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Help for a pension newbie!
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determined1_2
Posts: 266 Forumite
Hi guys :wave:
I've new to pensions and want confirmation of what I propse to do is the best idea!
Currently earn £19k and this should go up to ~£24k in Sept 09. At this stage, I'm thinking of signing up to my works pension scheme.
Couple of details:
Age: 20
My contribution: 5.5%
Company contribution: 11%
Final salary scheme
As you can see by my signiture, I'm trying to hammer this mortgage balance. From a motivational perspective, I'd obviously be loosing some net pay for overpayments.
From my understanding this is a very good pension scheme and I should get on board.
Am I too young to worry about starting?
Is it possible they could pull the plug on this deal for both existing and new (I appreciate you don't know about the firm etc, but can they actually do they without much notice. I.e. if they announce you have 6 months to sign up, you could then jump on board.)
Thanks in advance
Determined
I've new to pensions and want confirmation of what I propse to do is the best idea!
Currently earn £19k and this should go up to ~£24k in Sept 09. At this stage, I'm thinking of signing up to my works pension scheme.
Couple of details:
Age: 20
My contribution: 5.5%
Company contribution: 11%
Final salary scheme
As you can see by my signiture, I'm trying to hammer this mortgage balance. From a motivational perspective, I'd obviously be loosing some net pay for overpayments.
From my understanding this is a very good pension scheme and I should get on board.
Am I too young to worry about starting?
Is it possible they could pull the plug on this deal for both existing and new (I appreciate you don't know about the firm etc, but can they actually do they without much notice. I.e. if they announce you have 6 months to sign up, you could then jump on board.)
Thanks in advance
Determined
Mortgage started May 08 @ £144,499 for 35 yrs:eek: Must get mortgage sub £100k by xmas 2011
Current balance/total OPs/total interest saved/months saved
£111,000.00/£27,336.40/£96,025.57/156
Current balance/total OPs/total interest saved/months saved
£111,000.00/£27,336.40/£96,025.57/156
0
Comments
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determined1 wrote: »From my understanding this is a very good pension scheme and I should get on board.
Any final salary pension is worth its weight in gold. With tax relief the cost to you is less than 5.5%.Am I too young to worry about starting?
The younger you start the better - you will need to put away less per month than if you leave it.0 -
You are never too young to join a pension scheme. Defined benifit schemes (like final salary) are getting rarer than hens teeth these days. And in my view they are better than contibution schemes as what you'll get when you retire is predictable rather than at the whim of the markets.
Closing a scheme to new members is alot easier than closing a scheme to existing members. If you are a member and they close the scheme then you will still get any benefits earnt when you retire unless you transfer to another scheme (rather than joining an additional one). If they do close to new members, while there may not be an official warning of it happening there will be enough rumours floating around to see it coming. If you are a member of a union (or its an industry with a strong union presence) then you should get a warning of changes to pensions in advance from them.
I'd imagine the scheme is a 1/60th or a career average earning scheme. In either case the earlier you join the better. There may also be side benefits of death in service payments, partner pensions and alike.
The only thing you need to worry about is whether you can afford to join as once the money is in you will not see the benefit of it for a long time. Side note, that 5.5% should come from your pretax pay so is actually nearer 4% of your actual take home pay.0 -
The scheme you have is based on years of service. Not the amount of money paid into it. The earlier you start the better as you get more years.My contribution: 5.5%
As Jem says, its not really 5.5% you are paying as you have tax relief to factor in. Plus your NI contributions are likely to be lower as well. Meaning if you dont join your net pay wont see you get 5.5%. It will be closer to 4%.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.0
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