Is it worth me getting a pension?

McKneff

anniehanlon wrote: »

I can see your point but sh"t happens throughout life and if a crisis comes along or you need a deposit for a house etc. The temptation would be there to use it. Hence no cushion or less of a cushion in old age. With your pension you cant touch it till pension age which is original plan ie to have a reasonable pension. Maybe Dunstonh will be along soon, he knows his stuff

Sorry ed, i meant to say dunstonh or edinvestor who know their stuff

dunstonh

But I don't earn any interest on that money. I think that's how it works.

You dont get interest as its not a savings account. Its an investment and you will get invesmtent returns. It doesnt just sit there.

Free money from the employer is a no brainer. It would take you around 19 years in a savings account just to catch up on that free money. However, in that time the money in the investments could have doubled or even quadrupled.

Using Eds example, it wouldnt be £100 in a savings account. It would be £80. This is because of the tax relief on pensions and that makes the savings option even worse than Ed has shown. It would be £80 in a savings account and £200 in a pension investment.

gozaimasu

What happens if Pound leaves their job? Will they get any of the money from the employer? Can they contribute for 6 months, then stop the contribution and still have the money in the fund? Will the fund have to be moved to another pension fund if they are no longer employed by the company?

EdInvestor

dunstonh wrote: »

Using Eds example, it wouldnt be £100 in a savings account. It would be £80. This is because of the tax relief on pensions and that makes the savings option even worse than Ed has shown. It would be £80 in a savings account and £200 in a pension investment.

I was assuming the OP would be using his cash ISA allowance.

And it is best for basic rate taxpayers to ignore the tax relief IMHO, as 75% of it will be repayable when the pension is taxed on payment.

dunstonh

And it is best for basic rate taxpayers to ignore the tax relief IMHO, as 75% of it will be repayable when the pension is taxed on payment.

Not really as they still have the personal allowance in retirement which is increased every year and can take back 25% of the fund value tax free.

For income provision, nothing beats a pension even if are taken into basic rate tax in retirment.

What happens if Pound leaves their job? Will they get any of the money from the employer? Can they contribute for 6 months, then stop the contribution and still have the money in the fund? Will the fund have to be moved to another pension fund if they are no longer employed by the company?

The money is in their pension pot and they can either take it with them or transfer it into another scheme. Its really easy to do.

Aegis

gozaimasu wrote: »

What happens if Pound leaves their job? Will they get any of the money from the employer? Can they contribute for 6 months, then stop the contribution and still have the money in the fund? Will the fund have to be moved to another pension fund if they are no longer employed by the company?

Depending on the time in the job, you can either take the money out as a payment (tax deducted) or you can transfer it to another pension. There's certainly no danger of losing your own contributions, but if it is a very short stay with the company, you might lose the employer's contribution if memory serves. Still a good idea to go for it if you ask me.