New Pension

OhYeah

Hi everyone. After a period of unemployment I am starting a new job on Monday!!!!
They have a stake holder pension which I can contribute to in my first year a minimum of 1% and the employer will contribute 6%. It goes up the longer I am employed by them. The scheme is managed by Standard Life and it will be in my own name. Standard Life charge 0.44% pa of the value of the account which is deducted automatically by them.

What I want to know is it safe? Will I stand a chance of losing my entire pension like others I have read about in the news or is the stake holder pension different?

Thanks

dunstonh

Will I stand a chance of losing my entire pension like others I have read about in the news or is the stake holder pension different?

Who has lost their pensions? You really need to change your reading material if you have been given that impression.

There has never been a failure of a unit linked pension. Indeed, there has only been a failure of a very tiny minority of people and they occurred before the pension protection scheme was in place.

JoeCrystal

Well, dunstonh pointed out a flaw in your ideas on pension. What I would like to point out that have you consider on what level of contribution you are going to pay into? It is often quoted as rule of thumb that you should put in half of your age as percentage (which then the amount of contribution should increase along with indexation or earnings).

EDIT: The amount includes employer's contribution, just to clear up any possible misunderstanding.

Another point to bear in mind is to read all the literatures on your scheme and consider the funds. Your employer is not going to run it for you, you would have to decide what to do with the funds. Nevertheless, there seems to be usually a default fund which people pay into so they do not have to bother to think about funds. I recalled checking with my employer roughly two years ago concerning pension and they sent me Standard Life Stakeholder Pension Scheme literatures with mention that they do not contribute into pension schemes at all.

atush

Congrats on your new Job! Join the pension and contribute as ,uch as you can afford. Yes, it will be 'safe' but you will have a choice of funds in which to invest so choose wisely.

A long time ago some robber barons like Robert Maxwell took pension money from working people. Pretty much impossible now, and there is also a pension protection scheme to cover pensions if companies go bust. I also suggest you move from tabloids to broadsheet reading.

OhYeah

Thanks. I have been taken in by some negative reporting on pensions and rather then follow-up reading I have simply buried my head in the sand.
I am to contribute 1% and employer 6% in the first year then it goes to 3% and 10% respectively.

Thanks for your replies.

ExpertAdvice

Hi,

You are lukcy to have that kind of contribution from your employer I must say but as others pointed out, do a bit of research on the funds. There are websites where you can see the past performances and see how the funds have been performing. Keep in mind though that the past performances are not a guarantee for future returns but can be used as a guide or trend analysis. You can choose more than 1 fund do diversify risk.

Also, make sure to choose the fund according to yout attuitude to risk. Lets say if you are someone very cautious, then look for cautious funds and if you like to take alot of risk then dynamic or adventurous funds. Also, stakeholder pension may not be definitely right for you as the range of funds is generally limited. Standard Life does have a good range of funds but depends which one would be available to you under your occupational scheme.

dunstonh

10% of employer money for you paying 3% (which is actually 2.4% after basic rate tax relief) is very good scheme.