The Dogs B******s

Workplace Pensions, are they worth it these days?
I work for a small company and they are now obliged to offer us a workplace pension. At my time of life, is it worth it? (I'm 38)

hodgy0_2

The real benefit of workplace pension is when the employer matches or exceeds your contribution

So one I have access to pays 9% in if you pay 6%

So you get quite a big sum for a relatively small outlay

SJ_Skyline

It's also financially beneficial if you are able to make a salary sacrifice into your pension so that you can fly in under certain tax thresholds. These deductions are taken off the top line before tax is paid and taxable income calculated on the residual amount of salary, this also works for child benefit if you're earning over £50k.


The downside is that George to cocksmith is looking to get his sticky little fingers into the pension pot, just like Gordon the moron did before him.

BlkKnight

We ended up using "the peoples pension" to set ours up.

Yes it is financially beneficial - especially with the lump sum withdrawal at the end,

ditchmyster

iTrader: (7)

Depends if you think you'll live long enough to collect it, which at the rate things are going you'll probably be at least 70 before you get a penny, so you're looking at 32yrs worth of contributions for probably less that 10yrs payout, unless you're one of the very few men that make it past 80yrs old.

I took the view that I'd sooner put all my money into my own investments and draw on it as and when I see fit, if I end up relying on a pension if I make it to 68 or whatever it is now you're pretty much buggered anyway.

subevo

If company is willing to pay in then yes.
Rule of thumb for payments is half your age .your 38 so 19% of your wages / month
A pension pot of £100,000 buys you an annuity of between £4000 and £6000/ year
You need at least £400000 pension pot.

In the old days a working man got 1/60 for every year he worked. Work for 40 years = 40/60=2/3= maximum of 2/3 of your finally salary which was the max you could get.

Nowadays it's more like 1/80 or 1/90 or even 1/100.


All of the above is a defined benefit scheme whereby the company takes most of the risk and guarantees you a percentage of your final salary.

Most pension schemes are now defined contribution which is an investment with no guarantees of final amount but still attractive if your company pays into this.

When you are young the last thing on your mind is a pension.but the best advice I was given was to join the company pension scheme and now I'm 50 years old.hopefully I can afford to retire at 58.

If I hadn't joined then I would need to work to 67 to get my government pension of £150/week.

madscoob

iTrader: (3)

what a joke 100k pension pot sees you 6k per year rotflmao you would need to live 16.6 years just get your own lump sum back, thats before intrest, i think i will be taking my lump sum

PaulC72

one thing to also remember is you only need to recoup what YOU have paid in to be in profit, the money your company pays in is free money which you wouldn't normally get.

So if you pay in 40k and your company 60k to make the 100k pension pot the recovery is allot quicker.

boomer

..but won't that be taxable (at 40%)?

mb

Scooby.Newbie

The amount of tax you pay is linked to your 'income', as it is seen as such as they didn't tax you on it when you were putting it away unless, I think, you opt for this.

I have seen a large amount wiped off my pension fund over the last few months, ok is al relative as gone up before and is a long term investment, but I am just about to get a bonus at work, what do you do with it ?

Can put it in the pension, can save it and earn next to nothing, put in an ISA come April, but that is just giving you tax free interest on no interest at the moment, and I have that covered, invest it, but where?

Or just spend it on stuff I dont need and give them 20% in VAT after I have lost half of it in tax and NI just to get it.

I am in a nice position, don't get me wrong, but just begrudge saving it and don't need to spend it, much to the annoyance of the misses.

madscoob

iTrader: (3)

no under the new rules you can draw down a percentage each year, if you go over the yearly tax allowance you will only pay the std 20%

Midlife......

iTrader: (2)

So I can divert my Child benefit into a pension ?

Shaun

boomer

Sorry, i thought that you meant drawing down the entire 100K as a lump sum, which would be majorly taxable.

I'll certainly be taking out 25% (or whatever they allow at the time) up front and tax free when i retire! The rules are changing too often so i would rather have the pound in my pocket

Cheers,

mb

mart360

Only if you start very young!


mart

ALi-B

iTrader: (1)

Every person I know so far has opted out of the workplace scheme.

I know it's caused some problems with folk on low pay as it's automatically taken out of their wages if they don't notify their employer that they don't want it (auto opt-in) and not properly read/listened to the information given by their employer. I think part of the issue was these people -due to misleading adverts thought they were getting extra money for nothing- it's not quite like that-a small business can't just magic up money from nowhere; so often the "SMART" pension arrangement is used (government buzz word for salary sacrifice) so the pre-tax wage is the same but the take-home pay reduced due to the pension contributions.

BTW: I'm not "in" but I already have a private pension, however that may change as I had an IFA review it all and it's not that good. So that may all change. The game is all about minimising tax and maximising interest. It give me a headache working it out at the best of times LOL.

hodgy0_2

yes, true up to a point

and only if you are on low pay

and tbh if you are still on low pay in your 30's 40's etc - you are pretty fvcked however you dice it

ditchmyster

iTrader: (7)

I was also going to mention that. I spent the first 15yrs of my working life at sub £15k and a good portion of it around the £10k mark, which is where I was when the opting out came along, paid into it for a year or two then got laid off and never paid in again. Then came the opt back in to the state pension, which I did, then the next time I was in a position to do anything with pensions I was still only on £30k and had a final salary pension scheme for 2yrs then quit work

I've recently qualified for the state pension @ 30yrs paying in, but like you say I decided a long time ago that I'd be screwed if I didn't do my own thing and make some reasonable money on my own.

I feel sorry for people that are going to have to live on the state pension, it's not going to be much of a life for them.

Oh another question for the masses, is there any way to claim state pension or a portion of it before 67?

boomer

I think that it has gone up to 35 years of contributions from this year (for a full new State Pension)!

mb

ditchmyster

iTrader: (7)

Typical, it's not enough to raise the age so they raise the qualification criteria as well, let's just keep moving the goal posts until nobody get's paid, yet people that never worked a day in their lives get given a small fortune.

I think I'll have to call them and see where I stand as they way it looks is as though it comes into force in April 2016.