Pension - Can I opt out?

[dowie]

in a few decades time you might need the money for more things than just basic living costs when you own your own home

care provision, medical bills etc.. Who knows what the NHS will be like in 15 years time let alone 30 years time... treatments are improving all the time and new expensive procedures being developed - it isn't all going to be available free at the point of use... you might well find as a 65 year old that the thing you need is available but only privately for a few thousand

 

[MrMoonX]

Not really. My mother didn't put into a pension (my dad did but it's not great one) and she can happily live on the £116 a week she gets from the State Pension.

My parents own their own home, go on two cruises a year, keep up with the bills and don't struggle for money.

Of course this is partly due to the money my dad gets from his private pension but most of their incoming are from the State pension.

A bloke retired from my work last month with a £25k a year pension and my first thought was "why does a man in his late 60s with his own home need nearly £2,000 a month income?" It's actually more than that when you add in the State pension on top.

I opted out of my pension due to wanting to pay all my debts off and get into a position of having 3 months wages as savings. I'm nearly there now and I'll opt back in but I'm really not bothered about attaining my current wage level after retirement. As long as I have enough to cover my living costs and the odd holiday I'll be happy.

who wouldn't want £25k a year with a house paid off and no work lol

You could live like a king, it would be like wolf of wall street

 

[D.P.]

this can't be true, my dad died in 1987 and my mum to this day still gets his pension each and every month. There will be a death in service element in all pensions.

People who don't pay into pensions are either loaded with a property portfolio to keep them in retirement or they are narrow minded short term idiots, who when they get to old age are a burden on the rest of us because they didn't save for later life!

Even someone who is loaded with a Property portfolio would still be incredibly short sighted not to have maxed out their pension.


Property doesn't double in value instantly tax-free

 

[estebanrey]

in a few decades time you might need the money for more things than just basic living costs when you own your own home

care provision, medical bills etc.. Who knows what the NHS will be like in 15 years time let alone 30 years time... treatments are improving all the time and new expensive procedures being developed - it isn't all going to be available free at the point of use... you might well find as a 65 year old that the thing you need is available but only privately for a few thousand

Surely the odds of the NHS going private in the next 30 years are smaller than the odds your private pension company will go to the wall and everyone loses everything, ergo Robert Maxwell

 

[dowie]

I didn't say they would go private, that wasn't the point - the point is the NHS can't and won't provide everything and with rising healthcare costs that isn't likely to improve. Being able to pay for drugs or procedures due to long waiting lists or it simply not being available on the NHS is likely going to be quite useful in future.

 

[D.P.]

Surely the odds of the NHS going private in the next 30 years are smaller than the odds your private pension company will go to the wall and everyone loses everything, ergo Robert Maxwell

Pension companies don't own your investments, they just manage it. If the pension provider went bust you would just have your investment portfolio transferred to another provider.

 

[The_Abyss]

Surely the odds of the NHS going private in the next 30 years are smaller than the odds your private pension company will go to the wall and everyone loses everything, ergo Robert Maxwell

Pension funds, post Maxwell, are held under trust. DC schemes have FSCS protection and DB schemes have PPF protection.

 

[The_Abyss]

Says you. It's in the Company's interest for as many people to opt out as possible so they don't have to contribute . I might split the difference on what I could save by opting out with the director

It really isn't. Pension contributions are right at the top of the list to attract abdd retain staff.

 

[The_Abyss]

I mean how far through their pension pots do people tend to get before they die. That's always the issue I've had with pensions as it's essentially a gamble on how long you might live.

There must also be a considerable % of company contributions that eventually goes back to the state too. So whilst on the surface it's appealing, do company contributions actually benefit the state more (eventually) in inheritance tax?

No.

 

[platypus]

My point was that if you put the money into a savings account, your next of kin enjoys the whole lot, not just a small percentage. If you die, your next of kin only gets paid a years worth of pension.

I suppose that depends on your policy? In all of my pensions, the full amount goes to my wife.

 

[platypus]

Just don't need it mate.

It would be interesting to know how old you are, and how you can predict the future so well?

You've also got to remember it won't just benefit you, should you have any beneficiaries.

 

[platypus]

People who don't pay into pensions are either loaded with a property portfolio to keep them in retirement or they are narrow minded short term idiots, who when they get to old age are a burden on the rest of us because they didn't save for later life!

People who are loaded maximise their pension allowance.

 

[booyaka]

This thread.....

So many people brainwashed by poor journalism/the man down the pub said/total mis-information etc.

Open your eyes to the benefits of a pension and you will be rewarded. This attitude of "i won't live long enough to see the benefits" etc is just deluded.

You gain benefits whilst paying in (tax relief), you gain benefits whilst it grows in value (tax free growth), employer contributions (free money), you benefit from more money in retirement than without a pension, you family will benefit if you die before 75 and pass the full fund to them etc.

If your pension is of a decent value and your concerned about funds/poor performance etc - go see a financial advisor. They don't bite!! Either that or take a few hours a year to review things yourself.

You wouldn't buy a car, run it for 10 years without a service, and still expect good performance from it!!

It's just idiotic to continue with this stupid attitude of "pensions are crap" etc. Open your eyes people!!

 

[Richdog]

Not really. My mother didn't put into a pension (my dad did but it's not great one) and she can happily live on the £116 a week she gets from the State Pension.

My parents own their own home, go on two cruises a year, keep up with the bills and don't struggle for money.

Of course this is partly due to the money my dad gets from his private pension but most of their incoming are from the State pension.

A bloke retired from my work last month with a £25k a year pension and my first thought was "why does a man in his late 60s with his own home need nearly £2,000 a month income?" It's actually more than that when you add in the State pension on top.

I opted out of my pension due to wanting to pay all my debts off and get into a position of having 3 months wages as savings. I'm nearly there now and I'll opt back in but I'm really not bothered about attaining my current wage level after retirement. As long as I have enough to cover my living costs and the odd holiday I'll be happy.

People who don't live simple lives want 25k+ when they retire and own their own home. Quality of life should improve the older you get, and I for one don't want to be scrimping on anything when I'm in my dotage. If all goes well I should have a £40k+ pension when I retire and I will use that money to treat myself and my family until such a time as I pop my proverbial clogs.

 

[booyaka]

People who are loaded maximise their pension allowance.

totally - these people know the benefits of higher rate tax relief, tax free growth etc - they do maximise pensions/ISA every year.

 

[Mercenary Keyboard Warrior]

What happens if the employer doesn't match, or only pays in the minimum (which I think is about 1% isn't it?)

I remember last time I checked if the employer wasn't matching I would have to pay in something stupid like 20-30% of my salary each month to get the recommended 66% retirement pot, for a 20 something. Makes the sums far more difficult...

When companies don't contribute the only benefit of a pension over savings was the tax free part.

Well of course if the employer doesn't match for the same net result you need to invest more for the same end result.
BUT as far as I can tell once the signup date for your employer comes round they have no way of getting out of the mimimum contributions even if you make more.

I forget the "rule" now but the earlier you start contributing the lower the percentage is.
I ignored the 66% thing though. Personal circumstances will differ this for everyone, biggest issue by far is owner/renter when hitting retirement. If you rent you still need to cover that, as someone who should own my own home by then I feel the need for less than 66%. In fact I am planning to have a minimum under 50% pension.
I am looking for a fixed income after tax of £1500 a month at current prices, I can very easily live on an income of that level, assuming I do at that time own my house outright. Plan is in fact to downsize around the time of retirement, so reality is I would actually be looking to bank probably £75k at current values from equity allowing for a smaller house and some investment at the time of purchase into ensuring its setup for expected retirement length, ie fit new kitchen, old age friendly bathroom etc around the ago of 65-67

 

[Mercenary Keyboard Warrior]

any idea if or when employer matched contributions will be able to be put into a SIPP?

at the moment there doesn't seem to be much choice at all - we just have some big company that manages pensions which our employer chooses sell us their product essentially... I don't see why there couldn't be more flexibility on this - it shouldn't matter to employers where they pay the contributions

I don't think this is coming as a given right.

Eg my current employer selects the investment advisor and they recommend the pension supplier. In my case Aegon.

Possibly George will give more rights but bear in mind the company need to make the payments to the pension provider so they wouldn't want every employee making their own arrangements.

 

[platypus]

A bloke retired from my work last month with a £25k a year pension and my first thought was "why does a man in his late 60s with his own home need nearly £2,000 a month income?" It's actually more than that when you add in the State pension on top.

Probably because I'll have children and I'll want to be able to look after them and help them, especially given how expensive it is to go to University (if they want too), and how hard it is to get property these days. So I'll probably need a good income even then.

 

[booyaka]

I don't think this is coming as a given right.

Eg my current employer selects the investment advisor and they recommend the pension supplier. In my case Aegon.

Possibly George will give more rights but bear in mind the company need to make the payments to the pension provider so they wouldn't want every employee making their own arrangements.

Problem for the employer would be if they had 300 people employed all who wanted payments to their own pension - it's 300 seperate payments/direct debits etc which is WAY harder to control, over a single monthly payment to one provider etc. Never going to happen

 

[tlrBeta]

A lot of talk about the NHS collapsing / going private and having money put aside for worst case.

Even if it doesn't, I would not recommend going to an NHS run care home when you come to that point in your life.