View on Matching Contributions to Employer Scheme

passau91

Just seeking general advice here, as I currently have a very negative attitude towards pension saving (excuse the long preamble).

My current employer's scheme seems very generous - they pay non-contributory 8% into scheme on my behalf. I have the opportunity to pay up to 6% salary sacrifice which they will match, making a total of 20%. I know the standard advice is 'don't turn down free money'. My estimated net contribution is £130 per month, and I need convincing that it is worth the salary sacrifice, for the following reasons:

1. I have bits and pieces of various pensions from previous employers which I would guess to equate to less than £1k per annum if they were paying now.

2. I am 48 this year, statutory retirement age is 68(?) and may rise again in my lifetime.

3. (This bit is really pessimistic) I have early onset type II diabetes, so I genuinely doubt I'll make it very far into retirement.

I don't want to have contributed into a pension at this stage, only to find at retirement that the pensions will barely lift me above state pension and mean being worse off than if I hadn't saved (a fear which has been realised by my mother when she retired).

Q1. Is the general feeling that under the above circumstances, contributions now would be expected to significantly increase the chances of a comfortable retirement (i.e. as much again as the state pension)?

Q2. Is there a reason to contribute now, even if I genuinely think I won't benefit from it personally (i.e. is there a lump sum I can leave in my will or some other perk I don't realise is an option)?

Thanks in advance for any thoughts!

dunstonh

I currently have a very negative attitude towards pension saving

Many people do. usually for the wrong reasons though.

I don't want to have contributed into a pension at this stage, only to find at retirement that the pensions will barely lift me above state pension and mean being worse off than if I hadn't saved (a fear which has been realised by my mother when she retired).

It would only do that if you choose to make no savings/investments (tax wrapper is irrelevant) and plan to live your life on the breadline.

Unlike the old MIG, pension credit can not make you worse off by having small amounts. it is not a £1 for £1 reduction. Capital is hit harder than income.

Q1. Is the general feeling that under the above circumstances, contributions now would be expected to significantly increase the chances of a comfortable retirement (i.e. as much again as the state pension)?

Depends on your view of comfortable. Do nothing and you are on the breadline. Do something and you raise yourself above it. How why will depend on how much you put aside. Free money certainly makes it easier.

Q2. Is there a reason to contribute now, even if I genuinely think I won't benefit from it personally (i.e. is there a lump sum I can leave in my will or some other perk I don't realise is an option)?

Pensions do not have to die with you. There are options that allow the fund to be passed to a beneficiary.