Anyone not got a pension?

[CX53]

Hi all,

I’m getting to the point now where I haven’t ever really had a pension and I’m wondering if I should bother at all, given the amount I’d have to put in to have a decent pot at the end.

I’m thinking about this now as I’m soon to take a permanent job after most of my career so far contracting. The company will match my contribution to 3% but I would probably put in 5.

The last time I took a perm role the pension breakdown was really quite depressing, I wasn’t due to have much to live on at the end if, god willing, I get there.

Is anyone doing anything different and perhaps a bit more flexible, such as a LISA or saving for BTL property? (I’m aware BTL isn’t what it used to be...) maybe I’m better of doing the company pension and releasing funds from current property one day for BTL to diversify? I know that the companies contribution is basically free money, and some people are adamant on taking advantage of that, but I can’t help but think if I want to be okay in my retirement then there could be a better alternative.

Any advice welcome, I haven’t really worried about this all my working life and now I’m a couple of years off 30 it’s starting to creep in to my thoughts more often. If it helps for some context, I’m 28, salary will be 45000, I have a 24 years left on a mortgage of 155,000 on my first property which I am thinking about overpaying..

Cheers.

[craig1912]

Why on earth wouldn’t you join the scheme if your employer is going to give you an extra 3%?

and surely something is better than nothing when you retire.

[i4got]

craig1912 said:

Why on earth wouldn’t you join the scheme if your employer is going to give you an extra 3%?

and surely something is better than nothing when you retire.

Not to mention the free 20% contribution from the Government.

[CX53]

craig1912 said:

Why on earth wouldn’t you join the scheme if your employer is going to give you an extra 3%

This is essentially the question I am asking. If it’s unanimously the best thing to do then of course I will, but if my couple of hundred quid a month could see a better return or a more flexible pot somewhere else I’m all for it.

I’d hate to save for a tiny pension pot all my life which I may never even get to touch when I could accumulate a pot of money to invest in something better, but as I say, I haven’t given it much thought so far in life, if only I had started a pension when I started working at 17...

[Rick101]

45K at 28 and not sure whether to contribute.

I wish I had that opportunity. Get it set up pronto and if you can get closer to 3-400 a month that would be a good start.

[SamR380]

If you want to invest in something other than a pension remember you've already lost 20-45% in tax before you even start.

With a pension you:
a) invest before any tax
b) get free extra money from your employer

[Greshamst]

Reading through your post, I was expecting you to be 50 or something...

You’re 28. You’ve still got 35 years+ of pension growth, that is not a short time.

Start putting in to a pension now.

[bitchstewie]

Greshamst said:

Reading through your post, I was expecting you to be 50 or something...

You’re 28. You’ve still got 35 years+ of pension growth, that is not a short time.

Start putting in to a pension now.

^^

Exactly this.

If I could go back to when I was 28 I would be shovelling in as much as I could.

[CaptainSlow]

The best time to start paying into a pension is ten years ago, the second best time is now.

There are many 28 year olds that haven't started contributing yet so you're not alone. Make sure you at least secure the employer's contribution.

[clarky92]

Im 28 in Feb

Just starting my pension now. Contributing 4% and my employer is matching it. 8% on a £38,500 salary. Hoping thats a good start.

[bitchstewie]

clarky92 said:

Im 28 in Feb

Just starting my pension now. Contributing 4% and my employer is matching it. 8% on a £38,500 salary. Hoping thats a good start.

My personal view (and I don't work in Finance I'm just saying this as a regular employee) is if you're able to do so, contribute the maximum that your employer will match.

It's literally free money.

[CaptainSlow]

No, that's the minimum.

The maximum would be combination of annual allowances and/or coming off the higher tax rate dependent on other financial circumstances.

[clarky92]

bhstewie said:

My personal view (and I don't work in Finance I'm just saying this as a regular employee) is if you're able to do so, contribute the maximum that your employer will match.

It's literally free money.

That was my thought aswell, they will only go up to 4%.

[Groat]

CX53 said:

I’m getting to the point now where I haven’t ever really had a pension and I’m wondering if I should bother at all, given the amount I’d have to put in to have a decent pot at the end.

Is anyone doing anything different and perhaps a bit more flexible, such as a LISA or saving for BTL property? (I’m aware BTL isn’t what it used to be...) maybe I’m better of doing the company pension and releasing funds from current property one day for BTL to diversify? I know that the companies contribution is basically free money, and some people are adamant on taking advantage of that, but I can’t help but think if I want to be okay in my retirement then there could be a better alternative.

Retired and in Scotland here.

My 'pension' is pretty well a waste of time. £66 a month from two annuities. But my rented properties provide me with a perfectly satisfactory income which grows every year as does the capital value of the investment.

No regrets at all although to be honest the money put into pension funds would pretty obviously have been better put into property instead.

Eta: the "free money" bit is the bank buying them and the tenancy rent repaying the bank.

Edited by Groat on Thursday 19th December 15:24

[bitchstewie]

clarky92 said:

That was my thought aswell, they will only go up to 4%.

Sorry, to articulate further contribute as much as you can afford to regardless, but whatever their maximum is I would see it as "free money" if you can afford to meet it.

Not to patronise you but pensions at 28 are boring. Hit your 40's or some point where you start to think "how long do I need to work for?" and they suddenly aren't so boring

[i4got]

The key point to be clear on is that what you contribute and what you invest those contributions in, are two separate things.

If your employer is putting in 3% to your 5% then it may sound like small numbers but they are contributing an additional 60% on top of your (gross) contribution. Add in the additional 20% that the government contributes.

So if you pay in £1800 a year, you'd actually get an extra £450 from the government and £1350 from your employer. You then have maybe 40 year of compounding on that free money.

Putting it in £1800 to an ISA or other savings you'd only have that £1800 to invest.

So rather than focussing on how high the amount is, focus on the fact that a big chunk of it is free.

The obvious downs side are, you can't get at it until at least age 55 and you'll pay tax on the pension when you draw it - but you get your normal tax free allowance and 25% of the fund will also be tax-free. Whereas an ISA will be totally tax-free when you draw it.

All the above is before you chose what funds to invest in. These will obviously be dependant on what the pension provider allows, but at your age you should be able to be quite adventurous and chose higher risk investments.

[super7]

Well i'm 50 and i'm right f**cked for a pension. Been contracting for 25 years and basically pissed it all up the wall... and road

Anyway, i've canned all the little pensions that were lying around and put them into a SIPP. Invested all the balance into 2 companies... and will now forget about it. I'll ever work until i'm in my box or i'll be exceedingly happy....

The two companies i've invested in? One is the only manufacturer of 'certified real' Graphene and the other is a fledgling Bio-sciences company producing targeted methods for the immune system to kill cancer cells.....

st or bust

Edited to add..... I don't intend on retiring full stop. The minute you do that, unless you have something to keep your brain active, it's the slippery slope to the crem.

Edited by super7 on Thursday 19th December 15:16

[NickCQ]

Groat said:

My 'pension' is pretty well a waste of time. £66 a month from two annuities. But my rented properties provide me with a perfectly satisfactory income which grows every year as does the capital value of the investment.

No regrets at all although to be honest the money put into pension funds would pretty obviously have been better put into property instead.

(i) you don't have to buy an annuity any more. It's probably not the right product anyway for most people
(ii) most pensioners will live off dividends plus a gradual sell-down of the portfolio. Unless you have a really large pot, property is a bit too lumpy / illiquid and the transaction fees are too high to do that efficiently.

[Sheepshanks]

Just marry someone with a public sector pension - doctor (or other senior NHS employee), head teacher, etc etc.

[NickCQ]

super7 said:

Invested all the balance into 2 companies... One is the only manufacturer of 'certified real' Graphene and the other is a fledgling Bio-sciences company producing targeted methods for the immune system to kill cancer cells.....

don't try this at home kids