Shall I stop my pension?
Discussion
I know, I know, another Pension thread.
I am 30 years old and have been paying into my company pension for the past 5 years @ 3% with the company matching it. I do have another pension from another job which has been merged with my private pension.
My question is, is it all worth it? My Pension is going to pay out somehting like £6,000pa when I retire at 65. Would I not be better having the cash in my pouch now, paying off my mortgage and debts off then saving it?
I don't want to be paying into my mortgage for the next 35 years to find its useless. At the same time, I don't want to stop paying into my pension and find I can't touch the money I have paid in over the past 5 years.
Any thoughts? Am I mad to consider stopping paying into a pension?
I am 30 years old and have been paying into my company pension for the past 5 years @ 3% with the company matching it. I do have another pension from another job which has been merged with my private pension.
My question is, is it all worth it? My Pension is going to pay out somehting like £6,000pa when I retire at 65. Would I not be better having the cash in my pouch now, paying off my mortgage and debts off then saving it?
I don't want to be paying into my mortgage for the next 35 years to find its useless. At the same time, I don't want to stop paying into my pension and find I can't touch the money I have paid in over the past 5 years.
Any thoughts? Am I mad to consider stopping paying into a pension?
To help you decide.
To provide yourself with a 500/Month top up would need 150K using a 4% drawdown.
Remember this an extra 500/month
The first couple of 100K is the most difficult to accumalate, it gets easier after that.
The normal advice is to take any matching you can get, it's free.
Getting an extra 3% in you wage cheque is just going to dissapear.
I'm retired so here's a view from the opposite end of the telecscope.
Dog collar now back on the shelf!
R.
- Simply, you'll need all the pensions you can get! State benefits are nice (you'll have paid for them dearly of course) but they are hardly life enhancing.
- Life is now full of endless expensive possibilities.
- So, you've been a sensible bloke investing all your cash in non pension things for your future as recommended by lots of people who are the same age as you? No? Spent it all? What a surprise!
- If you can join a company sponsored pension scheme, do so. Why turn down their cash? If you don't, are you really sure that you can do better by following your own initiatives, and that's assuming you'll start them!
- You cannot say pensions have a bad reputation and as a result not set anything up, and them blame the pensions industry for not doing anything for you! Plenty of others seem use this as their excuse.
- You think it would be nice to retire early? Stop working at say 55? Good for you. Then you get to 55 and see what you want to do then..you probably still feel like 45 and have plenty of earning capacity in you so you want to stay at work until 75!
Dog collar now back on the shelf!
R.
That pension can invest in absolutely anything that any other savings can invest in so you can't outperform it through savings.
Not to mention the tax break the government give you on it.
And since you are starting off with HALF the amount (since the company is no longer matching) you will NEVER outperform.
However, if you have any debt with a crippling rate - say 20%+ APR then it might be worth taking a break on the pension to pay that off (will help with the credit rating too).
I suspect you really just want more money to blow on toys like jimslops suggests.
I would be interested to know how jimslops is going to pay for his illness in the future? Perhaps he doesn't mind festering his way to an early grave on an NHS ward.
Not to mention the tax break the government give you on it.
And since you are starting off with HALF the amount (since the company is no longer matching) you will NEVER outperform.
However, if you have any debt with a crippling rate - say 20%+ APR then it might be worth taking a break on the pension to pay that off (will help with the credit rating too).
I suspect you really just want more money to blow on toys like jimslops suggests.
I would be interested to know how jimslops is going to pay for his illness in the future? Perhaps he doesn't mind festering his way to an early grave on an NHS ward.
walm said:
That pension can invest in absolutely anything that any other savings can invest in so you can't outperform it through savings.
Not to mention the tax break the government give you on it.
And since you are starting off with HALF the amount (since the company is no longer matching) you will NEVER outperform.
However, if you have any debt with a crippling rate - say 20%+ APR then it might be worth taking a break on the pension to pay that off (will help with the credit rating too).
I suspect you really just want more money to blow on toys like jimslops suggests.
I would be interested to know how jimslops is going to pay for his illness in the future? Perhaps he doesn't mind festering his way to an early grave on an NHS ward.
Thank you all for the replies. I have quoted walm as he was last in the queue. Not to mention the tax break the government give you on it.
And since you are starting off with HALF the amount (since the company is no longer matching) you will NEVER outperform.
However, if you have any debt with a crippling rate - say 20%+ APR then it might be worth taking a break on the pension to pay that off (will help with the credit rating too).
I suspect you really just want more money to blow on toys like jimslops suggests.
I would be interested to know how jimslops is going to pay for his illness in the future? Perhaps he doesn't mind festering his way to an early grave on an NHS ward.
I am earning enough to pay off the debt I have, I only thought if I were to stop paying the pension I would be able to pay it off quicker.
Incorrect I am afraid, I have all the toys I need which are bought and paid for. i just didn't want to be paying into a scheme for the next 35 years with what seems like very little return if my money could be used better elsewhere.
The main bonus to the pension scheme I am on is the private health care for my wife and I (Plus kids if/when we have).
Lots of food for thought, i'll mull things over.
Thanks
Dan
danrc said:
I just didn't want to be paying into a scheme for the next 35 years with what seems like very little return if my money could be used better elsewhere.
I just don't understand how you could possibly think your money could do better elsewhere?Please paint a scenario with NUMBERS that shows how you would be better off taking half the money and no tax breaks?
Remember you can't magically assume 15% per annum returns from some fantastic day trading or something.
The RATE OF RETURN will be the same whether you invest in a pension or in some other saving scheme.
The only time it is different is if you are paying off debt.
All this AND they give you free private healthcare!!! Do you know how much that would cost to buy independently?
So you intend on giving up an extra 100% performance, plus AT LEAST another 20% from the tax saving - AND YOU STILL think you could outperform????
HOW???
Madness.
The math is pretty simple:
Let's say you put in £100.
The company match that with £100.
Then the pension performs with say 7% growth.
So at the end of a year you have a pension pot worth £214.
Or you don't pay in and take it as salary.
BEST CASE if you pay say only 20% tax you get £80.
So HOW ON EARTH are you going to invest that £80 and turn it into £214 in a year.
I would also like some of those magic beans!!
Sorry to shout but I don't have a company pension and I am seriously jealous.
You are literally throwing money away if you don't keep paying.
jimslops said:
Not mad at all. Spend all your money now and enjoy it. If you end up ill when you are older, you will just be using all your pension money and house money to pay for it.
No point in being the richest person in the graveyard .... not sure who said it but a friend embedded it into my head.But my view
Pay off mortgage to remove debt stress
Once paid off review outgoings and what you want to do, how long you expect to live etc etc
I will probably buy a small rental house at end of year - and as such take out the usual life insurance to protect oneself and pays of mortgage if term. ill**, one that would substitute state pension (if it exists) and my almost worthless company pensions and the ISA/Savings etc (OR I will find a pension deal I can trust ... OK picked myself up off floor at that thought).
When debt free financial planning becomes a lot easier. I think!
Nuff of my ramblings...and rubbish
- if this happens sell up lock stock and round the world travelling here I come!
PS I have few or no dependents (Sister, Nephew and Niece and of course Ma n Pa who a not getting any younger)
walm said:
I just don't understand how you could possibly think your money could do better elsewhere?
Please paint a scenario with NUMBERS that shows how you would be better off taking half the money and no tax breaks?
Remember you can't magically assume 15% per annum returns from some fantastic day trading or something.
The RATE OF RETURN will be the same whether you invest in a pension or in some other saving scheme.
The only time it is different is if you are paying off debt.
All this AND they give you free private healthcare!!! Do you know how much that would cost to buy independently?
So you intend on giving up an extra 100% performance, plus AT LEAST another 20% from the tax saving - AND YOU STILL think you could outperform????
HOW???
Madness.
The math is pretty simple:
Let's say you put in £100.
The company match that with £100.
Then the pension performs with say 7% growth.
So at the end of a year you have a pension pot worth £214.
Or you don't pay in and take it as salary.
BEST CASE if you pay say only 20% tax you get £80.
So HOW ON EARTH are you going to invest that £80 and turn it into £214 in a year.
I would also like some of those magic beans!!
Sorry to shout but I don't have a company pension and I am seriously jealous.
You are literally throwing money away if you don't keep paying.
Calm down mate, I was only asking for people's point of view. No need to go off at the deep end. Please paint a scenario with NUMBERS that shows how you would be better off taking half the money and no tax breaks?
Remember you can't magically assume 15% per annum returns from some fantastic day trading or something.
The RATE OF RETURN will be the same whether you invest in a pension or in some other saving scheme.
The only time it is different is if you are paying off debt.
All this AND they give you free private healthcare!!! Do you know how much that would cost to buy independently?
So you intend on giving up an extra 100% performance, plus AT LEAST another 20% from the tax saving - AND YOU STILL think you could outperform????
HOW???
Madness.
The math is pretty simple:
Let's say you put in £100.
The company match that with £100.
Then the pension performs with say 7% growth.
So at the end of a year you have a pension pot worth £214.
Or you don't pay in and take it as salary.
BEST CASE if you pay say only 20% tax you get £80.
So HOW ON EARTH are you going to invest that £80 and turn it into £214 in a year.
I would also like some of those magic beans!!
Sorry to shout but I don't have a company pension and I am seriously jealous.
You are literally throwing money away if you don't keep paying.
I was asking for advice so I don't waste money, plain and simple.
I am a retired Chartered Accountant. I did provide for my old age. I am comfortable and still own two homes without working.
Better than holidays IMO.
Cottage in the country has become cottage by the sea.
I was very fortunate born in 1946 very caring educated parents pushed gently in the right direction. You would have struggled to fail with my parents.
Choices were much simpler then.
I was able to earn significantly more than I spent throughout the 40 odd years I worked. Invested in property always very low geared. No geared now.
I also paid into several pensions up to the maximum possible over the last twenty years. chose the companies carefully. Saw the Equitable Life and other such Ponzi schemes for what they were.
I am not sure I would do this nowadays. Lifestyle choice first IMO.
There is going to be another horrendous crash with the Euro mess coming. Recession is going to be long and lasting. This could easily last ten years possibly longer.
Assuming you want to stay in the UK, which is my first question, look at the demographics and decide where you want to live.
Shire county towns strike me as much better than the old industrial centres. You may think otherwise.
I am quite happy to make suggestions as to alternatives and I think such an approach is eminently sensible given the Euro crisis and Banking crisis we have had in four years. With more to come.
But please answer those two questions first. Big choices
Better than holidays IMO.
Cottage in the country has become cottage by the sea.
I was very fortunate born in 1946 very caring educated parents pushed gently in the right direction. You would have struggled to fail with my parents.
Choices were much simpler then.
I was able to earn significantly more than I spent throughout the 40 odd years I worked. Invested in property always very low geared. No geared now.
I also paid into several pensions up to the maximum possible over the last twenty years. chose the companies carefully. Saw the Equitable Life and other such Ponzi schemes for what they were.
I am not sure I would do this nowadays. Lifestyle choice first IMO.
There is going to be another horrendous crash with the Euro mess coming. Recession is going to be long and lasting. This could easily last ten years possibly longer.
Assuming you want to stay in the UK, which is my first question, look at the demographics and decide where you want to live.
Shire county towns strike me as much better than the old industrial centres. You may think otherwise.
I am quite happy to make suggestions as to alternatives and I think such an approach is eminently sensible given the Euro crisis and Banking crisis we have had in four years. With more to come.
But please answer those two questions first. Big choices
Edited by Steffan on Wednesday 22 February 20:27
through my employer I have what is quite frankly an insane pension - they pay in just under 900 quid a month and I put in 150 gross (can you guess who it is yet..)
the missus also has a pension but hers is crap, and is only worth doing for the firms contribution. the firm puts in 60 quid a month and she puts in 40. she wont be topping it up at all, and we will probably keep the flat we are in as an investment when we buy a house in 3 or so years time.
as put above, you would be nuts not to put in the minimum as you are getting free money from your employer, however, dont top it up. if you have spare cash, bung it in an isa (at least you can get it back if you so wish to buy some coke and pay those hookers) although that said, although people here are saying live for now, lifestyle etc etc, the time will (very, very, quickly come) when you are in that boardroom, old and grey, shaking the MDs hand and getting your cut glass fruit bowl and looking forward to your retirement. Assuming that you do make it to retirement and this f
ked up world doesnt get to you first - you should aim to have a good few quid in the bank.
so do enjoy yourself - but not too much. Plan for your retirement, because you might get hit by that bus, but you probably wont...
(p.s before anyone thinks I am an old git I am 26)
the missus also has a pension but hers is crap, and is only worth doing for the firms contribution. the firm puts in 60 quid a month and she puts in 40. she wont be topping it up at all, and we will probably keep the flat we are in as an investment when we buy a house in 3 or so years time.
as put above, you would be nuts not to put in the minimum as you are getting free money from your employer, however, dont top it up. if you have spare cash, bung it in an isa (at least you can get it back if you so wish to buy some coke and pay those hookers) although that said, although people here are saying live for now, lifestyle etc etc, the time will (very, very, quickly come) when you are in that boardroom, old and grey, shaking the MDs hand and getting your cut glass fruit bowl and looking forward to your retirement. Assuming that you do make it to retirement and this f
ked up world doesnt get to you first - you should aim to have a good few quid in the bank. so do enjoy yourself - but not too much. Plan for your retirement, because you might get hit by that bus, but you probably wont...
(p.s before anyone thinks I am an old git I am 26)
Get a job you genuinely enjoy doing, especially amongst other people whose company you enjoy. It'll also almost certainly be something you're very competent at. Then you won't have to think about retiring, because you won't want to retire. (think Alex Ferguson/Warren Buffet/etc etc etc).
Ps: After a great business success I 'chucked it' in 1986 aged 34. Went to an affluent part of Spain, bought a villa, and my 'retirement' lasted ..........3 weeks. Mind you, I stayed for 3 more years and met many many ex-pat retirees 'living the dream'. What a lesson! Certainly won't be doing THAT again. Retirement's not empowerment. It's a form of social impotence.
Ps: After a great business success I 'chucked it' in 1986 aged 34. Went to an affluent part of Spain, bought a villa, and my 'retirement' lasted ..........3 weeks. Mind you, I stayed for 3 more years and met many many ex-pat retirees 'living the dream'. What a lesson! Certainly won't be doing THAT again. Retirement's not empowerment. It's a form of social impotence.
I was thinking about cancelling mine a few weeks ago. Even started a thread on here. I'm 23 and was thinking of cancelling it until around 30 where I'd then pay in as much as possible in time for my retirement. However after reading some of the replies I got and realising that my employer was matching my payments I decided that those 7 years was actually a long time and is time I'd never get back.
The amount I'm paying in is quite significant and if instead went into a savings account in a few years I'd have enough for a TVR Cerbera. However I decided to take the amount I'm paying out of mine and just think of it is as tax. As in it's money I have to pay and there isn't an option of not paying it thus removing the temptation on cancelling the whole pension just for exrtra money.
Instead now I'm paying a small amount into a savings account, it will take longer to get my Cerbera but at least when I retire I'll hopefully be able to live comfortably. I'm due a pay rise in around 2 years so when that time comes the extra income every week will be added to the savings account. So it might not be too long before I get my Cerbera anyway and I won't have reduced my pension in the process of getting it.
The amount I'm paying in is quite significant and if instead went into a savings account in a few years I'd have enough for a TVR Cerbera. However I decided to take the amount I'm paying out of mine and just think of it is as tax. As in it's money I have to pay and there isn't an option of not paying it thus removing the temptation on cancelling the whole pension just for exrtra money.
Instead now I'm paying a small amount into a savings account, it will take longer to get my Cerbera but at least when I retire I'll hopefully be able to live comfortably. I'm due a pay rise in around 2 years so when that time comes the extra income every week will be added to the savings account. So it might not be too long before I get my Cerbera anyway and I won't have reduced my pension in the process of getting it.
fid said:
princeperch said:
through my employer I have what is quite frankly an insane pension - they pay in just under 900 quid a month and I put in 150 gross (can you guess who it is yet..)...
Who, who, who?! I need to get me some of that.I would enjoy it while it lasts. Final salary funds will be gone in 5 years.
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