Workplace Pensions. Good or Bad?

[logic_guy]

As from October, we'll all be loosing 4% of our monthly income to put into our pension pot. Our employer will put in 3% and the government put in a cold hearted 1%.

-John pays in £40 a month from his £1000 p/m gross basic salary.- this is taken directly from his monthly pay.
-His employer pays in £30 a month
-The government, in the form of tax relief on his payment, pays in £10 a month

Personally, I'm not sure if this is a good or bad idea. There are pro's and con's for it. What do you think?

My main concern is if my employer puts in £30 a month just for me, and also has another 19 people employed, somehow the company has to make an extra £600 a month to 'pay back' the money they've paid into my pension (based on 20 people earning £1000 p/m). This would mean a small increase in product costs and less likely to get a bigger pay rise in the future. Everything will just go up in price.

Imagine what Tesco's and Asda's contributions will be each month for their thousands of employees. They've got to recover the cost some how.

References:
Workplace Pension. (http://www.direct.gov.uk/en/Pensionsandretirementplanning/Companyandpersonalpensions/WorkplacePensions/DG_183783?PRO=hp&CRE=banner)
How it works. (http://www.direct.gov.uk/en/Pensionsandretirementplanning/Companyandpersonalpensions/WorkplacePensions/DG_200722)

[smiith]

You will pay it all in, but what age do you actually get it? The rate things are going, by the time most 20 year olds get to pension age, half the people who paid in, will have died

[Rogue_Shadow]

Pretty damn sure you can Opt out, Dragons Den Style :y:
Already have a pension plan going with my employer. Don't understand it, but I have one :A:

[L33h]

I really dont expect to live long enough to get my pension anyway lol

[Saxotim]

I've been paying in for 2 years, 6.5% matched by my employer

[logic_guy]

You will pay it all in, but what age do you actually get it? The rate things are going, by the time most 20 year olds get to pension age, half the people who paid in, will have died

Just my thought.

Apparently, people are living longer? Isn't the 'current' retirement age 67 for men and 65 for woman?

What about the Asylum Seekers? I bet their on the governments books too. What happens if you've worked from the age of 14 (like me) or you get some scum bag who's not worked a day in their life, do they just get a 'enhanced' state pension?

Do we still get £107 a week, or will it increase a extra £60 - £80 a week?

[Yasuraka]

As from October, we'll all be loosing 4% of our monthly income to put into our pension pot. Our employer will put in 3% and the government put in a cold hearted 1%.



Personally, I'm not sure if this is a good or bad idea. There are pro's and con's for it. What do you think?

My main concern is if my employer puts in £30 a month just for me, and also has another 19 people employed, somehow the company has to make an extra £600 a month to 'pay back' the money they've paid into my pension (based on 20 people earning £1000 p/m). This would mean a small increase in product costs and less likely to get a bigger pay rise in the future. Everything will just go up in price.

Imagine what Tesco's and Asda's contributions will be each month for their thousands of employees. They've got to recover the cost some how.

References:
Workplace Pension. (http://www.direct.gov.uk/en/Pensionsandretirementplanning/Companyandpersonalpensions/WorkplacePensions/DG_183783?PRO=hp&CRE=banner)
How it works. (http://www.direct.gov.uk/en/Pensionsandretirementplanning/Companyandpersonalpensions/WorkplacePensions/DG_200722)


Tesco already do this but a change has already been made that they wont be paying in as much as they used to (Blaming people living longer). So its meant we have to work a few more years to get our full pension.

[Heliosphan]

I think you're suffering from an extreme case of financial myopia if you think this is a bad thing.

[Ashleyp]

Chances are, by the time we're old enough to retire two things would have happened:

A - Retirement age would have gone up.
B - you probably won't get a state pension.

pay in to your works scheme, or find some way to secure you're future financially. As 'early' as it sounds, planning for the future isn't too bad in that sense. [/OldManMode]

PS; making it a sun newspaper-esque "what will the bloody foreigners get?" type of story makes you sound like a naive, uneducated prick. :)

PPS; you don't pay tax at 14, so the government don't give a crap about how long you've worked.

[Penn]

I think you're suffering from an extreme case of financial myopia if you think this is a bad thing.

Unless the pension money prevents someone paying for bills or adding to savings for a house deposit.

[smiith]

Chances are, by the time we're old enough to retire two things would have happened:

A - Retirement age would have gone up.
B - you probably won't get a state pension.

pay in to your works scheme, or find some way to secure you're future financially. As 'early' as it sounds, planning for the future isn't too bad in that sense. [/OldManMode]

PS; making it a sun newspaper-esque "what will the bloody foreigners get?" type of story makes you sound like a naive, uneducated prick. :)

PPS; you don't pay tax at 14, so the government don't give a crap about how long you've worked.

I pay some into a separate savings account everytime i get a decent lump of money.. Then i can get at it well before my pension age if i wish

[Penn]

I pay some into a separate savings account everytime i get a decent lump of money.. Then i can get at it well before my pension age if i wish

And you will probably end up with more money putting it all in a long term ISA returning more than 3% interest PA as opposed to this pension scheme.

[Carlvtr88]

As from October, we'll all be loosing 4% of our monthly income to put into our pension pot. Our employer will put in 3% and the government put in a cold hearted 1%.



Personally, I'm not sure if this is a good or bad idea. There are pro's and con's for it. What do you think?

My main concern is if my employer puts in £30 a month just for me, and also has another 19 people employed, somehow the company has to make an extra £600 a month to 'pay back' the money they've paid into my pension (based on 20 people earning £1000 p/m). This would mean a small increase in product costs and less likely to get a bigger pay rise in the future. Everything will just go up in price.

Imagine what Tesco's and Asda's contributions will be each month for their thousands of employees. They've got to recover the cost some how.

References:
Workplace Pension. (http://www.direct.gov.uk/en/Pensionsandretirementplanning/Companyandpersonalpensions/WorkplacePensions/DG_183783?PRO=hp&CRE=banner)
How it works. (http://www.direct.gov.uk/en/Pensionsandretirementplanning/Companyandpersonalpensions/WorkplacePensions/DG_200722)

I opted out of mine on my contract. If I can afford to stick 20 quid a week away Ill put it in a jar or my bank savers account; Not some company executives pocket so when it folds I get fuck all. Bun dat !

[L33h]

Im just goin to pay into my works pension too.

Mines ment to be really good. Whatever i pay, the company will pay it x3

[logic_guy]

Im just goin to pay into my works pension too.

Mines ment to be really good. Whatever i pay, the company will pay it x3

you pay £30, your company pays £90? + Government 1% Meaning you set away £120+ each month?

I'd rather that in my pocket tbh and go without a pension. I'd whack it into a ISA then i can take out money when ever I want.

[L33h]

I can pay as much as i want. So if i pay 100 a month before tax. They pay 300. £400 a month. Not bad if you as me.

[Heliosphan]

Unless the pension money prevents someone paying for bills or adding to savings for a house deposit.

None of which he offered as a concern.

Even if he did, he can opt-out, right?

And you will probably end up with more money putting it all in a long term ISA returning more than 3% interest PA as opposed to this pension scheme.

I highly doubt that a fixed rate ISA will out-perform a cautiously managed investment fund over the long-term especially when you take into account the employer contributions and tax relief going into the pot.

Unless you're a very skilled investor with time on your hands, which the vast majority of people aren't, you're almost certainly better off in some kind of official scheme.

[Barry123]

Pay as much as you can afford to into your scheme, especially if the employer makes a contribution too.

1) it comes out of your gross salary so you offset some of your tax. win.
2) if you employer matches your contribution, you get more in your pot than you would do putting it into a standard savings account. win.
3) depending on your arrangements, your NI payments drop too. win.

I'm raising mine from 5 % to 15 % over the next year.

[haz_pro]

I think i'll be opting out of this, I plan to start a share portfolio at some point so will use the money saved to fund that.

[b0t13]

do a private pension tbh, do u trust the govn with 000,000 of ur money through ur whole lifetime, itll be a massive money pot that theyll one day tap, whereas a private one they cant get into as easy

[smiith]

None of which he offered as a concern.

Even if he did, he can opt-out, right?



I highly doubt that a fixed rate ISA will out-perform a cautiously managed investment fund over the long-term especially when you take into account the employer contributions and tax relief going into the pot.

Unless you're a very skilled investor with time on your hands, which the vast majority of people aren't, you're almost certainly better off in some kind of official scheme.

Self employed, not going to put a tenner in, then pay it again to myself am i..

[Heliosphan]

do a private pension tbh, do u trust the govn with 000,000 of ur money through ur whole lifetime, itll be a massive money pot that theyll one day tap, whereas a private one they cant get into as easy

Yes, you need to be wary of the government. Always trying to steal employee pension scheme money.

Self employed, not going to put a tenner in, then pay it again to myself am i..

So you're making a point about something that you're obviously not even eligible for?

[devilsadvocate]

My pension comes out about £150pm.

My employer pays quite a bit more than this.

[0rang3peel]

Im just goin to pay into my works pension too.

Mines ment to be really good. Whatever i pay, the company will pay it x3

that sounds like total shit

I can pay as much as i want. So if i pay 100 a month before tax. They pay 300. £400 a month. Not bad if you as me.

this makes it sound even more like total shit.

I've worked for some decent companies with good pension schemes before and this one sounds totally fictional, I'll eat my words/hat if true but seriously...

:homme:

[devilsadvocate]

Yes, you need to be wary of the government. Always trying to steal employee pension scheme money.


I picture you living in your mums basement with a tin foil hat on, reading shite you find on the internet.

[smiith]

So you're making a point about something that you're obviously not even eligible for?

Which point is that? Only thing i said is what age will you get it at, will it be a set age, or does it go up with normal pension age..? Because if it goes up, surely half the people who dip into their wage won't reach the right age..

Rather have a scheme where you can set the age to 60 or something

[smiith]

that sounds like total shit



this makes it sound even more like total shit.

I've worked for some decent companies with good pension schemes before and this one sounds totally fictional, I'll eat my words/hat if true but seriously...

:homme:

My mate works for somewhere with the same thing to be fair, they pay in 3x what he pays in..

[gazza808]

I've already been told we probably won't be having another pay rise in a while to counteract this pension scheme coming in.

[Giraffe]

I picture you living in your mums basement with a tin foil hat on, reading shite you find on the internet.

He was being sarcastic, hence his other posts.

I'm opting out until later in life, need all the money I can for a house deposit and then living costs for now.

[0rang3peel]

My mate works for somewhere with the same thing to be fair, they pay in 3x what he pays in..

that's insanely good, if we had a scheme like that (my work doubles what I put in iirc) I would put so much in, as it stands I don't put any in.

[smiith]

that's insanely good, if we had a scheme like that (my work doubles what I put in iirc) I would put so much in, as it stands I don't put any in.

Yeh, he works for TeesPort, obviously a port, that brings containers in, high up in the IT side of it.. He was telling some of the things the company charges, like for if a ship takes too long to unload its cargo, the fines they dish out.. No wonder they can afford to pay 3x what he pays in!

27 and has a decent 3 bedroom house, a decent car, and can afford most things he wants.. Can't be bad!

[matt_vtr_15a]

I'm not currently contributing but my company put £40 a month in for me I think...

Once I start contributing I'm sure they double the amount in which I add towards my pension...

Have a meeting with the pension guy in december so I'll start paying into it then I think. It's easily carried over to any future company I work at apparently! As said though, I don't plan on even living to 70 etc. but your kids can inherit your pension I believe...

Well my directors dad has just died and he is now being paid his dads pension on a weekly basis...

If I don't get the benefit at least my kids/widow etc. will :y:

I spunk enough money away as it is, I may as well be sensible with some of it

[L33h]

that sounds like total shit



this makes it sound even more like total shit.

I've worked for some decent companies with good pension schemes before and this one sounds totally fictional, I'll eat my words/hat if true but seriously...

:homme:

Its true. It was on the news a few year ago saying they were one of the best pensions in the country. I think its only x3 if i put away over £100 a month tho

[Heliosphan]

I picture you living in your mums basement with a tin foil hat on, reading shite you find on the internet.

Talking of internet shite, there's a relatively new adage that relates specifically to the internet called Poe's Law. The law itself states that no matter how ridiculous and absurd a statement may be, there will always be one total idiot (i.e you) who takes it literally. So on that basis, I'm claiming Poe's Law over your complete and utter idiocy in failing to spot the sarcasm in that post. Congratulations indeed.

In future can you try to understand things better, it's like having Harvey Price on the forum.

Seriously though, if you think I talk shite debate me instead of writing dickish comments.

Which point is that?

The one I quoted.

[Barry123]

you're in a particularly fine mood Helios lol

Just to be sure... are we really saying there are some (I guess relatively mainstream) pension schemes that pay in at THREE times what the employer pays??

Are you sure it's not double taking the total pension pot to three times. Seems pretty amazing to me.

[Ashleyp]

hahahaha. Harvey price

[haz_pro]

you're in a particularly fine mood Helios lol

Just to be sure... are we really saying there are some (I guess relatively mainstream) pension schemes that pay in at THREE times what the employer pays??

Are you sure it's not double taking the total pension pot to three times. Seems pretty amazing to me.

A pharmaceutical company I worked at once paid 3 times. A lot of the people who worked there said that's the main reason they hadn't left lol.

[axsaxoman]

pensions are a problem .
the bottom line is that an investment that is tax free is the best option for long term .
the economy is totally bust at this time but a pension is looking 20-30 years to the future .
there is nothing out there that will give you as good a return that is totally safe .

the idea of using an ISA instead of a pension is wrong on a few levels -the fact you can withdraw the money at any time is too tempting and the interest rates are always a lot lower than pension rates

there is no doubt that every one will live longer and it is wrong that people who do not contribute via tax should get the same state pension as people who work --

this will change over the next 20 years --it has to as no government can keep paying the rates they are now for a growing number of people who do not contirbute .
there will be changes . hopefully we will come out of th EU

since i started my pension in 1979 the interest rates have changed up= dwon dramtically from 20% to 5% annually .
there is notset retirement age now and an employer is going to be hard pressed to get rid of you at the governments retirement age-- and with inflation etc etc it is likely that everybody will be working longer --especially if they have not built up a nice pension fund to allow them to retire with an income other than the state pension .

could you live on just over £100 a week --I doubt it .but add to that the annuity from your pension and it all gets better .

bottom line is returns on pensions now and for the next few years is crap --but there is nothing you can do and it will get better as the economygets back in to growth ,so it is the right thing to do .

your going to be pretty sick if a future government decide to get rid of ISA,s or start taxing them,as they did with pension funds (labour) and you have lost 10 + years of pension contirbutions + growth

I see someone was saying they were not buying a pension but saving to buy a house --what in the economy makes anybody think that house prices are not going to keep on dropping --the golden age of buy a house and watch it double in value in 5 or 10 years is gone if not forever or at least for a lot of years .

yes house prices providing you buy right have always kept up with inflation --but as you will pay approx 4 times the original rpice by the time you include the interest on the mortgage --it is not the gold mine some think --not at this present time
what i am trying to say is you cannot view your house as your pension fund I doubt the silly price rises in house values will ever happen again and if you sell it you still need somehwere to live ,so unless you are moving from london to outer hebrides you won,t end up with a big chunk of money to invest to live on

as bad as pensions may look they are still the best long term thing you can do and the sooner you start the more time the money has to grow .
the first ten years of contributions will make most gain in real terms as they have most time to grow .

[Giraffe]

pensions are a problem .
the bottom line is that an investment that is tax free is the best option for long term .
the economy is totally bust ts this time but a pension is looking 20-30 years to the future .
there is nothing out there that will give you as good a return that is totally safe .
the idea of using an ISA instead of a pension is wrong on a few levels -the fact you can withdraw the money at any time is too tempting and the interest rates are always a lot lower than pension rates
there is no doubt that every one will live longer and it is wrong that people who do not contribute via tax should get the same state pension as people who work --
this will change over the next 20 years --it has to as no government can keep paying the rates they are now for a growing number of people who do not contirbute .
there will eb changes .
since i started my pension in 1979 the interest rates have changed up= dwon dramtically from 20% to 5% annually .
there is set retirment age now --as far as the work place goes and with inflation etc etc it is likely that everybody will be working longer --especially if they have not built up a nice pension fund to allow them to retire with an incom other than the state pension .
could you live on just over £100 a week --I doubt it .but add to that the annuity from your pension and it all gets better .
bottom line is retuns on pesnions now and for the next few years is crap --but there is nothing better ,so it is the right thing to do .
your going to be pretty sick if a future government decide to get rid of ISA,s or start taxing them and you have lost 10 + years of pension contirbutions + growth
I see someone was saying they were not buying a pension but saving to buy a house --what inthe economy makes anybody that house prices are not going to keep on dropping --the golden age of buy a house and watch it double in value in 5 or 10 years is gone if not foever for a lot of years .
yes house prices pproviding you buy right have always kept up with inflation --but as you will pay approx 4 times the original rpice by the time you include the interest on the mortgage --it is not the gold mine some think --not at this present time
what i am trying to say is you cannot view your house as your pension fund i doubt the silly price rises in house values will ever happen again and if you sell it you still need osmehwere to live ,so unless you are moving from london to outer hebrides you won,t end up with a big chunk of money to invest to live on
as bad as pensions may look they are still the best long term thing you can do and the sooner you start the more time the money has to grow .
the first ten years of contributions will make most gain in rel terms as they have most time to grow .

It was me who said I was saving to buy a house. I'm not looking for a pension fund, I'm looking for somewhere to live for the rest of my life... When I'm in my 30's I'll be earning more than enough to put away in a pension, but for now I need to get a roof over my head with a reasonable mortgage and be able to afford it.

[axsaxoman]

I,m not against house buying --I have one -but the two things sghould be looked at together
my house cost 29500 in 1960 and now is valued at 250000,but if i was to change i would be apying same r more than i would get for mine .
So i hope you can see what i was getting at
please think carefully about the possible rise in interst rates when the economy starts to recover .
example when i took out ny mortgage it was 8% within 2 years due to inflation the interest rates peaked at 18%
i do not think it will go that daft again and if a couple % rise in your proposed payments would cause diasater then save some more deposit before making a move .
a good yard stick is to get a quote for asimple capitol +interest repayment type of mortgage --if that is too much then maybe you need ot save more deposit --I,m not saying don,t take a better deal if it suits you but a staright repayment type allows you to pay off capitol at any time with no penalties --which then will save interest on the remaining term .
every 1000 pounds extra you have as a deposit will be more like 4k in repayments over the life of some types of mortgage "deals2 -fixed term etc
house prices must stablise +drop in the near future due to the shrinking economy and there will be bargains in the next couple of years

[Giraffe]

I,m not against house buying --I have one -but the two things sghould be looked at together
my house cost 29500 in 1960 and now is valued at 250000,but if i was to change i would be apying same r more than i would get for mine .
So i hope you can see what i was getting at
please think carefully about the possible rise in interst rates when the economy starts to recover .
example when i took out ny mortgage it was 8% within 2 years due to inflation the interest rates peaked at 18%
i do not think it will go that daft again and if a couple % rise in your proposed payments would cause diasater then save some more deposit before making a move .
a good yard stick is to get a quote for asimple capitol +interest repayment type of mortgage --if that is too much then maybe you need ot save more deposit --I,m not saying don,t take a better deal if it suits you but a staright repayment type allows you to pay off capitol at any time with no penalties --which then will save interest on the remaining term .
every 1000 pounds extra you have as a deposit will be more like 4k in repayments over the life of some types of mortgage "deals2 -fixed term etc
house prices must stablise +drop in the near future due to the shrinking economy and there will be bargains in the next couple of years

I'll be saving for the next 2 and a half or 3 years, maybe longer, and intend on putting down at least 25% as a deposit. I'm not after an expensive house or anything, but the main advantage I can see against putting in to a pension is that a pension won't cover rent payments when I'm old, so if I buy, at least by retirement age I'll own the house and won't have a mortgage to pay. I'm only going to move out when I get my full accountancy qualifications and should be on more than enough to cover a mortgage and bills. If I'm not, I'll wait. I'll look in to it all in good time though, for now I'm just focusing on saving every penny for a bigger deposit.

[axsaxoman]

good move to maximise the deposit

[Heliosphan]

you're in a particularly fine mood Helios lol

Today finds me in particularly high spirits and fine fettle as it happens.

But just in case the red-mist should descend again, I've sent my Mother out to get me some Jasmine oil and Camomile tea to keep me calm...

...and a few extra yards of tin-foil of course ;)

[Penn]

The only reason I haven't started my pension yet is because I've been saving for the past 2 years to buy a house. Now have a house using a 20% deposit and my next move is to start a pension (if I can afford it, buying and running a house by yourself certainly isn't cheap!).

If you can afford mortgage payments on a house and pay into a pension, you're doing really well for yourself in this day and age.

[Saxologist]

I get paid £1000 a month before tax, take home £920.

I need to pay rent and bills which by last count came too £550, I spend about £120 on food a month, so I have some left over, I dont like counting pennies, but as someone said before, Even if you pay in £80 a month, starting now (minimum age is 22 for pension scheme) I'll have invested £30980 privately, with the goverments and companies contribution, that adds up to a tidy sum.

I'd pay the minimum now, and increase it when I get a pay rise

[DontHaveASaxo]

So much could change by the time most of us reach the retirement age, wich as said will most likley go up, when the time comes to receive your pension it will most likley be taxed again.

If I'm honest ino fuck all about this lark but ino I wouldn't trust the government with my money.
I'm only 21 so not ganna worry about it all just yet..
Ide rather save up myself and invest in something, don't have a clue what but i will

[Barry123]

I'm basically doing this:
I get two pay rises in the next 10 months. when the first kicks in I'm raising my pension to 10% of gross salary. Then 15% once the second pay raise kicks in.

The idea being I'll take home exactly the same as I did before, so I don't notice the increase in deductions but be stuffing a shit load into the pension.

[axsaxoman]

anything you can do at as young an age as pssible is good
and remeber the 10%of your wage is not 10% as its before tax so its really around 12-13% and all the growth is not taxed .
and if you get into higher rate tax its even better
and you have the option of when you retire of spending the lot --and then let the government keep you

[Penn]

Here's one for you. Overpay on a mortgage to get it out the way sooner or pay into a pension whilst keeping the mortgage term the same?

[Ashleyp]

Here's one for you. Overpay on a mortgage to get it out the way sooner or pay into a pension whilst keeping the mortgage term the same?

That's a stupid question.

Far too vague to give an answer which is of any use to anyone, not enough variables have been stated.

[Penn]

That's a stupid question.

Far too vague to give an answer which is of any use to anyone, not enough variables have been stated.

It was actually meant to start a discussion but oh well, I'll fuck off and not bother.

[Barry123]

I don't think there is a clear cut answer for this. If you're on the 40% income tax rate then almost certainly the pension, as it qualifies for tax relief at 40%.

If you've got a big ass mortgage then maybe that extra £50 a month might make a substantial difference to the length of the loan, if it's like a 25 year mortgage.

The mortgage company might not allow over payments either.