Don't understand all this pension stuff

xylophone

In your position I'd do my utmost to join the existing scheme.

Lokolo

lisa701 wrote: »

Existing scheme
Employee 3% - Employer 4%
Life insurance = 3 times annual salary

Keep in mind my partner also needs to start paying into a pension again, depsite cutting back on everything possible for us to be paying out 6% of our income (or more depending on the schemes we go for) is not possible at present.

Just remember about tax relief.

An example, if you are earning £10k. Without pension you are taking home £801.

Decide to take a pension and you would reduce monthly amount of £20. BUT in the pension would be £58.

lisa701

jem16 wrote: »

Are you sure you have this correct? I can't see the employer offering 3% this year and then only 1% next year.

Yes, I've got the letter they sent to all employees in front of me. They expect us to up the amount we pay in as they reduce what they pay in. Suppose its understandable when you consider how much money they will now need to pay out each month if everyone not curently in the scheme auto enrolls.

jem16 wrote: »

You really should be trying to join this scheme. You are effectively throwing away 4% of your salary as well as the valuable Life Assurance. With tax relief that 3% is really only 2.4%.

I would like to join the existing scheme but unless I stop paying my mortgage, utility bills, travel costs or food I'm not sure where to find the money. We are already living on the line as it is.

jem16 wrote: »

Where are you getting this maximum of £1000pa from?

As to a savings account instead, it will not even come close.

The literature the pension provider sent to us all stating how much we will be expected to pay and what we can expect back from it. My colleague who is a couple of years older than me has been paying into the existing scheme for 5 years, and has been told she will receive a maximum annual pension of £800.

dunstonh

I would like to join the existing scheme but unless I stop paying my mortgage, utility bills, travel costs or food I'm not sure where to find the money. We are already living on the line as it is.

You should pop over to the debt free wannabee section of the board. They are very good at helping people with a poor financial position like yourself.

The literature the pension provider sent to us all stating how much we will be expected to pay and what we can expect back from it. My colleague who is a couple of years older than me has been paying into the existing scheme for 5 years, and has been told she will receive a maximum annual pension of £800.

If you pay in peanuts then you get out peanuts. Because of tax relief and employer contribution, the peanuts will be bigger than any other option. However, these things are only as good as what you pay into them and for how long.

I'm surprised the documentation gives a maximum. There are no pension providers I know of that give maximums. They give examples using multiple rates. They are neither minimums or maximums. Just examples. Plus, many will also show them in todays terms not future money terms and use one of the lowest annuity rate options going to be on the safe side.