Auto-enrolled, should I opt out?

Southend1

atush wrote: »

Why would you opt out, if you are throwing away free money?

Bonkers.

Because the monthly charge could well eat up all the money in the pot long before OP reaches retirement. Depends how much is paid in.

PeacefulWaters

If monthly pay is £1,500 then the employer contribution over three months is £45.

While I'm usually overwhelmingly in the "grab the free money" camp the fixed monthly fee puts me off unless a much bigger personal contribution is being made - perhaps by shifting mortgage overpayments to pension contribution.

It's a close call. I'd probably opt out on the understanding that proper retirement provision commences when "proper" employment does.

dunstonh

Because the monthly charge could well eat up all the money in the pot long before OP reaches retirement. Depends how much is paid in.

How can it do that? (hint: it isnt possible)

Calfuray

Wow, okay, thank you for all the responses.

To explain a bit more:
Right now the internship is through an agency. If I get kept on, it will be directly with the company, which means it would be a different pension provider. I'm not sure how complicated it is to transfer pensions around.

The fees seemed high to me because it'd be vastly cutting into the money going into it right now percentage-wise.

But I completely understand the points regarding 60% free money, 1% being tiny and not throwing that away. I guess it's not "I would rather have that extra 1% in my pocket" but more, is this the most efficient use of my money right now.

Thank you all for taking the time out to give me advice, much appreciated

Cal

dunstonh

But I completely understand the points regarding 60% free money, 1% being tiny and not throwing that away. I guess it's not "I would rather have that extra 1% in my pocket" but more, is this the most efficient use of my money right now.

Put it this way, it would be better to withdraw the Vanguard LS80 you mention in your sig and have the pension as the pension is the better option of the two. It will make more due to free money.

The fees seemed high to me because it'd be vastly cutting into the money going into it right now percentage-wise.

But cheaper than the VLS80.

somethingcorporate

dunstonh wrote: »

Put it this way, it would be better to withdraw the Vanguard LS80 you mention in your sig and have the pension as the pension is the better option of the two. It will make more due to free money.

But cheaper than the VLS80.

I just thanked your 30,000th post!

I agree, it's funny how the financials aren't looked at in the round. The charges on the VLS may possibly be higher than the pension options and the tax uplift and employer contributions make it a no brainer.

OP, that 1% isn't 1%, it's 1% less tax and NI so 0.68% (or 2% in the pension so almost 3 times as much).

Southend1

dunstonh wrote: »

How can it do that? (hint: it isnt possible)

There is a £1.50 per month charge. Any amount less £1.50 per month given long enough will reduce to zero. The amount paid in plus returns on contributions from 3 months on an intern's salary are likely to be eaten up pretty quickly at that rate I would imagine.

kidmugsy

Calfuray wrote: »

Right now the internship is through an agency. If I get kept on, it will be directly with the company, which means it would be a different pension provider.

Now you tell us.


Tell you what: with the sword of Damocles hanging over you of the £1.50 p.m. charges, opt out. After three months, use the money you have thereby pocketed to place a bet with one of those bookies who offers incentives for new mug punters. Maybe you'll win and maybe you won't. If you win, buy an ice cream.

dunstonh

Southend1 wrote: »

There is a £1.50 per month charge. Any amount less £1.50 per month given long enough will reduce to zero. The amount paid in plus returns on contributions from 3 months on an intern's salary are likely to be eaten up pretty quickly at that rate I would imagine.

Auto-enrolment schemes have caps on charges. There cannot be a £1.50pm ongoing charge. I suspect its linked to an initial charge (which is allowed) but is only paid with each contribution. Or it could be an example of what the annual management charge would be on a certain amount. Or its not an auto-enrolment scheme and they havent hit their staging point yet and its a scheme that does not qualify.

Freecall

somethingcorporate wrote: »

I just thanked your 30,000th post!

Wow, you looked a long way back!