Pensions - can you lose money?

2

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  • westv
    westv Posts: 6,081 Forumite
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    Chickabee wrote: »

    Just turned 40 ( still trying to cope with that!) so I still hopefully have a good few years to get money into a pension.

    I've had a number of 39th birthdays. :D
  • atush
    atush Posts: 18,726 Forumite
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    As a result I've always been more of a saver because I know despite low returns I know I'm not losing money.

    Pensions only lose money when investments fall. But over 10 years or mroe they are the best bet.

    And you have been losing money, each year due to inflation. This is a fact that you may not have been aware of.

    If your new pension is Salary sacrifice, put in as much as you c an afford to. As each 100 into your oension is only going to cost you 68.
  • dunstonh
    dunstonh Posts: 116,318 Forumite
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    As a result I've always been more of a saver because I know despite low returns I know I'm not losing money.

    So, you have replaced investment risk with shortfall and inflation risk. Investments may only suffer those. Cash does suffer those.

    For long term, cash is actually higher risk when you consider all risks. you need to pay in around 3 times more than you would if you used investments. I suspect you have not been doing that. So, you have created more risk and reduced what you have by being a saver.

    Risk is not on/off. it is a sliding scale. Every option has risks, including cash. Its about being balanced with your risk. You dont need to go gung ho.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • xylophone
    xylophone Posts: 44,348 Forumite
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    "Before tax & NI" will be salary sacrifice. "Net pay" is where conts are taken before tax but after NI.

    Thanks - I missed the reference to NI.

    However, I am not sure that the RBS DC is sal sac as commonly understood - do you happen to know?

    As far as I can make out, RBS pay the employees a basic salary and then 15% of salary on top which the employee can choose what to do with.

    The employee can choose to pay the 15% ( or part of it) into a group pension scheme scheme.

    Again, (as I understand it), the employee can choose to contribute amounts over and above the 15% into the DC pension if they so choose.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    xylophone wrote: »

    Saving more; it’s easy and won’t cost as much as you think

    I hate it when a clairvoyant tells me what I think.
    Free the dunston one next time too.
  • xylophone
    xylophone Posts: 44,348 Forumite
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    https://rbs.tbs.aon.com/RBS/media/default/PDFs/RBS%20Group%20Retirement%20Savings%20Plan/RBS_2016-newsletter_PRINT_03-01-17.pdf


    Saving more; it’s
    easy and won’t cost
    as much as you think
    It’s easy for bank employees to
    save more into their Individual
    Accounts in the Plan. Using
    RBSelect, you can choose to
    use more of your ValueAccount
    towards your Plan savings at any
    time. This means you save tax and
    National Insurance too

    This post is now out of order as I was attempting to edit the previous.

    I am still not sure about the salary sacrifice angle even after having read through the above.
  • zagfles
    zagfles Posts: 20,318 Forumite
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    xylophone wrote: »
    Thanks - I missed the reference to NI.

    However, I am not sure that the RBS DC is sal sac as commonly understood - do you happen to know?

    As far as I can make out, RBS pay the employees a basic salary and then 15% of salary on top which the employee can choose what to do with.

    The employee can choose to pay the 15% ( or part of it) into a group pension scheme scheme.

    Again, (as I understand it), the employee can choose to contribute amounts over and above the 15% into the DC pension if they so choose.
    Sorry don't know anything about that specific scheme, but if the 15% can be taken as salary, then it is really a salary sacrifice arrangement.

    It doesn't affect pensions, but the govt have new rules about sal sac where if someone has a cash alternative option to a benefit (eg a company car), then they will consider it a sal sac and the employee will be taxed on the higher of the BIK value or the cash alternative option.

    See https://www.clm.co.uk/company-car-tax/#cash
  • Chickabee
    Chickabee Posts: 201 Forumite
    xylophone wrote: »
    Thanks - I missed the reference to NI.

    However, I am not sure that the RBS DC is sal sac as commonly understood - do you happen to know?

    As far as I can make out, RBS pay the employees a basic salary and then 15% of salary on top which the employee can choose what to do with.

    The employee can choose to pay the 15% ( or part of it) into a group pension scheme scheme.

    Again, (as I understand it), the employee can choose to contribute amounts over and above the 15% into the DC pension if they so choose.



    As far as I'm aware with the RBS scheme the 15% salary top up can all be taken as cash and to be honest most people tend to take it as cash and very few pay into the work pension.
    They advertise their jobs with the additional 15% included in the starting salary. Which if I'm honest I think is a slightly sneaky way of making you think your salary is higher than what it actually is. If you do then opt to say put £100 into your pension each month RBS don't match any contributions. Its just your own contributions going in there. At least with my last job they had a good matched scheme where they matched more than you actually put in. Can't remember the full break down but if you put in 5%, they put in 8% . That's what gives me doubts about this pension as there is no matched employer contributions
  • xylophone
    xylophone Posts: 44,348 Forumite
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    edited 16 September 2017 at 2:28PM
    If you do then opt to say put £100 into your pension each month RBS don't match any contributions

    http://jobs.rbs.com/pages/reward-and-benefits

    RBS regard the "Value Account" as their contribution.

    https://rbs.tbs.aon.com/RBS/media/default/PDFs/RBS%20Group%20Retirement%20Savings%20Plan/RBS_2016-newsletter_PRINT_03-01-17.pdf



    The Plan is a valuable part of your benefits package. The bank wants to support you to save for retirement and the Plan is designed to make an important contribution to your retirement income. Your ValueAccount includes an amount from the bank towards a pension that you can choose to pay into the Plan.

    Our role as Trustees is to help you make the most of this significant benefit.
    We do this by providing you with information and support to explain the
    options and benefits available in the Plan. We also select and monitor the
    range of investment options and design the default investment strategy (for members who don’t want to make their own investment choice)    .

    Were you given a copy of https://rbs.tbs.aon.com/RBS/media/default/PDFs/Current%20Pension%20Plan/Pensions_Explained_181016_2.pdf

    No matter what elections I make, the total pension
    cost currently paid by the bank is 15%.

    Are you a member of the
    RBS Group Retirement Savings Plan?

    Where does L&G come into it?
  • Chickabee
    Chickabee Posts: 201 Forumite
    L&G run the RBS work placed pension
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