Are you also saving for retirement?

LittleMissAspie

Yep, I have a Company/Personal Pension and/or ISA savings

I don't understand pensions in the slightest, and the reading I've done on them hasn't helped. So I'd never take out a private pension. I have a company pension, I understand the maths behind that one but I don't know how it works when you actually retire. And if the pension scheme no longer exists when I retire (38 years time) then I'll lose all the money I put into it, right? And if I leave the organisation before I retire, I think they give me my money back but I'll have to start from scratch with a new one. But I still pay in to it because I don't know what else to do.

I put all my spare money into an ISA for a mortgage deposit, and when I have a mortgage I'll put all my spare money into overpayments.

I should have 20 working years left after paying off the mortgage so I guess I can then put spare money into some kind of low risk investment.

chewmylegoff

Yep, I have a Company/Personal Pension and/or ISA savings

Generali wrote: »

whoever you work for (Govt or private employer) the employer has to put in 9% of your salary into Super (pension). If you put more in you get tax breaks on that cash.

it's just a deduction at source on your payslip though isn't it? it's not on top of your gross salary, so it's a compulsory employee's contribution rather than an employer's contribution in effect - is that correct?

Mr_Matey

Yep, I have a Company/Personal Pension and/or ISA savings

chewmylegoff wrote: »

this may be what your mean, but your language is ambiguous:

the australian rules are that 9% of your salary has to be deducted at source by your employer and paid into a superannuation fund. this is essentially a compulsory 9% employee's contribution into a money purchase pension scheme. the employer does not have to make any contribution at all, as far as i know.

AFAIK australia does not really have the employers pension culture that we do - i think you only really get employers contributions if you work for the govt. may be wrong, but this is my understanding.

I wasn't trying to give a detailed account of Australian Super, but to clarify your points:

Australia used to have a similar employer's pension culture, but has moved away from it into a accumulation style (i.e. it works like a bank balance, is portable, and you can invest it where you choose - with some conditions). There are still quite a few company pension schemes floating around (especially government) but they're a dying breed.

Employers are required by law to contribute 9% of your salary to Super. This means when you go for a job they may say "50k" or "50k including Super". If it's the former, the employer has to pay a further $4.5k to your super, if the latter it's included in your contract. Some jobs even off incentives such as "50k base plus 15% super".

Any further contributions are at your own discretion.

chewmylegoff

Yep, I have a Company/Personal Pension and/or ISA savings

LittleMissAspie wrote: »

I don't understand pensions in the slightest, and the reading I've done on them hasn't helped. So I'd never take out a private pension. I have a company pension, I understand the maths behind that one but I don't know how it works when you actually retire. And if the pension scheme no longer exists when I retire (38 years time) then I'll lose all the money I put into it, right? And if I leave the organisation before I retire, I think they give me my money back but I'll have to start from scratch with a new one. But I still pay in to it because I don't know what else to do.

re: company schemes, different schemes have different rules. as a rule of thumb if you stay there for less than 2 years they will probably return your employee's contributions to you (after taxing them as normal income). you would lose any of your employer's contributions.

if you stay there longer then you would be entitled to transfer your pension pot out into a private pension scheme, or to receive the benefit you have accrued when you eventually retire.

chewmylegoff

Yep, I have a Company/Personal Pension and/or ISA savings

Mr_Matey wrote: »

I wasn't trying to give a detailed account of Australian Super, but to clarify your points:

Australia used to have a similar employer's pension culture, but has moved away from it into a accumulation style (i.e. it works like a bank balance, is portable, and you can invest it where you choose - with some conditions). There are still quite a few company pension schemes floating around (especially government) but they're a dying breed.

Employers are required by law to contribute 9% of your salary to Super. This means when you go for a job they may say "50k" or "50k including Super". If it's the former, the employer has to pay a further $4.5k to your super, if the latter it's included in your contract. Some jobs even off incentives such as "50k base plus 15% super".

Any further contributions are at your own discretion.

i forgot you were australian, sorry!

Mr_Matey

Yep, I have a Company/Personal Pension and/or ISA savings

chewmylegoff wrote: »

i forgot you were australian, sorry!

haha no worries.

I mentioned the 9% thing because everyone who works and is over 18 in Aus is saving for retirement whether they know it or not! Unless they only do cash jobs.

Dithering_Dad

Yep, I have a Company/Personal Pension and/or ISA savings

LittleMissAspie wrote: »

I don't understand pensions in the slightest, and the reading I've done on them hasn't helped. So I'd never take out a private pension. I have a company pension, I understand the maths behind that one but I don't know how it works when you actually retire. And if the pension scheme no longer exists when I retire (38 years time) then I'll lose all the money I put into it, right? And if I leave the organisation before I retire, I think they give me my money back but I'll have to start from scratch with a new one. But I still pay in to it because I don't know what else to do.

I put all my spare money into an ISA for a mortgage deposit, and when I have a mortgage I'll put all my spare money into overpayments.

I should have 20 working years left after paying off the mortgage so I guess I can then put spare money into some kind of low risk investment.

The pensions scheme cannot just disappear, they might go bust but you'd then be in line for the compensation I mentioned in a previous post.

If you leave a company prior to 2 yrs service (and you were in the pension scheme), the company has to offer you the chance of moving the pension (your contributions, their contributions and any gains) to your own scheme, such as a stakeholder or they can just pay you your contributions.

If you leave a company after 2 yrs service, the company has to offer you the choice of leaving your pension within their existing scheme (though you cannot add any more money to it) or move it to your own scheme, such as a stakeholder, and you can continue to contribute to it.

The above is enshrined in law and the company has to follow these rules. Previously a company could force you to cash in your pension if you had less than 2 years service, but since the "A Day" pension changes, they have to offer you the option of moving the balance to a personal pension scheme.

Snooze

Dithering_Dad wrote: »

We'll have to agree to disagree on this one, Rob .

Out of interest though, where do you put your excess money? If it really is 'under the matress', are you not open to burglary - an event that is more likely to occur than a run on a bank (or indeed a fire), plus you're only covered upto a certain amount on your home insurance for cash.

Well obviously it's not under the mattress, I just used that as a kinda figure of speech. My cash is stashed at several locations which only I know about, and no it's not in any of these secure storage type places.

If you keep your savings in cash, are you not afraid they are being eroded by inflation, especially at the moment with interest rates so much lower than the underlying inflation rate?

Not at all. Inflation affects everyone in the country so if stuff goes up for me it goes up for everyone else too.

Rob

Generali

Yep, I have a Company/Personal Pension and/or ISA savings

chewmylegoff wrote: »

it's just a deduction at source on your payslip though isn't it? it's not on top of your gross salary, so it's a compulsory employee's contribution rather than an employer's contribution in effect - is that correct?

What mr matey said.

In addition, if you have defined contribution pensions, everyone's pensions are by definition fully funded. Whether they're funded to the extent that the putative retiree would like depends on circumstances of course but it does remove a big element of risk - what happens if the person promising you a pension can't afford it>

LittleMissAspie

Yep, I have a Company/Personal Pension and/or ISA savings

Dithering_Dad wrote: »

The pensions scheme cannot just disappear, they might go bust but you'd then be in line for the compensation I mentioned in a previous post.

Okay but I'm in the Local Goverment Pension Scheme. A lot of people seem to think that is unsustainable and that eventually there will be no taxpayer money to pay the pensions. And the Pension Protection Fund is the goverment too, so if the LGPS part of the government can't afford to pay pensions, how can the PPF part of the government pay them?