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  • FIRST POST
    • kmb500
    • By kmb500 28th Sep 17, 5:13 PM
    • 409Posts
    • 110Thanks
    kmb500
    Opting out of pension
    • #1
    • 28th Sep 17, 5:13 PM
    Opting out of pension 28th Sep 17 at 5:13 PM
    Hi, I am 21 and work for a local council. I pay in to my pension £105.67 per month as part of the LGPS scheme and my employer pays in £315 per month. I know the scheme is very good as my employer pays in 3x what I pay in, but I won't be retiring for 50 years and I could well be dead by then - I could really use the extra £100 now.


    I was looking at our pension information and it says that if you are considering opting out of the scheme then you should take financial advice as the tax and NI will increase. Going by the MSE tax calculator my income tax would increase from £151/month to £172/month. So in reality I will have £84 extra per month.


    Is this worth it? I currently struggle to save anything at all and basically live paycheque to paycheque. If I opt out of the pension I can put money in my savings account which seems to me more important than getting money when I'm near dead. But my brain tells me it's all a good investment... in the past year and a half that I've been working here I've earned 8 grand in my pension.


    Not sure what to do.
    Last edited by kmb500; 28-09-2017 at 5:18 PM.
Page 6
    • crv1963
    • By crv1963 6th Oct 17, 11:26 AM
    • 164 Posts
    • 432 Thanks
    crv1963
    They should never have allowed an opt out without an IFAs positive advice.
    Originally posted by badmemory

    I totally agree with you, but most people go through their working lives and do not think about their retirement. Many see pension payments as a burden and do opt out. Others see 30/40/50 pm going out and think that they'll retire with the same standard of living as they have whilst working. Others see the whole pension situation as too big an area and close their mind to it and hope for the best.


    I work with some really bright people who have the option of the NHS Scheme, which even with its' latest reforms is a really good scheme but some still opt out saying "I could use that 9% I'd pay for my holidays/ mortgage/ car" and when I tell them that it's crazy thinking I'm told well I could be dead next week, or my Dad dies at 60 so I won't get much back. Others (most) like me see it for what it is a dammed good scheme with good benefits!


    The people that post on this forum (in my honest opinion) are a) seeking advice, b) helping others out in an altruistic manner, c) exploring and learning more to help make their own best educated guess/ choices about future planning. I class myself as a and c!


    But my sons (20 and 21) have had no financial education other than by me, family or in the case of my 20 yo from older people in his workplace.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
    • adonis10
    • By adonis10 6th Oct 17, 11:39 AM
    • 1,484 Posts
    • 195 Thanks
    adonis10


    I work with some really bright people who have the option of the NHS Scheme, which even with its' latest reforms is a really good scheme but some still opt out saying "I could use that 9% I'd pay for my holidays/ mortgage/ car" and when I tell them that it's crazy thinking I'm told well I could be dead next week, or my Dad dies at 60 so I won't get much back. Others (most) like me see it for what it is a dammed good scheme with good benefits!
    Originally posted by crv1963

    This one gets me every time. With the advances in medical research do they actually feel that it is a given that they will die of the same problem at the same age? "I could be dead next week" is even more ridiculous - yes, we all could be dead next week, obviously, but what are the actual chances of that? Very, very low I would guess. And people are actually not willing to sacrifice a few quid now in order to help themselves when they are much older - baffling. Unless one has a terminal illness, in which case I totally agree that retirement planning is a complete waste of time and money, it is worrying how many people are willing to ignore it. Don't get me wrong, I am not perfect as have only started taking it seriously in the past few years (albeit most of my previous jobs didn't have a workplace scheme and I've job hopped a lot since mid 20's) but the amount of people who won't even consider it is worrying.


    As soon as one adjusts to the new, lower net pay it is fine. I upped my conts in July and it seems completely normal now and am already planning to increase by another 5% in June - sacrificing £80 net pay for £136 into pension seems like a good deal to me.
    • crv1963
    • By crv1963 6th Oct 17, 12:12 PM
    • 164 Posts
    • 432 Thanks
    crv1963
    This one gets me every time. With the advances in medical research do they actually feel that it is a given that they will die of the same problem at the same age? "I could be dead next week" is even more ridiculous - baffling. But the amount of people who won't even consider it is worrying.


    As soon as one adjusts to the new, lower net pay it is fine. I upped my conts in July and it seems completely normal now and am already planning to increase by another 5% in June - sacrificing £80 net pay for £136 into pension seems like a good deal to me.
    Originally posted by adonis10

    I agree Adonis10 but yes people do frequently say this! I too am late to the party so to speak in terms of planning, I have always paid into the pension scheme though and did for a time pay into an AVC but stopped that when Equitable Life ran into problems- then saved into a S&S ISA.


    I and my wife are looking to retire between 55-62 depending on what we can save to supplement the NHS Pension before the SP starts at 67.


    I'm actually on the last day of sick leave following a heart attack and return to work Monday after 6 months recovery- I have not wasted my time off. I've read and re-read much about pensions, mortgages debt reduction and future planning- a lot of it but not all of it on this website.


    We've looked at and managed to reduce the costs of telephone, television, broadband, car running costs (although MOT yesterday did set me back £268!), energy bills, mortgage and improved savings rates and of course pension planning. All mainly due to research on this site and others thoughts and views/ experiences.


    We currently save £300 pm cash and from end November are adding £250 pm that I used to burn in cigarettes!!! Luckily I have managed to stay smoke free for 24 weeks now! These monies are in addition to what we save into our pensions.
    CRV1963- Light bulb moment Sept 15- Planning the great escape- aka retirement!
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