Pension

Cheddar123

Have made decision no longer needed on forum

Aegis

Cheddar123 wrote: »

I am in a Defined Benefit system and my employer now wishes me to contribute an extra 3% if I wish to retire at 60, or I can not pay the extra 3% and retire at 65. If I retire at 60 without paying the extra 3% I will get 1/80th of the Pension ie:

Retire at 60 paying extra 3% I will get £11799.01 pa pension
Retire at 60 without paying 3% I will get £10930.09 pa pension

As I am planning on retiring at 60 I wonder if it is really worth paying this extra 3% for a difference of only £868.92 pa.

The reason being if I did contribute the extra 3% I would end up paying at extra £44 per month with equates to £7920 - would I not be better just saving this money rather than putting it in a Pension?

If you're calculations are correct, it looks like you're asking if you should trade £8000 for £800 additional income each year. Personally I'd go for it, the chances of getting 10% return on investment (and probably index linked as well) with anything else is very slim.

By the way, this sounds like HSBC's pension scheme... Am I close?