Are pensions even worth it?

borderline

I was paying into a pension at previous job for a few years.. Just got the statement and there is a pot of just over £3,000 and it says that my future pension would be a taxable yearly of £146…

so, what’s the point to have paid all this money to get in return less than £146 a year !!!


I have paid more money into this pension than they money I’ll get in return even if I live 200 years:rotfl:

SplanK

If you have only just started then that will be why the pot is quite low, thus the return is quite low.


How old are you, and when do you currently plan to retire. The more money that is put in, the more money there is to invest for it to grow (or in some unfortunate cases, to shrink!) and the return will increase in turn.

CAN1976

20 years and a half actually, which is not unreasonable givemn the longevity rates these days

Perelandra

CAN1976 wrote: »

20 years and a half actually, which is not unreasonable givemn the longevity rates these days

And proabably only half that, in terms of getting back the mony that was put in (it was an employer's scheme, so probably half that pot was paid by the employer?)

EdGasket

They are if you are a higher rate taxpayer but if you are only a basic rate tax payer then imho, I think pensions are borderline. That is because although you get 20% extra invested in your pension due to tax relief, you tie up your money until at least age 55 and can only ever get 25% of the money back as cash lump sum. Fees and charges cripple returns in the current low-growth environment.
If you don't use up all your annual ISA allowance and are a basic-rate only taxpayer, I would do that before turning to pensions.

dunstonh

Just got the statement and there is a pot of just over £3,000

So, you have put peanuts in it.

so, what’s the point to have paid all this money to get in return less than £146 a year !!!

If you pay in peanuts then you will get out peanuts.

I have paid more mone into this pension than they money I’ll get in return even if I live 200 years

That is not correct.

20 years and a half actually, which is not unreasonable givemn the longevity rates these days

The op is leaving of the TFC. So, if you look at current annuity rates and the TFC then its more like 15 years.

We also need to remember that £3000 has not been paid into it. It has had tax relief, tax free growth and probably an employer contribution.

borderline

SplanK wrote: »

If you have only just started then that will be why the pot is quite low, thus the return is quite low.


How old are you, and when do you currently plan to retire. The more money that is put in, the more money there is to invest for it to grow (or in some unfortunate cases, to shrink!) and the return will increase in turn.

well, I’m 44 and I don’t plan to retire because I don’t think I’ll be able to afford it. I don’t pay anymore into this pension because it was from my last job.
I can’t afford to pay into any pension at my current job because I only get low wages and I have not much to live on after paying all the bills…

borderline

dunstonh wrote: »

If you pay in peanuts then you will get out peanuts.

If I get paid peanuts, I can only pay with peanuts.
Maybe I should open a peanuts business:rotfl:

atush

"well, I’m 44 and I don’t plan to retire because I don’t think I’ll be able to afford it"


Well if this is your attitude to epnsions, and at 44 you have only managed to save a 3K pot you probably wont be able to afford to retire. You should be saving into a pension now, and if your employer has one, and you are not saving into it, you are throwing away free money.


I know things are tight, but you should put up an SOA on the budget board or do a spending diary. No one who has done either, hasn't found waste somewhere that could be turned into savings.

lisyloo

well, I’m 44 and I don’t plan to retire

That's completely ridiculous.
Do you think you will be able to work when you are 90?
Do you think anyone will want you?
It's completely unrealistic to keep working forever.

You could try to do something and do an SOA (statement of affairs) and get some help.
Or you could do nothing and just live on the poverty line.

I know what I'd be doing.

regprentice

Sympathise with the op. Got my pension statement the other day and was alarmed to see that the lowest projected retirement income was actually less than i pay in every month!