Is there a point in Pensions

Tom_Brine

Hi there

I am 28 years old and have recently started a new job (Earning 21,171k per year). I am saving £550 a month towards a house deposit and currently have just over 15K in the bank.

When I left my old job I left my Final Salary Pension Scheme. My new Career Average Pension scheme does not accept transfers from previous schemes so as I did not build up a large pot I have opted for the money to be reinbursed so I can put it towards my deposit.

Here is my question. Is there any point in joining my new employers scheme? I have more career aspirations and within two years hope to moving up to an analyst role. This will probably mean moving companies after gaining the experience at my current one. So why pay into a pension? I can see if I was staying here for good why it could be a good idea but I honestly dont see that happening due to ambitions for the future.

I feel I dont know much about pensions and would rather invest the monthly sum into my deposit savings. However I am also aware I need to save for old age but am not sure if a pension is the right way to go about it.

Any advice would be appreciated.

Andy_L

Your employer is paying money into your new pension scheme, almost certinally not as much as the previous final salary scheme but its still "free money" that you won't get if you save into your deposit account.

dunstonh

Is there any point in joining my new employers scheme?

free money from employer.

If you dont pay towards retirement you are effectively reducing your living standards in retirement to pay for your living standards now. Your retired self wont thank you for doing that.

I have more career aspirations and within two years hope to moving up to an analyst role. This will probably mean moving companies after gaining the experience at my current one. So why pay into a pension? I can see if I was staying here for good why it could be a good idea but I honestly dont see that happening due to ambitions for the future.

I know many people that have said the same but are still there years later. Things rarely turn out as you expect.

I feel I dont know much about pensions and would rather invest the monthly sum into my deposit savings. However I am also aware I need to save for old age but am not sure if a pension is the right way to go about it.

What alternative to free money, tax relief and tax free growth would you think is better for you?

teffers

Pension / Tax Law rarely survives 10 years so what will happen in the next 30 years that will interfere with everyone's 'plans' is impossible to guess.

Buy mattress ... insert £20s :eek:

billa_champion

But surely your pension 'follows' you? So no matter which company you are with, it's all money going into your coffers, no?

Tom_Brine

Im not sure if your pension does follow you? Having just moved companies recently it didnt follow me then.

So let me get this right, If I pay into a pension my employer will be paying in also, If I then close the pension at a later date, say due to moving companies, that extra money will still be there for me to take out? They wont/cant deduct it from my total?

CLAPTON

Tom_Brine wrote: »

Im not sure if your pension does follow you? Having just moved companies recently it didnt follow me then.

So let me get this right, If I pay into a pension my employer will be paying in also, If I then close the pension at a later date, say due to moving companies, that extra money will still be there for me to take out? They wont/cant deduct it from my total?

it was a bad move to take money out of your final salary scheme.... you got peanuts compared to the value you have now lost

and you would be wise to find out the actual benefits of your new scheme but it is almost certainly worth joining.


there's nothing wrong with several small pensions; they can add up to a large sum (is £10,000 worth more or less than 10 lots of £1,000)?

jem16

Tom_Brine wrote: »

Im not sure if your pension does follow you? Having just moved companies recently it didnt follow me then.

They don't necessarily follow you to the new employment as some won't accept a transfer. However it would have "followed" you in that it would simply have been deferred for you to collect at retirement age. In taking the refund you have thrown away the employer's contributions and seen only a return of your own contributions minus tax and NI. It's a pity you didn't ask before doing that.

So let me get this right, If I pay into a pension my employer will be paying in also,

In a defined benefit scheme, yes. In a defined contribution scheme, maybe.

If I then close the pension at a later date, say due to moving companies, that extra money will still be there for me to take out?

Yes it will.

They wont/cant deduct it from my total?

No they won't. It will all add up.

Tom_Brine

I had only been paying into it for 7 months so didn't see the point of keeping it. It may have been a bad move but all I ever hear about pensions is that you don't get out of them as much as you pay in. That youll be working untill your 70 etc, theres not much positive praise of them about and it worries me.

The pension I am with is run by Exeter University and seems like a good thing if you were to be here for a long time.

You get

1/80 x Career average salary x service in years = yearly payment

and a lump sum of 3 x yearly payment on retirement

I pay 6.25% of my monthly pay into the scheme

It says the university pays 19% contriubution for me?

CLAPTON

Tom_Brine wrote: »

I had only been paying into it for 7 months so didn't see the point of keeping it. It may have been a bad move but all I ever hear about pensions is that you don't get out of them as much as you pay in. That youll be working untill your 70 etc, theres not much positive praise of them about and it worries me.

The pension I am with is run by Exeter University and seems like a good thing if you were to be here for a long time.

You get

1/80 x Career average salary x service in years = yearly payment

and a lump sum of 3 x yearly payment on retirement

I pay 6.25% of my monthly pay into the scheme

Though nothing is said about my employers paying into the pot?

the value of a pension like that is about 20-25% of your pay (all paid by we taxpayers)

Neverland

Tom_Brine wrote: »

You get

1/80 x Career average salary x service in years = yearly payment

and a lump sum of 3 x yearly payment on retirement

That sure looks like a defined benefit scheme - those are quite rare and nice to have

I pay 6.25% of my monthly pay into the scheme

It says the university pays 19% contriubution for me?

Generally employer contributions are around 5-6% and YOU take all the investment risk