Work place pension?

Stiscooby

Hi,

I don't really know much about pensions but have recently been auto enrolled into a work place pension and have a few queries...

At the same time they notified me about it they also said I would be getting a pay rise, however, they said they would be using £500 of that (per year) to pay into a pension. Is this normal?

From my point of view I see that almost as a personal contribution rather than the company contributing as my wages before tax etc have been reduced (I don't wish to make a personal contribution to this as I already have my own personal pension) and if I did also make a personal contribution my wages would be hit twice for the company scheme.

I'm considering opting out and I'm not so sure the £500 a year they putting in, well what I'm kinda putting in, is even worth it. This is a HSBC stake holder pension (who the company banks with) so probably haven't really taken much care in what scheme we have been enrolled in and just went on the "advice" of the HSBC rep?

I'm trying to speak with a IFA but thought some of you on here would be able to pass some kind of opinion/info etc

Thanks

jamesd

Whether putting the £500 into the pension is a true raise for you depends on what happens to the £500 if you say you opt out of the pension. Do you still get it but now in your pay instead, after deducting any employer NI that they might be including in the £500? For them it's an extra cost however they pay it so from their point of view it definitely will be a raise for you if you can get it in some way and do.

Ask how much of the £500 is from them, how much is the tax relief and saved employee and employer NI. The tax relief isn't their money, the rest is.

The HSBC stakeholder is probably a good deal better than many options you could have been given. Be relatively happy compared to say those getting NEST as their only option.

Stay opted in. It's worthwhile. Unless you have truly dire debt problems at high interest rates.

It's quite common for companies to do things like reducing pay rises to allow for the costs of auto-enrolment, without telling people they have done it. Yours seems to be doing better than that and also managed to do better than many on the pension scheme they are offering. Maybe not full marks, but way better than it could be.