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

FatherAbraham

becky4131 wrote: »

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.

You have always been at a stage in life where you needed to think about your future.

I can't think why you would want to turn down the free money coming from the employer's contributions to the pension scheme, even if you only collect it for a few months.

If you turn the offer down, you will never recover that money.

I can't make sense of James' advice. Even if it's a defined benefit scheme, you should join, because you won't lose anything if you leave soon after joining (the contribs would come back to you) -- and despite your best intentions, there's a small chance that you won't go travelling.

Some pension schemes have associated death benefits too (in effect, free life insurance) -- you haven't mentioned whether that's a part of the scheme you're considering, but it can be a benefit worth having.

Not joining pension schemes because one only has short periods of employment is crazy. Some people are going to have fragmented careers through their lives -- but they will need retirement income just as much anyone else.

The need to save for retirement is real, and we all carry a personal pension deficit, which can only be paid by saving for our old age.

There seem to be few genuine good reasons not to join the scheme. Like I said, the free money offered here will never be offered to you again if you turn it down.

Warmest regards,
FA

jamesd

FatherAbraham wrote: »

I can't make sense of James' advice.

What's hard to understand? I identify just two specific schemes as not worth paying into because of their specific properties.

FatherAbraham wrote: »

Not joining pension schemes because one only has short periods of employment is crazy.

That isn't crazy. The overhead of watching the pension can exceed the value, particularly when there are only three or so months of contribution and 40 years until state pension age. But at present we don't know what the value of contributions for this one between now and April will be, nor whether it's one of the usual ones that can be merged.

atush

Well Iw ould join the DB scheme anyway, despite your reasons for not doing so.

No1, they might not travel as soon as they think, no2 it means they have savings building up as the contribs will be returned.

Maybe NEST is the only reason not to (and perhaps the non transfer rules will be changed in future?).

becky4131

NEST is the company.

It can not be transferred to other schemes and i will have paid very small amount into it between now and April.

Don't get me wrong i am keen to pay into a pension and im aware at 26 that i have left it quite late to start. Until no i have only just managed to keep my head above water with daily living never mind extra money to pay into a pension! At 26 i think i have acheived alot without any financial support from family so im not going to beat myself up for not paying in sooner.

System

atush wrote: »

Maybe NEST is the only reason not to (and perhaps the non transfer rules will be changed in future?).

The government has pledged to remove the in and out (and contributions limit) in 2017.

System

I think the important thing is to get into the habit of paying into some kind of pension scheme, now, and then just keep going. There will always be plausible reasons for not starting yet, and then when you reach 50 you will start saying it's now too late so not worth starting at all.

opinions4u

Clifford_Pope wrote: »

I think the important thing is to get into the habit of paying into some kind of pension scheme, now, and then just keep going.

Spot on. The habit is everything. Otherwise you just keep putting it off.

jamesd

becky4131 wrote: »

NEST is the company. ... It can not be transferred to other schemes and i will have paid very small amount into it between now and April.

Then it's unlikely to be worth paying in because the likely value of the employer match is not going to be worth the tracking cost of having a pot in NEST that has to be held apart from any others.

Clifford_Pope wrote: »

The government has pledged to remove the in and out (and contributions limit) in 2017.

Do you have a reference for that pledge? I know the current pensions minister has said that this government wants to remove the limit sometime but I'm not aware of any pledge, nor of any law or regulation that would bind the next government. I want to see this ASAP, just don't yet know of anything more than want to or speculation level of interest.

Even if a transfer was possible, the cost of a transfer might well exceed the total value of the pension pot in this case. I'm not even convinced that two or three months into a transferrable personal pension pot would be worth it due to the possible costs.

Clifford_Pope wrote: »

I think the important thing is to get into the habit of paying into some kind of pension scheme, now, and then just keep going. There will always be plausible reasons for not starting yet, and then when you reach 50 you will start saying it's now too late so not worth starting at all.

Regular investments for retirement don't have to be into a pension. In this specific case S&S ISA investing seems more sensible, to be moved into some future pension later, perhaps.

atush

becky4131 wrote: »

NEST is the company.

It can not be transferred to other schemes and i will have paid very small amount into it between now and April.

Don't get me wrong i am keen to pay into a pension and im aware at 26 that i have left it quite late to start. Until no i have only just managed to keep my head above water with daily living never mind extra money to pay into a pension! At 26 i think i have acheived alot without any financial support from family so im not going to beat myself up for not paying in sooner.

I am curious as to how you are affording to take a year+ off work when in the past you could only hold your head above water?

bigadaj

atush wrote: »

I am curious as to how you are affording to take a year+ off work when in the past you could only hold your head above water?

Personal choice I guess, no problem with this so long as there are no complaints in the future about not being able to afford a house, not getting a decent pension etc, we all make choices.