company pension schemes cheats

savier

hello

this article says that company pension schemes may be cheating you

http://www.independent.co.uk/money/dont-join-company-pension-schemes-without-advice-1341132.html

however it is a bit old (1996), does it apply now?

or are there any other reasons for not joining a company pension scheme?

thanks

jamesd

All it says is that defined benefit pension schemes get to return contributions if you leave within two years, which is still true, and that if you change jobs a lot you might experience that repeatedly.

However, it's quite hard now in the private sector to repeat the experience described because defined benefit pension schemes are no longer generally available to new employees. Instead employees, if they get a pension plan, will normally get a defined contribution one. With those you keep the money if you leave after getting it.

There are many potential reasons for not joining a company pension scheme. Things like having a known very short life expectancy, existing diagnosis of death soon and such. Even some of those aren't enough to eliminate the value of a pension scheme, it would depend on the death benefits. A substantial amount of high cost debt might also make it worth delaying joining sometimes.

M.R.W.

savier wrote: »

hello

this article says that company pension schemes may be cheating you

http://www.independent.co.uk/money/dont-join-company-pension-schemes-without-advice-1341132.html

however it is a bit old (1996), does it apply now?

or are there any other reasons for not joining a company pension scheme?

thanks

Hi, if you've posted this because you are considering not joining your company pension scheme, or you are already in it and considering transfer out, then I personally would suggest you speak to an IFA first. In the vast majority of cases you will by better off by becoming/remaining a member of your company scheme. In fact this is the default FCA (the financial regulator) position.

savier

M.R.W. wrote: »

In the vast majority of cases you will by better off by becoming/remaining a member of your company scheme.

I don't understand this sentence, can you elaborate please?

dunstonh

savier wrote: »

I don't understand this sentence, can you elaborate please?

It means that being a member of the scheme is the best option financially. Leaving or not joining the scheme would be a financially bad move (indeed, a really really silly thing to do).

jamesd

savier wrote: »

I don't understand this sentence, can you elaborate please?

It means that you should join a company pension scheme in almost all cases. If you think your case is an exception, ask here.

savier

I think my case may be an exception, as I may continue my career in another company or in another country, so I wouldn't like to lose both mine and my company's pension contributions

Linton

savier wrote: »

I think my case may be an exception, as I may continue my career in another company or in another country, so I wouldn't like to lose both mine and my company's pension contributions

I assume your employers pension is defined contribution and not final salary.

You dont lose anything if you move elsewhere. Your pension funds will carry on exactly the same increasing in value, just without any additional contributions. You will be able to access it when you retire.

So I dont see your situation as an exception.