Do I take my company pension?

aliman2000

I worked for a company for 2 years who had a non-contributory money purchase pension scheme (first job out of uni). The fund was worth about £3.5k when I left a year ago.

My new job has a contributory pension scheme (3% of salary) which the company matches any amount I put in. I didn't join the company scheme as I don't expect to be in this job for much longer than another year. The new pension is with the same company as my old one (Standard Life) so I assume it would be simple to transfer over.

Should I join the scheme to get the employer contributions added to my transferred amount from old company? Would it be better to get a pension that I can just pay into myself? I work in the oil & gas industry (service engineer on offshore platforms) and can see my career moving into overseas contracting in the next while. This would probably take me out of the British tax system and so I'm not sure if it would be better to take out a private pension.

I'm only 26 but have started earning a fair bit of money (£60k+) and would rather get all this sorted out before I start jumping around the industry. One of the reasons I didn't join the pension scheme in my current job is that I have a fair few student debts left and am trying to pay them off. This should be pretty much finished within a year so should I wait until then before I start paying money into a pension?

Any thoughts would be much appreciated here. I know that I need to speak to an FSA but was just wondering what other people would do! :beer:

Ian_W

Well, at the mo you're turning down "free" money from both your firm and the government in the form of tax relief - do you think that's a good idea?

Based on the minimum 3% [which will only cost you 1.8% - or £1080 - as a HR taxpayer because you get 40% tax relief on pension contributions] you're losing out on £3,600 being added to a pension fund each year for your future use. That's assuming £60K is annual salary.
The money that's in your fund longest generally works hardest for you due to compounding so the younger you start the better, more :beer: when you get to old age!!

I'm certainly no expert but as many companies will only contribute to their scheme join each one for the free money as you move around. Perhaps consider a stand alone private pension to consolidate these into as you leave each firm so you have control over your investments. That is probably an area for an IFA [FSA is a regulatory body for financial services ]to advise you on.

Drumtochty_2

aliman2000 wrote: »

Should I join the scheme to get the employer contributions added to my transferred amount from old company? Would it be better to get a pension that I can just pay into myself? I work in the oil & gas industry (service engineer on offshore platforms) and can see my career moving into overseas contracting in the next while. This would probably take me out of the British tax system and so I'm not sure if it would be better to take out a private pension.

You will not be working offshore Aberdeen all your life. You will work for various employers and I would guess at least 75% out of the UK.

The majority of your workmates will (!!!! it all up against the wall). This is an oil industry technical term describing the financial planning that oil industry personnel have followed since the 1980's.

I would take the company scheme and put in a lot of AVC's today as you can afford it.

Do not look at all the over priced cars at the heliport they are all on some form of HP. An expensive Rolex does not make you a better person.

Buy a house in a nice place that will always sell not because it is only 5 mins from the Airport.

Enjoy your life but do not take the example of the majority of the people who you work with. You will earn a good living and assuming the law has not changed by then, you should have no problem retiring at 55 if you are sensible with your money. When you are working overseas you still have to be putting money away for your retirement.

aliman2000

Thank you very much for the replies. You've both given me some food for thought. I'd never really looked at it as throwing money away!

Think it's time to get the forms from my company and see about getting a fund started and the money transferred over from the old one.