compulsory workplace pensions

benniebert

Mattygroves2 wrote: »

Yes you as an employee have to contribute but then your employer and the government contribute as well. I'm sure the 20% added by the government will outstrip your 4% even without any investment growth.

Hello 20% of what are the government going to contribute?
And where is the matter of charges in all of this + don't forget that Capital Gains Tax is levied on the gains within the pension funds.


I'm happy with my investments and their performance at just under 4% compound.

xylophone

Hello, but don't you, as the employee have to contribute to get that 'free money'?

In most cases although some pension schemes are non-contributory.


But that is not relevant to the point at issue - the employer is still contributing money to the employee's future which he will not receive if he opts out.

And for every £80 the employee contributes to his pension he will receive a £20 top up from the government by way of tax relief.

He may even qualify for more by way of tax credits if he contributes to his pension.

https://www.gov.uk/workplace-pensions/what-you-your-employer-and-the-government-pay

Is Andy back?

BigAunty

wildcat666 wrote: »

Does anyone have an idea about what to do when you are enrolled automatically but the employer will not tell you how to opt out?

why would you want to opt out?

Are you currently sitting on a large nest egg of savings? Your property is fully paid off? And you've a good private pension built up to date?

benniebert

BigAunty wrote: »

why would you want to opt out?

Are you currently sitting on a large nest egg of savings? Your property is fully paid off? And you've a good private pension built up to date?

Hello, like me and others like me see these 'compulsory' pension schemes a poor substitute.
Surely it would be better if you managed your own scheme?
There have been so many variations on a theme with these work placed pensions - none have been what they portrayed to be in the end. The last one - the stakeholder scheme - was a complete flop!

xylophone

Hello, like me and others like me see these 'compulsory' pension schemes a poor substitute.
Surely it would be better if you managed your own scheme?
There have been so many variations on a theme with these work placed pensions - none have been what they portrayed to be in the end. The last one - the stakeholder scheme - was a complete flop!

Andy is back!

With regard to the stakeholder, what is your evidence for saying it was a flop?

A stakeholder is still available and can be a suitable choice
for those who wish to make small contributions and vary the amount of that contribution/stop/start etc

https://www.moneyadviceservice.org.uk/en/articles/stakeholder-pensions

And my company pension does "exactly what it says on the tin...."

Poppie68

Now Andy we have had "hey" now its "hello" how about......"Goodbye".

Mattygroves2

benniebert wrote: »

Hello 20% of what are the government going to contribute?
And where is the matter of charges in all of this + don't forget that Capital Gains Tax is levied on the gains within the pension funds.


I'm happy with my investments and their performance at just under 4% compound.

The 20% is the contribution from the government - you pay £80 in and they add £20. You need a fairly high level of charges to nullify that. There is also no CGT within a pension.

You do pay income tax on the money when you draw it out but you can take 25% out tax free is you want to as soon as you start drawing it. If you haven't got a very big pension pot it would be possible to take £13,250 out each year completely tax free (assuming you haven't had your full 25% up front).

4% compound is OK at the moment as inflation is low but when inflation is back to normal levels you will be slowly eroding your capital and end up with negative real returns. The idea of stock market investments, which is what most pension funds are, is to produce a real return every year ie one that exceeds inflation.

You might be happy with your 4% compound but I'm also happy with having a pension fund that is worth 3.8 times more than I've personally contributed after 5 years due to a mix of employer contributions and growth.

patman99

If the OP has been enrolled in NEST then I can see a good reason to want to opt out. The charges are horendous in comparison with some of the other schemes.

In my last role, I was employed by an Agency with aview to the role becoming permanent (it never did). The Agency auto-enroled me in PensionsNOW and after speaking to my potential permanent workmates, I immediately opted back out again.

My reason was that the hirer had consulted their staff with regards to a pension scheme and every single one stated they would immediately opt out of any scheme they were auto-enroled into.
As such, anything I had acrued in my PensionsNOW pot would never grow beyond the 3 months worth initially deposited whilst working as an Agency worker.

benniebert

patman99 wrote: »

If the OP has been enrolled in NEST then I can see a good reason to want to opt out. The charges are horendous in comparison with some of the other schemes.

In my last role, I was employed by an Agency with aview to the role becoming permanent (it never did). The Agency auto-enroled me in PensionsNOW and after speaking to my potential permanent workmates, I immediately opted back out again.

My reason was that the hirer had consulted their staff with regards to a pension scheme and every single one stated they would immediately opt out of any scheme they were auto-enroled into.
As such, anything I had acrued in my PensionsNOW pot would never grow beyond the 3 months worth initially deposited whilst working as an Agency worker.

I can fully understand your reasons. Charges are horrendous.
Why somebody would want to pay someone else to play with their money beats me.