new to proper jobs and pensions...

wallofbeans

Hi All,

I'm starting my first 'proper' job in a few weeks. i've been working freelance for the last 20 years and am now taking a part-time real job with a 'salary sacrifice' pension scheme.

It's starting to seem like a good idea to go with it, although all my freelance instincts are saying don't do it, put the money in a savings account...

Any advice?

dunstonh

although all my freelance instincts are saying don't do it, put the money in a savings account...

your freelance instincts aren't telling you that. Your freelance instincts would be well used to using pensions.

You bad financial planning instincts are telling you to use a savings account. Just about the worst option (after doing nothing).

yes it is a good idea. Its free money vs no money.

wallofbeans

Ha. It's not bad financial planning, it's earning very little money and never having any to put aside. Until now.

dunstonh wrote: »

your freelance instincts aren't telling you that. Your freelance instincts would be well used to using pensions.

You bad financial planning instincts are telling you to use a savings account. Just about the worst option (after doing nothing).

yes it is a good idea. Its free money vs no money.

PeacefulWaters

wallofbeans wrote: »

Ha. It's not bad financial planning, it's earning very little money and never having any to put aside. Until now.

But the over-riding message is get into this pension scheme. Maximise employer contributions.

Then ponder a plan to do more even if your employer doesn't match it.

wallofbeans

I'm already in it. It's just a case of if I should opt-out.

If my employer doesn't match what they are taking from me and putting into the pension scheme? How can I tell if they do that?

PeacefulWaters wrote: »

But the over-riding message is get into this pension scheme. Maximise employer contributions.

Then ponder a plan to do more even if your employer doesn't match it.

xylophone

Surely you have been given a booklet/information sheet about how your salary sacrifice pension works?

https://www.moneyadviceservice.org.uk/en/articles/salary-sacrifice-schemes

What about your state pension?

https://www.gov.uk/state-pension/overview

wallofbeans

I did get given a huge booklet all about it but it's only starting to make any kind of sense as I figure out the basics of these types of schemes.

I've just looked again, now knowing that my employer might add in something also and I found a section that says "Your employer pays a monthly contribution equal to 16% of your salary while you currently pay 6.5%."

That wouldn't have made any sense a couple of hours ago but now - does that mean they pay in more than double what they are getting from me? That's good, isn't it? This proper job thing isn't too bad. Why would they do that?

xylophone wrote: »

https://www.moneyadviceservice.org.uk/en/articles/salary-sacrifice-schemes

What about your state pension?

https://www.gov.uk/state-pension/overview

hyubh

wallofbeans wrote: »

I've just looked again, now knowing that my employer might add in something also and I found a section that says "Your employer pays a monthly contribution equal to 16% of your salary while you currently pay 6.5%."

That sort of wording sounds like a DB scheme (the DC norm is much less generous, with lower contributions on both sides). Are you sure it's applicable? (If it is, then great, even if it is DC.)

Why would they do that?

If a DB scheme, because they have to (DB is expensive, and contemporary pensions accounting standards are much more realistic about the costs compared to the 'good old days'). If DC but a large employer that traditionally had a DB scheme, because that's what got negotiated when the DB scheme closed, keeping in mind the previous point. If DC and an employer that never had a DB scheme, because they are mad? At least, it clearly wasn't a benefit that helped to get you on board...!

wallofbeans

I don't know what DB or DC means. I'm working for a university and it says it's the Universities Superannuation Scheme (USS).

Does that mean anything to you?

hyubh wrote: »

That sort of wording sounds like a DB scheme (the DC norm is much less generous, with lower contributions on both sides). Are you sure it's applicable? (If it is, then great, even if it is DC.)



If a DB scheme, because they have to (DB is expensive, and contemporary pensions accounting standards are much more realistic about the costs compared to the 'good old days'). If DC but a large employer that traditionally had a DB scheme, because that's what got negotiated when the DB scheme closed, keeping in mind the previous point. If DC and an employer that never had a DB scheme, because they are mad? At least, it clearly wasn't a benefit that helped to get you on board...!

JoeCrystal

Oh it mean something alright.

It is DB pension and you have to be extremely stupid to opt out. Simple as that.

EDIT: The employer bears all the investment risk and will pay you an income when you retire based on the number of years of service and the salary. It may have extra benefits like death in service or pension for your spouse after you die.

Nothing like contribution based pension at all!

wallofbeans

Well, that's great news! I won't then!

What do 'DB' and 'DC' stand for?

JoeCrystal wrote: »

Oh it mean something alright.

It is DB pension and you have to be extremely stupid to opt out. Simple as that.

EDIT: The employer bears all the investment risk and will pay you a set amount based on the number of years of service and the salary.

Nothing like contribution based pension at all!