My Pension

dilemma10

Hi there,
I started work in May 2010 and my job pays out a 15% pension. It is via Standard Life but due to complications has not been set up yet. Although my employer has paid around £3500 and sent a cheque to SL which was sent back because of identity issues.
Now my question is this, our organisation is quite flexible and only a 5 man band. I would much rather have the £3500 sent to my bank and receive the pension contributions around £280 a month in salary. I know this may mean I am taxed on it etc but it would be a help to me. I also don't trust pensions and would rather invest myself.
My job itself is not the best salary and I don't forsee much of a raise any time soon.
Is this even possible??? I daren't ask.

dunstonh

I also don't trust pensions and would rather invest myself.

Pensions are just a tax wrapper. The same investments you use in ISAs or unwrapped are available in pensions. So, in effect, if you dont trust pensions then you shouldnt trust any investments.

Is this even possible??? I daren't ask.

If your employer allows it then it is. However, not only does it increase your tax & NI contributions, it will also increase theirs. So, by the time all that is factored in, it may not be at all efficient compared to getting the money paid directly into the pension. Plus, legislation is in place that between 2012-2017, employers will be required by law to pay into a pension. Whilst you can opt out, the employer doesnt have to pay you the money.

Loughton_Monkey

There is nothing wrong with asking.

But in my opinion, you would be committing a grave error by doing so. If you are really saying that you know how to invest £2,800 [£3,500 less 20% tax] and make more than the £3,500 then there are thousands of people on this forum who would love to learn how you propose to do that. I for one will copy you! Please let us have the 'secret'.

There is nothing not to trust about a pension. A pension is a 'Tax Free Wrapper' and as such can be totally trusted and cannot possibly do you any harm. The investment inside it, though is another matter. Whatever alternative 'investment' you claim can do better, why don't you do that inside the pension and get even more?

Like a lot of people, you probably have been a bit misled. Yes, there have been a lot of 'mis-selling' scams around over the years. Most of these are to do with transferring pensions (not buying one in the first place). And the other 'scam' is simply a general lack of understanding that blames 'The Pension' for poor performance when people should be blaming "Their investment choices". Or they have looked at investments over a short period, and not compared them with mauch larger gains over other periods.

If I were your employer, I would seek to persuade you to join the pension scheme. If I were to agree to pay you cash instead, I would make you sign a strongly worded piece of paper effectively getting you to sign in blood that you know you are digging your own financial grave.