Just a quickie! Age 22, pension, yes or no?

GoldenShadow

I start my grad job in Sept, and from what I can gather, the pension is like most in retail ie. chuck 5% in per month and they chuck the same in on top.

Aged 22, at the very start of a grad career (saving for house deposit but no debt bar student loan), would you go along with it too?

OH started paying for one last year, he is 25. Bit worried if we don't do it now we never will, it will be oh when we earn X and keep not happening (although we are good savers)...

SailorSam

The general advice is the sooner you start the better. And the company is doubling it up, that sounds like a good deal.

[Deleted User]

Yes! Yes! Yes!

As a 22 year old that started paying into their pension at 20, you have no idea what advantage it puts you in. The earlier you start the less you need to contribute and the more comfortable your retirement will be, plus free money! Would you turn down a 5% pay rise?

There are very few situations in which it makes sense to turn down a pension, and in most it's a big mistake to turn it down.

Side note, 5% match is not "like most", it's very very good!

mania112

Yes.

Starting early (in fact I would say you're starting at the right time, not early) will a) make a higher income in retirement and b) make it less an impact on your salary, than if you were to start it later in life. You will quickly not notice 5% less wages in your bank.

David_Aston

Yes! Go for it.

PeacefulWaters

Lots of words above. The ones that stood out for me were:

free money

Do you want free money or not?

It's a no brainer to me.

GoldenShadow

Thanks everyone

I guess I worry a bit about how well protected pensions are. I imagine there will be very little in the public pension pot by the time people like me do retire, but that anything in there won't go to people who have even a little bit of private pension.

citricsquid wrote: »

Side note, 5% match is not "like most", it's very very good!

I don't know what the 'norm' is to be honest! I have heard on the grape vine that they contribute the same. My OH works for Tesco (I do part time and will until grad job in Sept) and the Tesco website says:

It's simple, you pay 5% of your earnings into the Scheme - that's £5 for every £100 of your wages. Tesco pays in more than you - 11% on top of your 5%.

I find it very hard to believe Tesco actually pay in 11% if you pay in 5%..! But then they do have a reputation for paying better than their competitors at a lower level...

kidmugsy

In your shoes I wouldn't touch it, except for one thing: "free Money" - therefore say "yes".

kidmugsy

kidmugsy wrote: »

In your shoes I wouldn't touch it, except for one thing: "free Money" - therefore say "yes".

P.S. the amount Tesco pays in is nominal - if the investments do terribly well, then they'd begin to pay in less. If the investments do poorly, they'd pay in more. The 11% is just to give you guidance as to what it would cost them long-term on some reasonable projection of what will happen in future, and will correspond to what they are paying in at the moment. It's a much better deal than most people will ever get, apart from people employed by the government.

dunstonh

I guess I worry a bit about how well protected pensions are.

Well dont be. They are some of the most protected options you can get.

I imagine there will be very little in the public pension pot by the time people like me do retire

There isnt a public pension pot. That isnt how the state pension is funded.

PeacefulWaters

Don't forget the tax relief either (and national insurance if you pay via salary sacrifice).

If your gross pay is £1,500 a month your 5% contribution is £75. But if you didn't contribute to a pension you'd only get £51 of it your hand.

Give up that £51 net and £150 ends up in your pension fund.