Withdraw from Public pension scheme?

Krach78

I pay £187 Per Month into my public sector pension. I am 33, and can not retire until I am 68!(at the moment)
I have two young children, a mortgage, and child care costs as my wife and I both work.

The question is, should I consider withdrawn from the Pension Scheme for the next 4 years, in order to make our lives less stressful money wise, then put back into the scheme once the kids are in school?

My pension pot would remain frozen, then I can start in the same scheme with same benefits, and start adding to that pot again after 4 years.

I am struggling to see a down side to this, but am concerned I have missed something? Any advice appreciated.

hcb42

personally, i wouldnt, 4years with no pension when you are in a good scheme, is robbing the future a little, it will be hard to get back if there is another reason not to rejoin

Andy_L

As a taxpayer I would love you to withdraw.

As someone who also has a Public Sector pension it would qualify as, almost certainly, the worst financial decision you could make.

Its not just the pension but, with a wife & 2 kids, the death in service benefits (guesstimate of ~2 years pay & 1/2 of the pension you've accrued paid immediately) are extremely valuable

Yorkie1

I would also double check your assumption that you will be able to resume in the same version of the scheme as you are in now. You may find that you will only be able to join the money purchase scheme rather than final salary.

Andy L's description of whether it's a good decision for you to make is spot on.

hcb42

Andy_L wrote: »

As a taxpayer I would love you to withdraw.

as a tax payer and someone who has not had a company pension for over 10 years now, i would love everyone to withdraw;)

Annisele

If you withdraw, you're effectively turning down free money from your employer - or in other words, you're choosing to give yourself a pay cut.

Jarndyce

Yorkie1 wrote: »

I would also double check your assumption that you will be able to resume in the same version of the scheme as you are in now. You may find that you will only be able to join the money purchase scheme rather than final salary.

This. With the uncertainty over the future of public sector pensions, changes are more likely to affect new entrants to the scheme than current ones. If you leave and then rejoin, you may be classed as a new entrant. The problem is nobody knows, but because of that this is probably the worst time ever to leave a public sector pension scheme. Don't do it.

StephenM_2

Krach78 wrote: »

I pay £187 Per Month into my public sector pension.

You won't be £187 a month better off, though, because your tax and NI will go up.

At the end of the 4 years you will have got used to spending the extra money so you may well find you can't afford to re-join.

EconomicsGirl

It is not in your interests to withdraw and I would strongly advise that you cutback on other things instead unless that's absolutely impossible. Firstly you wouldn't get £187 you'ld get £187 less tax and NI back. Mostly though its as you'ld lose the employer's contribution which is probably worth around 20% of your salary in the current climate - exact amount will vary depending on pension fund stock market performance. Basically you'ld losing 25% later to gain 5% now. I would not be certain that you'ld be able to re-join on the same terms even if your employer is currently saying this - it is almost certain that at least the employees contribution will rise in future and that's a best case scenario. Are you both getting childcare vouchers? - that could help with your childcare fees. switching utility suppliers can help. I know its hard with kids to stick to a budget esp at Christmas but I'ld try this option again first as you'ld lose so much by the pension option.

dancingfairy

Hi - if you're struggling I'd suggested trying the debt free wannabe board to see if theycan save you any money.
Also if you have problems with debts then try National Debtline, CCCS or your local CAB.
Are you getting all the benefits you are entitled to? Can you save any money by shopping around?
Best of Luck
df

agrinnall

Why start a second thread, are the answers you are getting on the Pensions board not to your liking? That's a shame as they seem to be pretty much the same on here.

https://forums.moneysavingexpert.com/discussion/3606663