Bother joining pension or not?

Critical illness insurance normally pays out when you're alive, not when you're dead, though quite a few of the things it covers have a substantial chance of killing you eventually. No problem if they don't, you still keep the money. As insurance types go it's fairly low in priority list. Reducing the amount of cover might not be a bad idea.

You say who is to get your pension pot when you die using an expression of wishes form. You'd probably say it's to be split between your children. If you die before 75 they get it all tax free, else it's taxed at their normal tax rate when they take money out, which can be at any age for an inherited pot.

If you're diagnosed with something where your doctors say your life expectancy is no more than a year you can take the whole pension pot as a tax free lump sum, at any age. The doctors are allowed to be wrong, you get to keep the money anyway if they are and you live to be a hundred.

A pension is an efficient way to clear or help clear a mortgage. You pay into the pension and get the tax relief and employer contribution. At any time from 55 you can take 25% as a tax free lump sum to use for the mortgage and leave the rest in the pension for retirement. The bit left in the pension will probably still be more than the amount you paid in.

If the mortgage rate is sensible you might consider increasing the term to free up cash flow now that you can use to accumulate an emergency fund and invest for the future more easily.

At a minimum join the pension and pay in enough to get the maximum employer contribution. Do that as soon as you can because that employer money is claim it or it's gone, effectively a given up bit of pay. No problem to move and combine pensions these days so that's not a reason not to join.

and the difference it may make in a top up to a basic state pension


I'd rather cancel the critical illness cover and get the pension if it were me

..normally paying into a pension is a "no brainer" as your Company will "give" you extra money..(all be it you can't access for a while...but that's probably a good thing if you are tempted to spend it). I can accept that you may be struggling financially now...but how much more will you struggle when you stop work and have a much reduced income and no company pension to help out?

halesowenmum wrote: »

I've just joined my new company and there's pension on offer.

However, I've needed every single penny so I can pay my bills and have not been able to pay into a pension for years now.

I'm 50. I have about 78k mortgage to pay off (so will likely be working until I'm 90!!), no other investments. I do have critical illness insurance (so I'm worth a fair bit dead not that that's much help!!) and I guess I can't see the point of 'starting now' so to speak.

I suppose what's further complicated things is my income has been up and down over the last 8 years through various forms from temping, fixed term contracts, and a short spell with a ltd co. I'm also recovering from a £2k boiler replacement 3 days before Xmas and four months without child support from my XH meaning my income took a £1500 hit and I'm struggling to catch up. Also, this job role is supposed to be for 1 year, could stretch to 2, but again it's not a permanent role so I'd be changing pensions again in due course.

What do people think in general about not paying/paying into a pension/??? Any thoughts gratefully received. I also wonder if I should sort out a will just in case I'm run over by a bus as I don't understand where any pension would go (I'm single since the divorce and have two children who are teens) or if the payment from the critical illness etc, where would that go if I'd not got a will?

Thank you.

People on here switch the record of " pension is a priority" no matter what the situation is. To me it looks like in your case questions about pension are secondary. If one has less money than state pension amount now after taking into account expenses one will not have in retirement then no point in additional pension.How much disposable income do you have after mortgage and children related expenses? If less than state pension than your priority is to chose whether you will try to pay off mortgage before retiring or it is non viable and you will have to rely on local authority accommodation for living till the end of your life. If former than coping while children do not earn yet is a priority , you will be sorted after. If latter then familiarising with rules for housing and crunching numbers on when to sell the house is priority.

mark5 wrote: »

The ex might not owe any money, the op only says she didn't receive child support!

and four months without child support from my XH meaning my income took a £1500 hit

And this lead me to believe she is owed 4 months worth?