Opting out of pension
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To put it in perspective I'm 51 and have only become keenly interested in pensions recently. I worked for the Post Office for 32 months in the late 1980's earning roughly the equivalent of what you're earning now.
Totally forgot about it but recently realised they will pay me £1k indexed linked a year from age 60. That's me beer money sorted for life, my LGPS from age 35 will cover the rest. :beer:0 -
You can take your pension earlier than the retirement age? I thought you have to wait until you're 68 / retirement age ?
The current rule is that you can take a pension from the age of 55. I have seen a suggestion that that will become 10 years before the state retirement age.
I know that at your age even 55 seems a long way off. My first job only allowed managers to join the company scheme. But when I was 25 I lucked into a good scheme, though its rules don't let me take it until I am 60. I now wish I had put more into it.
Your scheme is better and safer than mine. You were talking about saving the money not spending it, but you are not going to find any better investment.
Since you were thinking about saving it it seems you are considering the future, Do you have a plan for what you want to do with your life? I only had short term ones at your age, but I did not intend to stay at the same level in my first job for a long time. If you can get promotions and increase your pay that solves everything - more to spend, more to save and more pension. Is there any reason that could not be your short term goal?0 -
I used to share digs with a girl who smoked, she always needed to borrow a tenner from me because she was short at the end of the month - but if she wanted some new clothes she'd just give up smoking for a week or so.
Thinking that cigarettes cost £10+ per packet, cutting out a packet a day for 1 week in four would save something getting on for that £84 per month anyway (not saying the OP smokes that much, but there are many that do).0 -
Once you start paying it you tend to forget its going out so you really dont feel it. I AM pensioner and i am so glad i stayed in my pension scheme. I can see so much poverty in lots of the elderly and its avoidable.
You are also saying No Thanks to free money, Thousands and thousands of £s. You would be mad to leave itmake the most of it, we are only here for the weekend.
and we will never, ever return.0 -
To kmb500 - along with the bl00dy good advice you've already had on this thread, go and find someone in work who really understands the pension scheme, book some time with them and get them to explain it to you...properly, mind, AND PUT IN THE EFFORT TO FULLY UNDERSTAND HOW GOOD IT IS.
You say death In-Service, Ill-health early retirement benefit, surviving spouse/partner benefits mean nothing to you currently, and maybe they don't. You may meet someone next week/month/year and suddenly they mean a lot, in both financial and security terms, to you both.
In some ways, I get where you're coming from about the dosh being more use to you now, but it really IS a flawed argument....being in the pension scheme now and for the following 40-ish years is FAR better than pishing £84 more up the wall every month...........Gettin' There, Wherever There is......
I have a dodgy "i" key, so ignore spelling errors due to "i" issues, ...I blame Apple
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Wasn't aware you did.
I meant "we" as a society, that through the efforts of the labour movement have managed to secure (amongst other things) affordable, generous pensions for public service.
I didn't mean myself personally.
Sorry that my frustration at someone who hasn't bothered to even find out how his benefits acrue before choosing to dismiss this golden egg as pointless, elicits such a pointless response from yourself.
Don't let my explanation stop another inevitable d!ck!sh response though. :rotfl:0 -
It's simple. You continue to contribute your modest amount.
By far the best investment you will ever make.0 -
Like I said I'm well aware that you get more money, a lot more, from the pension. But it's not money I can use right now, and in terms of what I think about my finances, I'm more concerned with the present. An extra 8% on my income can go a long way. If I was offered an 8% pay rise right now I'd leap at the chance.
Yes, by that I do mean smoking and drinking. Yeah I could cut down on the things I like and I would save some money, but I don't particularly want to. I enjoy going out with my friends drinking a lot, I like to make the most of it while I can.
This bit of your text is really telling
you are over prioritising your present at the vast vast detriment of your future. You want an 8% pay rise for your current self to waste on alcohol and cigarettes (lets be real - it won't touch a savings account) to deny your older self an 80% payrise which could be spent on giving yourself a decent retirement.
It is good you are asking the question but you are at a cross roads and your life could go two ways now.
20's - opt out of pension and spank the money on a night out. retirement is decades away - i still have time
30's - want a mortgage - that money could be better spent on a mortgage - retirement is decades away - I still have time
40's - kids are growing up. That money could be better spent of stuff for them - retirement is 20 years away, I still have time
50's - kids are going to college and university - money could be spent on. To make any decent pension I would have to put more money in that I can afford. What is the point.
60's - getting tired of working but must carry on. Too poor to quit
70's - oh !!!!!!. Stupid stupid 20 year old self. Can't physically work any more but too poor to quit. £8,000 a year doesn't go very far
80's - cold, very very cold. Can't afford to put heating on. Staring day in and day out at the tv. Very very depressing.
the alternative
20's - 1 less night out a month - maybe you could use the money now but thinking of the bigger picture if you make some small cut backs your future self will thank you. Not many investments could turn £1044 a year into £4800
30's - am used to saving into the pension now. The death benefit and pension rights for my kids and partner are also nice to have incase things go wrong
40's - am used to saving into the pension now, ill health retirement hopefully not needed but useful to have as a back up. Seeing the bigger picture
50's - wow look at how much my pension is worth.
60's - tired of working so you know what I am going to retire. ooh cruise.
70's - theatre trips, days out with friends, holidays - all affordable on my pension and state pension.
80's - heating on, well fed, days out, care if needed, money to treat the grand children, all thanks to the lgps pension and sacrificing that night out in my 20's. I am glad I listened to people who told me to stay in it.
you don't want to save into the pension as you could be dead before you need it. The chances are infinitely higher that you will spend 30 years of your life in abject poverty.I am a Mortgage Adviser
You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
kmb I sympathise-you can see exactly what that £80 odd would buy you here now today, but here's my story in the hope it helps. Longish post, sorry 😐
In my early-mid 20s I was in your position and declined the offer to join LGPS because I thought I couldn't afford it. At the time I had kids and a mortgage and bills and and and and... Mortgages were easy to come by then, see how times change
At 30 I was a bit further up the tree and started paying in.
In my mid fifties now (yes I know that's more than twice your age but time speeds up as you get older, really it does) and too many of my waking hours are spent obsessing about how to move out of local government and into something more creative. I've reached the point where I've seen and done most of the shiny new exciting stuff and it's just more of the same with 70% fewer people to do it.
I can access my pension now whenever I choose to, with reductions for taking it early. I've been lucky in my job, worked my way up and even - mostly - enjoyed what I've done, and if I'd joined LGPS on day 1 I could afford to walk away now, and know I could afford to do most things I want to while I'm still relatively young (don't laugh, I know 55 is a mile off when you're 21 but I compare myself with proper pensioners with sticks and wheelchairs these days 😉). I didn't, so I can't. Not. Quite.Yet. You wouldn't believe how overwhelmingly frustrating that is. It won't be long before I crack and leave anyway but I'll either have to find other work or cut out many of the things I really want to do. I have limited my options now because I didn't scrimp a bit more (we were pretty poor believe me) back then.
I really envy you and my kids for the chance you've got to make better choices than I did. Can I encourage you to do some reading about people who have made plans to free themselves from the world of work early. FIRE is a useful search term. It might not be for you - maybe you'll find you enjoy being a wage slave too much to give it up before you're 70 but give yourself the option. You've got a huge opportunity to get this right. Good luck 😉I have borrowed from my future self
The banks are not our friends0 -
I meant "we" as a society, that through the efforts of the labour movement have managed to secure (amongst other things) affordable, generous pensions for public service.
I didn't mean myself personally.
Sorry that my frustration at someone who hasn't bothered to even find out how his benefits acrue before choosing to dismiss this golden egg as pointless, elicits such a pointless response from yourself.
Don't let my explanation stop another inevitable d!ck!sh response though. :rotfl:
Well might be better to put any response in context.
Life is about choices, the OP can take on board people's choices and act accordingly, I don't see why people get on their high horses about things, personal responsibility is at a relative low currently, so long as people are given short shrift in several decades time when they moan at missing out, and we move away from the 'Mis sold' culture I honestly couldn't care less.
Not everyone's idea of a perfect life is to soend decades shuffling paper around a council office, if you want to then fine, and whilst you're there take advantage of the available benefits but there are other things in life.
Oh, and if you think the labour movement is teh primary reason behind the relative preservation of db schemes in the public sector, as opposed to the degradation seen in the private sector you are very much mistaken.
Cost and continuing increase in life expectancy have led to soem reduction in public sector db schemes, but they are largely intact, and the main reason is politicians. Why have a big fight about being unfair to workers when the accrued liability is decades away and someone else's problem, it politician short Termism that's behind the preservation of db schemes, not Union activism.
Apologies if you didn't want a sensible debate but just wanted a knee jerk reaction, I would not have thought discussion boards and forums were the place for you in that case.0
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