MSE News: Pensions shake-up 'to help half a million by Christmas'

Ectophile

What makes all the difference is if you can get a half-decent pension scheme from your employer.

My employer pays all the fees, and they also make a contribution to my pension pot.

So even if the scheme isn't very good, my money is instantly doubled the moment I make each payment (because of my employer's contribution).

marathonic

Ectophile wrote: »

What makes all the difference is if you can get a half-decent pension scheme from your employer.

My employer pays all the fees, and they also make a contribution to my pension pot.

So even if the scheme isn't very good, my money is instantly doubled the moment I make each payment (because of my employer's contribution).

Exactly. My pension charges are 0.5% and many others are less. Sure there are pension schemes that charge 5%, but they are few and far between and any employee who's employer offers one, should really advise them to switch providers.

Another good thing about my scheme is that it's a salary sacrafice scheme and the employer donates their portion of the national insurance savings to the scheme. This means that I get 20% tax relief as a standard rate tax payer, 12% personal NI savings and 13.8% employer NI savings - a total of 45.8%.

If I give 3% of my salary, my employer gives 6%. That means that, if I earned £10,000 and gave £300, my employer would give £600. This £900 contribution would cost me £300 minus 45.8% - or £162.60.

Pincher

7% growth? Stilll wearing the colourful braces from the 80s?
If the government can guarantee 7% growth, try and stop me from putting money in, and I don't even need some employer chipping in.

I was fanatic about using my maximum pension allowance when I started my working life. Given 6% or 9% I would always choose 9% of my salary, and then paid into AVC (Additional Voluntary Contribution) to soak up the rest of the allowance.

If I had 5% growth I would be laughing.

Let us say there is roughly £12k of employer's money in my pension pots, and £8k of mine. 12 years later, there's probably £22k in there, and I cannot touch any of it. It will be a grudge match just to get my own £8k back. Retire at 67, live to 73, and then the annuity provider gets the "employer's contribution".

I listened to Thatcher and saved into pensions and lost. Won't be fooled again.

diamonds

Personally ISA it ANY pension per se will damage the amount of state pension, it will be paid but very reduced for those who paid in private.

diamonds

marathonic wrote: »

One must remember though that money saved by not having a mortgage may be diverted towards other expenses such as healthcare. It's all to do with sensible planning as opposed to mouthing off about the government.

Good planning, but existing health issues will always be NHS/government funded, you cant plan around things 100% always.

edinburgher

These now exist, there is no longer an obligation to purchase an annuity and funds can be drawn directly from the pension pot.

Hope this helps

I was proposing an account where the owner gets to withdraw money as they see fit, not the GAD-approved drawdown percentage.

runninglea

What happens if you already have a private pension that you pay into each month.

Does the money from the employer then go into this pot or is another scheme started for the whole of the workforce?

Wywth

runninglea wrote: »

What happens if you already have a private pension that you pay into each month.

Does the money from the employer then go into this pot or is another scheme started for the whole of the workforce?

You can ask the employer if they will consider paying their contribution into your personal pension, but as I understand it, they are under no obligation to do so (which means if you don't join their scheme you will lose the employers contributions, so effectively opting for a pay cut)

Now it may be that, depending on relevent performances, charges, etc, that you would still be better off keeping to your own personal pension rather than choosing the employers scheme, but for the reasons explained by YoYoY above, you may have trouble finding an IFA to say so.

Pincher

I had a colleague, who got talked into a personal pension.

Got made redundant, new job company had a FINAL SALARY scheme. The choice was something like:

A. Join the company scheme, he pays 6%, the company pays 9%, plus the tax rebate.

B. He carries on with his personal pension, the company will not contribute.

He chose B!!!!???

I did not understand it, but he said he had thought it through, and it was more portable in case he left the company.

TWENTY years later, STILL with the same company, he said he made a BIG mistake.:(

He has a BSc in Mathematics. Some people are beyond help when it comes to money.

Kite2010

Most likely the company I work for will provide the bare minimum when it comes to auto-enrolment, so I might just stick the money which would be taken off me into an ISA and switch it every year to get the best interest rates I can.

At least I will be in control and the money will be safe and won't go down in value when the pension fund management decides to invest in bad shares.