MSE News: All companies to offer workplace pensions

hugheskevi

I have 4 kids and I can assure Mr.Presumptuous and Self-Righteous that I do NOT have any extra to put into a pension.

No-one has said that you do have extra to put into a pension.

But as you mention it, your case is useful to illustrate the general point. You say your husband has been in constant employment, including a management position. He therefore earns more than the people he manages. Despite this extra money, he still cannot afford to save into a pension. Therefore, affordability is not only related to earnings, as I said.

This is one of the reasons for this policy - once individuals receive money, it changes their lifestyle. They may choose to have more holidays, a better car, more children, or whatever. They may also choose to save for the future, but many will not. By putting the money into a pension before the individual receives it, individual's lifestyles adjust automatically to the resources available and pension saving occurs.

The 'industry-wide scheme' pays less than £10 a year if that's what you call well-coordinated.

The industry-wide scheme is a Defined Contribution scheme. What it pays out will be in proportion to what is paid in.

as he seems to be trying to put everyone else in as bad a mood as he is

I am in a very good mood

Using a public discussion forum shouldn't put you in a bad mood, if it does, then it probably isn't good for your health and best avoided.

I'm sure you will disagree, but the key question you should be asking is why after 15 years of continuous employment in a managerial role, no pension provision has been made and what can be done to address this.

From what you say, it is likely that you are in receipt of Child Tax Credits. If so, pension contributions are particularly advantageous as every £1 into a pension reduces net income by less than 50p once basic rate tax relief and the Tax Credit taper is taken into account.

Mr.Presumptuous and Self-Righteous;)

Andy_L

chattychappy wrote: »

And 3% of the wage bill to companies. A huge amount for some - I'm sure they'll notice it's gone.

AIUI the Aus/NZ experience is that companies actually planned for this in advance and divided payrises between salary & pension contributions so it didn't come as a big surprise to their pay bill

wotsthat

I have 4 kids and I can assure Mr.Presumptuous and Self-Righteous that I do NOT have any extra to put into a pension.

...don't put any in then - there's an opt-out - simple.

People with no private pensions do no do so out of 'apathy' as a previous poster put it, but because they have no extra to put away! Don't be so narrow minded sir!!

You've picked me up on a generalisation and then made quite a sweeping one yourself "because they have no extra to put away" - really? Everyone without any pension provision simply cannot afford to save anything? Nothing at all?

If you are right then 100% of those who don't save now will opt-out - I somehow don't see that happening.

jamesd

GILLIBABES, nothing self-righteous from hugheskevi, just a helpful mention of hte indistry scheme, a correction of the suggestion that the plan comes from this government and an observation that many people choose not to pay into pensions.

You may well legitimately have no money available, though. You're not a general case, but your own specific position.

It may not apply to you but most people who say they can't afford to pay into pensions are just choosing to have new cars, or new cars more often, one room per child instead of one per gender, or more holidays or nights out than they could have if they were also looking at their future. That's a choice that they are perfectly entitled to make, so long as they don't grumble about having only a low pension when they retire and look for those who did spend less to have a good pension to subsidise them.

Yet many people legitimately are just scraping by and barely able to cover bills even after cutting spending to the bone, with no holidays or take-aways and shared bedrooms. That's the family situation I grew up in and it could easily be yours.

chattychappy

GILLIBABES wrote: »

4 bedrooms, 6 people

In some cultures, having 4 children would be a very successful pension.

I can understand it is difficult supporting 4 children and your own old age. It is all about the choices that adults make.

echos_mum

Is it going to be sensible to enter into one of these pensions when someone is quite close to retirement? I would have thought that pension companies, if being honest, would not normally suggest this as the best use of one's money at that time, even with the employer's contribution? If that would be the case, how can the Government suggest it? Maybe there should be some guidance from the Government - could they be accused of "mis-selling" if a person could actually be dis-advantaged by entering into a scheme? Comments welcome.

hugheskevi

Is it going to be sensible to enter into one of these pensions when someone is quite close to retirement?

Probably. Although if the money goes to the default scheme called NEST then you will pay a 2% charge on contributions, which is fine if the contributions are going to be invested for a long period, but if you are close to retirement it would be a lot more expensive than a normal employer pension. Hopefully your employer would offer something other than the default though.

If you have no other pension wealth, then you will be able to Trivially Commute the pension and take it as a lump sum.

If you have other pension wealth then unless it pushes you slightly above Trivial Commutation level (that is where the probably comes in) and forces the pension income to interact with means-testing then it would usually be worthwhile, as it is normally best to maximise the 'free money' available from an employer in the form of employer pension contributions.

wotsthat

Maybe there should be some guidance from the Government - could they be accused of "mis-selling" if a person could actually be dis-advantaged by entering into a scheme?

Some of the government proposals might help. For example, if everyone gets a state pension of, say, £140 regardless of contributions and any additional savings via NEST are used to provide additional income then there's no disadvantage. i.e. the more you save the more you get.

jamesd

echos mum, probably sensible but only if your employer refuses to offer one of the better schemes. The NEST scheme:

1. Is more expensive than the best available alternatives, charging:
a. 2% on all payments into the scheme.
b. 0.3% of all invested money each year.
You can get non-NEST alternatives that have no initial charge and less than 0.3% annual charge, for example the HSBC institutional FTSE All Share Index tracker from Hargreaves Lansdown.
2. Normally you can freely transfer money between pensions. NEST blocks that and once the money is paid in you can't transfer it out to a scheme that offers better value or more investment choices.

For those reasons, it's only employers who are lazy or who don't care about their employees who will use NEST. Anyone who does even a little research and work can easily find a better deal.

hubrad

As I've spent the last year or so chasing down and re-taking control of a few small outstanding bits of earlier company and private pensions, all frozen, mostly pretty worthless but still accruing fees, and consolidated them into a SIPP which I look after from day to day myself, will I still have to opt out of this compulsory scheme? It sound like it. I might try to persuade my boss to contribute his NEST contribution to my SIPP but I may be chasing the wind there!