Pension for 26 year old, to pay or not to pay?

becky4131

I have never really thought about paying into a pension before but with the new government pension scheme im unsure whether to start or not.

My current employer has sent details through for pension scheme and i have some time now to opt out if i want to. Obviously need to start thinking about the future but i will be leaving my current employment in the next few months to go travelling (for 12-18 months).

Is it worth opting out of this pension scheme and just starting one when i return from my travels with my new employer?

dunstonh

I have never really thought about paying into a pension before but with the new government pension scheme im unsure whether to start or not.

If you are referring to the state pension changes then they are going to be largely cost neutral apart from some groups. you shouldnt make decisions on the basis of state pension though as you never know what you will get until you get there.

If you are referring to auto enrollment then that is not a Government pension scheme. It is a set of rules requiring employers to contribute to a pension.

Is it worth opting out of this pension scheme and just starting one when i return from my travels with my new employer?

How serious are you about leaving? Many people with similar ideas end up staying for decades or even working life.

dancingfairy

Well, a years pension is a years pension. Not only that but it can be accumulating interest whilst you are away. Also you may find that your employer will add something into the pension pot for you as well.
df

spacey2012

Ask yourself if you can trust them with your money.
The old state pension was called national insurance, that mystery chunk charge you pay on your wage, you still pay this, but now if you want a pension, you have to pay more to a "new scheme" plus the old one that you now get no pension for paying.
Then will you live long enough to see it ?
68 ? 70 ? 75? who knows where they are going.

But they have moved the goal posts so far, so many times, it is a wonder we have not strung them all up for robbing us .
You decide if you can trust them.

Linton

spacey2012 wrote: »

Ask yourself if you can trust them with your money.
The old state pension was called national insurance, that mystery chunk charge you pay on your wage, you still pay this, but now if you want a pension, you have to pay more to a "new scheme" plus the old one that you now get no pension for paying.
Then will you live long enough to see it ?
68 ? 70 ? 75? who knows where they are going.

But they have moved the goal posts so far, so many times, it is a wonder we have not strung them all up for robbing us .
You decide if you can trust them.

What are you talking about??? Not only is this nonsense, it is dangerous nonsense if it leads anyone to think that they shouldnt save for their old age. Pensions, especially with an employer contribution are the most efficient way of doing this. And this old age for most people is likely to last well beyond 75 - current life expectancy for someone retiring at 65 is around 85.

becky4131

I am very serious about leaving, i have just sold my appartment and got a flight booked in April to start my travels.

I have always concentrated on saving for now e.g. car, uni fees and house deposit but i am now at a stage in life when maybe i should think about my future.

Im not sure i do trust putting my money into a pension but im unsure of the alternatives and don't want to be left with nothing when it comes to retirement (if i ever get to that point).

atush

Opt in, if the empllyer puts money in. This is Free Money to you, and will be there when you get back from your travels.

Ask yourself if you can trust them with your money.

Pay no attention to such comments, as there is legislation that protects pensions these days form imprudent employers (and has for decades).

jamesd

What is the name of the pension scheme?

If it is NEST, not worth paying into for a few months because you can't transfer it anywhere else when you get another one. If it's Morrisons you're too young for it to be worth paying into it because it's only likely to be a good deal for those within twenty years or so of retiring.

Is it a defined benefit scheme, like final or average salary? If so you'd probably just get your payments refunded.

Otherwise if it's defined contribution you're probably better off being in it even for a few months.

CKhalvashi

becky4131 wrote: »

I am very serious about leaving, i have just sold my appartment and got a flight booked in April to start my travels.

I have always concentrated on saving for now e.g. car, uni fees and house deposit but i am now at a stage in life when maybe i should think about my future.

Im not sure i do trust putting my money into a pension but im unsure of the alternatives and don't want to be left with nothing when it comes to retirement (if i ever get to that point).

I'd put in a year before leaving, especially if the employer is paying in, too, but this is just me.

We pay 3% automatically, and match to 12.5% (total 25% plus tax), so if the scheme is competitive, then you have nothing to lose.

CK

opinions4u

I'm in my forties.

I have a final salary pension scheme in my past which was excellent. The benefits it will provide will be my biggest chunk of income when I eventually retire.

But as fifty gets closer, and my love of work diminishes, the idea of early retirement appeals. My old pension will give me £11,000 a year at 55. Not quite enough on its own.

While I've saved hard into a money purchase scheme over the last few years, if I drew this at 55 with RPI and spouse protection I'd only get about £300 a year from it. Why so small? Because I started late.

Despite having a top notch pension scheme in the past I have little flexibility to retire early. If I had no pension provision at all I'd have no flexibility at all.

So get into pensions now. The younger you are when you act the more choices you will have in future. 26 is leaving it late. Don't make it any later.

OldBeanz

Look at the number of people who still travel in their sixties - cruises, caravans and motorhomes (never mind ex pats). Do you want to join that community or sit in the chilly UK 12 months of the year eking out an existence on the standard pension of, the soon to be, £7.5k? If so you have to make some provision and the sooner you start (ie the longer you pay-in) the smaller the percentage you needed to contribute.