going contracting I would urge them to do their research. The umbrella will still allow you expenses and you may possibly even be refunded by your employer so it can be a big shock if say commuting from London to Manchester and also claiming accommodation.
https://www.gov.uk/hmrc-internal-man...anual/eim32080
Last edited by MB2; 10th January 2018 at 11:43.
This is a little fuzzy as I took a different contractor route but this is my understanding.
Most contractors contract via a agent this should have little bearing on if you do this via a ltd company or an umbrella company.
The rules changed last year in regard to ir35 for public bodies which has impacted the contract market, how individuals structure themselves and how much tax they pay. This could well be why you are seeing contract roles converting to fte in the local government it could be that there is no longer an advantage for the contractors and hence they are unable to attract applicants and they are attempting to convert key workers over to fte rather than lose them to the private sector.
As for ir35 changes in the private sector I assume it’s likely they will happen, when that will be is the bigger question.
Until the changes are made it’s hard to say what mitigations can be put in place, but I would expect there to be some.
And ltd vs umbrella: with an umbrella you will pay standard rate IT&NI but have some wiggle on travel etc.
I would expect with a ltd company you could pay a lower salary, take some dividends at a more advantageous rate of tax and leave the rest in the company, should the ir35 changes happen in the short to mid term in the private sector then I’d hope you’d still be able to make use of Entrepreneurs' Relief to minimise tax exposure on the company balance.
This will most likely depend on your day rate.
I’d suggest having a read on some of the contractor forums as I haven actively followed this area for a year or more just picking up snippets.
If it were me, I’d take the contract role with MS, as a ltd company but then I haven’t been an fte for about ten years now so I’m used to the contract shuffle
I went in to meet the wider team at MS today and now i'm not so sure it's for me at all. I got on with them ok but they were a bit flat. Annoyingly I got on great with the guys in the US and the department head in London but not so much the team up here. The large office was also like a bloody morgue and felt like hours could pass very slowly there.
Speaking to a few people who work in the same industry as me they are all saying to take the public sector job.
This could come down to a flip of the coin.
Go for option 2. Safe and steady and you’ll sleep well at night. Who knows, you could progress pretty quickly up the ladder and be on better money and benefits.
Contracting every time for me almost 17 years at it now but I like the flexibility it offers if I get bored or don’t like a place etc I can move on the extra money is also a big factor but I’ve had 3 weeks without work in 17 years no pension because I don’t trust them but I invest my money elsewhere and should be fine at 55ish certainly a lot more comfortable than friends with permie jobs. Having said all that it’s not for everyone only you can decide if it’s for you or try it out and see.
I've decided to go for option 2.
When I weighed up the pros and cons the only thing in favour of 1 was money. Money only matters when it affords you a better life but all I'd end up doing is saving more for when the contract ended. In 6 months of job hunting I've only seen 2 contract roles advertised in Glasgow so my location and job type don't offer loads of potential in contracting. Also, whenever I make more money my wife just finds new ways to waste money.
Thanks all for your help. You definitely gave me food for thought.
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Sounds like the right choice give all the various factors...particularly given your feelings on the team and lack of other contract option locally, probably a relief to have just made the decision!
Good luck in your new job.
I work with loads of contractors in the Oil & Gas industry, and many of them are commuting and remote living on a minimum of a Mon-Thurs basis.
A grim life if it was me, but for most of them they know little other pattern of working. Best never to get started in that routine if you can afford not to.
Little update.
After making my decision I found I wasn't sleeping well. I was angry at my future employer, I felt they were under valuing my experience and expertise and had got themselves a bargain which left me angry at myself for selling myself short. Then on Thursday I was invited to one of their departmental events. As I sat there I started to see layer upon layer of a tangled web of bureaucracy unraveling before my eyes. I saw a frustrating future of approval and process and having to suck up decisions I didn't agree with and was powerless to affect in any way. I kept thinking about some of the comments and advice here and as I looked round the room I just kept thinking back to the phrase "death spiral".
Immediately after the event I called Morgan Stanley and accepted the contract.
Now embarking on the mystifying process of setting up a limited company, business bank account and getting an accountant.
Thanks all for your help.
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