Shall I join company pension?

alexanderalexander

Southend1 wrote: »

Yes, but people do keep repeating this without knowing whether the OP would stand to lose more in social security than she would gain from the pension.

Though it does seem in this case that OP will not be in a position to claim HB/CTB etc so she really should join.

My issue is more that people keep advising that the pension is definitely the right way to go without checking OP's individual situations. I suspect there may be some people within 5-10 years of retirement for whom having a small private income would cost them money in lost social security payments in the long term. It really would be interesting if anyone in the know had some figures on this.

You seem convinced that having a private pension can cause people to lose benefits in retirement greater than the value of the pension, but having been challenged you can offer no evidence to back up this rather improbable assertion.

Your encouragement of reticence in signing up for pensions to which the employer makes a substantial contribution is irresponsible. Firstly, as atush says above, the Government can change the benefits system whenever it likes, so you even if you're only a few years away from retirement you don't know what benefits will or will not be available; not signing up to a pension on the grounds that there's a small chance that some future Government may let a bizarre perverse incentive slip through the net is clearly a nonsense.

Secondly, many people are far too reticent as it is in signing up to pensions (even when there's a good employer contribution to be had) so bringing up this spurious non-issue which gives them another excuse to say "it's too complicated" or "I don't know whether it'll benefit me" is obviously unhelpful.

Southend1

alexanderalexander wrote: »

You seem convinced that having a private pension can cause people to lose benefits in retirement greater than the value of the pension, but having been challenged you can offer no evidence to back up this rather improbable assertion.

Your encouragement of reticence in signing up for pensions to which the employer makes a substantial contribution is irresponsible. Firstly, as atush says above, the Government can change the benefits system whenever it likes, so you even if you're only a few years away from retirement you don't know what benefits will or will not be available; not signing up to a pension on the grounds that there's a small chance that some future Government may let a bizarre perverse incentive slip through the net is clearly a nonsense.

Secondly, many people are far too reticent as it is in signing up to pensions (even when there's a good employer contribution to be had) so bringing up this spurious non-issue which gives them another excuse to say "it's too complicated" or "I don't know whether it'll benefit me" is obviously unhelpful.

There doesn't seem to be any evidence on either side at the moment! Hopefully someone who knows about this will come along with some examples.

I'm not encouraging anyone not to join a pension, I'm simply saying that it's always best to fully understand the facts before committing to financial decisions.

I can see that there may well be people close to retirement who have little or no current private provision for retirement who will be worse off if they don't opt out. Not many perhaps but the blanket "join because it's free money" argument is a little too simplistic in certain situations.

It also strikes me that a few regular posters on this board probably work in the pensions industry and have vested interests on the subject.

So the most responsible course of action is ALWAYS to get as much information as possible and make an informed decision on your personal situation rather than just following some generalised guidance given by people who may have a personal interest in you taking a particular course of action.

atush

So, did you not Actually watch the TV today? The news? The budget?

Does the fact that all DC pensions will be fully flexible Drawdown at retirement not change your tune?

If you still say someone should throw away 12% of their salary in free money, maybe you should be banned :eek:

There is even less of a reason to not enter an employers or PP today than there was yesterday

Southend1

atush wrote: »

So, did you not Actually watch the TV today? The news? The budget?

Does the fact that all DC pensions will be fully flexible Drawdown at retirement not change your tune?

If you still say someone should throw away 12% of their salary in free money, maybe you should be banned :eek:

There is even less of a reason to not enter an employers or PP today than there was yesterday

So you take your pension as cash and that puts you over the savings limit for housing benefit etc. then you have to use all the pension money on rent that would otherwise have been paid by social security? Doesn't seem like a good deal to me.

atush

it seems like you are bent on living a life on benefits?

You take your pension 100% as cash, and 75% counts now as INCOME NOT SAVINGS. So might not affect benefits if you spent it.


But I wouldn't know as I am not planning on any benefits so don't actually even know the income or savings limits w/o looking them up.

Plus they were/are eliminating many benefits with the new flat rate pension. I would expect, as auto enrollment continues that other pension benefits for those who have not saved towards their retirement such as you describe to also be eliminated.

Southend1

atush wrote: »

it seems like you are bent on living a life on benefits?

You take your pension 100% as cash, and 75% counts now as INCOME NOT SAVINGS. So might not affect benefits if you spent it.


But I wouldn't know as I am not planning on any benefits so don't actually even know the income or savings limits w/o looking them up.

So you won't claim your state pension? The one you worked hard for and are entitled to? More fool you.

Ok so if you are in a situation where you have no private pension provision to date and are 5 years from retirement you could defer some spending for five years but most likely you would be in greater need of the money each month for the five years rather than in one go at retirement.

I'm not saying millions will be in this situation but to blindly ignore the possibility with your free money mantra is irresponsible. How can you possibly argue that people should just do something because you think it's a great idea rather than have all the available information at their fingertips before making an informed decision about their finances?

alexanderalexander

Southend1 wrote: »

There doesn't seem to be any evidence on either side at the moment! Hopefully someone who knows about this will come along with some examples.

You should not try to shift the burden of proof. As you are the person who is making what is clearly a rather contentious statement, you need to come up with the evidence. Also, it is always harder to prove a negative than a positive, so you ought to have the easier job here!

Southend1 wrote: »

It also strikes me that a few regular posters on this board probably work in the pensions industry and have vested interests on the subject.

I am sure there are a few people who work in the pensions industry here, but they hardly stand to benefit directly from pro-pensions advice. In case you're wondering about me, I have no connection to the pensions industry at all but I am very much in favour of pensions due to the fact that my parents never took an interest in or were properly advised about pensions, and now they are in retirement they are much much poorer than they could/should be.

Southend1 wrote: »

So you take your pension as cash and that puts you over the savings limit for housing benefit etc. then you have to use all the pension money on rent that would otherwise have been paid by social security? Doesn't seem like a good deal to me.

The point has been made a couple of times that no one knows what the benefits regime will be when they retire (the Government changes it all the time!), so even if there were any merit in your point for a small number of people at the moment (and I don't think there is), it still shouldn't be taken as a reason not to save for a pension for the future when the benefits regime will almost certainly be different.

Southend1

alexanderalexander wrote: »

You should not try to shift the burden of proof. As you are the person who is making what is clearly a rather contentious statement, you need to come up with the evidence. Also, it is always harder to prove a negative than a positive, so you ought to have the easier job here!


I am sure there are a few people who work in the pensions industry here, but they hardly stand to benefit directly from pro-pensions advice. In case you're wondering about me, I have no connection to the pensions industry at all but I am very much in favour of pensions due to the fact that my parents never took an interest in or were properly advised about pensions, and now they are in retirement they are much much poorer than they could/should be.


The point has been made a couple of times that no one knows what the benefits regime will be when they retire (the Government changes it all the time!), so even if there were any merit in your point for a small number of people at the moment (and I don't think there is), it still shouldn't be taken as a reason not to save for a pension for the future when the benefits regime will almost certainly be different.

Well neither side seems to be able to back up the argument with figures at this point, so my point that it is best to get all the information and make an informed choice still stands.

I am also very pro pensions, to the point that I wouldn't choose to work for an employer who doesn't provide a decent company pension. However there are some for whom this may not be best e.g. Those very close to retirement, on low incomes and with no previous private provision.

Yes the rules around social security can and do change..... But so do those applying to pensions!

atush

Southend1 wrote: »

So you won't claim your state pension? The one you worked hard for and are entitled to? More fool you.

No one here is talking about State pensions. Which everyone takes, they are talking about private and company DC pensions- do you know the difference?

Southend1

atush wrote: »

No one here is talking about State pensions. Which everyone takes, they are talking about private and company DC pensions[ do you know the difference?

So you are planning on some benefits? I suspect they actually form a significant element of your retirement planning?