Starting pension when only 20 --Update #49

atush

so, you'll be paying more in interest ont hese loans than youc an get in savings.

So, if you don't need the loans (or all of them) i'd not take them. AS you will be borrowing money at say 5-6% and getting 2-3%

Anselm

atush wrote: »

so, you'll be paying more in interest ont hese loans than youc an get in savings.

So, if you don't need the loans (or all of them) i'd not take them. AS you will be borrowing money at say 5-6% and getting 2-3%

Too late, I took them I thought long and hard about it and decided to take them because I could cut down on my work, amongst other things. But I admit, I hadn't taken into account borrowing at 5% and only getting 3% - there were other reasons that I wanted/needed the money though

taktikback

Let's get real about student loans - They are not loans in any real sense - they are a deferred tax. They don't affect your credit rating for mortgage purposes. You pay an additional 9% of anything you earn over £21k and if there is an outstanding balance after 30 years -as there will be in many cases, it gets written off - if you earn more than about £40K+ you just might pay them off in 30 years

Don't even think about them as debts -just accept that the price of your education is a marginal rate of tax over £21k is 9% higher than someone who didn't go. Take all the loans you can get. If there's any money left - invest it wisely - do not be daft enough to pay it back!

stinktankcynic

Despite having tax relief, employer contributions etc, it all depends on how things pan out in future years. Having scrimped all your life to pay into a pension, would it not be gutting to have the goalposts moved....such as

Means tested state pension.
No lump sum
2% annuity rate
Increasing pension age.
Plus more.

If things were written in stone, the decision would be far better. Remember pensions are usually more for the middle band, who get the brunt of most things.

Perhaps a mixture of ISA's, cash and some pension, especially if its final salary or a decent employer contribution may be good.

kidmugsy

stinktankcynic wrote: »

the middle band, who get the brunt of most things.

That's the only way to fund an extravagant welfare state.

BobQ

Quote:
Originally Posted by Tancred
First, please bear in mind that a lot of people who post on these forums are financial advisers and it is in their interest to push you towards taking up a pension scheme immediately.
..

A somewhat cynical view of the financial services industry. I am not an IFA and can be quite cynical but starting a pension in the circumstances you describe is very sensible.

OP I think you have realised that you have been given some good advice by several posters. If they are IFAs they have nothing to gain from this and if they are not they are still talking sense.

Anselm

BobQ wrote: »

OP I think you have realised that you have been given some good advice by several posters. If they are IFAs they have nothing to gain from this and if they are not they are still talking sense.

Indeed. I'm in work again tomorrow, so I'll ask my manager to get me the stuff on the pension. When I know the details, I'm sure I'll be back asking again if it's worth it

Thanks all, much obliged.

Anselm

UPDATE:

Ok I finally got the pension details today, yippee! The bad news is that I won't be auto-enrolled in line with the pension rules, but I can elect to enrol myself onto the pension scheme.

The pension will be 1% of my basic pay (not including overtime) and will be matched 1% by TJX.

However, as I'm only on an 8 hour contract a week, 1% of my basic pay will amount to around £2 which will be matched by TJX.

Depending on which pension group I'll be in (from 1-5) and length of service, I can increase contributions from 2-6% and once I reach 5 years service (In a year and a half) the contributions will be 2.5%-7%

So, even though it seems like a small amount, should I join the scheme?

Edit: I rang HR and they said I could pay more in, but only a maximum of 2% would be matched by the company, so is it also worth paying more in?

atush

At this point, pay in enough to get their 2%. Raise it later when you have more hours/pay.

I would instead, save any extra cash in a savings acct for a rainy day.

Anselm

atush wrote: »

At this point, pay in enough to get their 2%. Raise it later when you have more hours/pay.

I would instead, save any extra cash in a savings acct for a rainy day.

Ok I will thanks, but I don't know the first thing about savings acct - best get reading