Cut Backs... Pension Payment?

Mrs_A_2

At the moment I pay 1% of my salary (approx £25) monthly into my pension. My employer, very generously, pays 10% - regardless of whether I put in anything.

I signed up for the Pension when I started there quite a while ago now. To be honest, I understand nothing of pensions, and have no idea what my 1% payment means (as I remember being told that whatever you pay in, you are not guaranteed to get back when you retire?!).

I'm wondering whether to opt out and just leave my employer contribution in there for now. I'm thinking £25 could go a long way to helping to clear our debt.

Also, at 26, I can pick it up again once the debts are clear and probably not make that much of a negative impact?

What do you think?

I've also cancelled my Life Insurance (stupidly been paying it when I get it through work too!) and my Gym Membership - Around £50 a month saved :T

[Deleted User]

I would keep paying into the pension, that 1% can become significant over time. It's a small amount to pay from your salary, many people pay much more, I think the average is around 6%.

BitterAndTwisted

I think you'd be mad to stop paying such a small sum each month. As Smoothies said that 1% can build up to a substantial sum over decades and you'll never get that time back.

I'd cut down on something else.

AnnieBox

I'm also 26 and like you, have next to know knowledge about pensions but I would NOT recommend stopping your contributions.

1% is such a small amount each month, but will make such a big difference in the future and you wont realise the impact of it until its too late. I've known older people who didn't do their pensions properly and they always say they regret not paying into it while they were younger.

If you need to cut £25 from somewhere, I'm sure you can cut it from something else less important, it's really not a lot of money.

poppasmurf_bewdley

If one percent of your salary equals £25, that means you are on £2.5k per month. With that income, you can surely find £25 a month from elsewhere.

You have not said what your outgoings are, but unless you are married with children and have a mortgage, you will not be spending anywhere near £2.5k a month on essentials.

You would be mad to stop paying into your pension.

tallyhoh

You get tax relief on contributions I believe so its actually worth more than £25.

I would continue to pay it.

[Deleted User]

£25 becomes £30 after the tax break,thats £360 a year or £7200 over 20 years and that assuming no growth which is unlikely in fact £7200 could be worth around £10,000 if growth is good,and as you have 40 years to work that £25 a month could be worth over £20,000 when you retire
keep paying it IMHO

ShootForTheMoon

Great advice from Woodbine...

If I would you I would try to cut elsewhere before your pension! Just to put it in perspective, I'm 25 and pay 14% of £30k salary into mine...

It helped me loads getting some understanding of how my pension actually works in terms of understanding what/why I was paying!!