Can't afford a pension

xylophone

Have you really thought about this? You are considering not joining a defined benefit pension scheme?:eek:

I knew a family with two very young children. The young husband was out at work one day when a freak accident led to his death.

You may imagine that in the midst of her grief, his widow at least knew that the LGPS would take care of her and their children.

Similarly, I knew a chap who couldn't afford the DB pension scheme until he was required to join it - he too died prematurely but at least his widow, already retired on a very modest income, had a boost to her income that enabled her to live in reasonable comfort.

More to consider - I have known three people drawing their DB index linked pensions for more than thirty years.

In your position I'd tighten my belt and start contributing to that pension - it seems a shame that you chose to leave it on a previous occasion.

sandsy

You would have to put around 3 times as much in another scheme to get what 10.2% in the teacher's scheme will get you in retirement.

If you don't make it work it will be one of the biggest regrets of your life when you retire. Don't put yourself in that position. Make a plan, any plan, but do not opt out of the best deals you'll ever be offered.

Goldiegirl

I know you'll be thinking your retirement is a long way off.


But time passes sooner than you think, and in 30 odd years time you'll be so grateful if you made every possible contribution to your pension.


Do whatever it takes to make the contributions - it is so worth it in the long run

pandora205

I'd forgotten about the life insurance benefits for partner and dependent children. It really is a no brainer.

Many years ago, I was a young teacher in a similar position to you. I went on to a related Local Authority profession and transferred my pension to LGPS. I took a career break when my children were young (when I couldn't afford to pay pension) but rejoined as soon as I returned to work. I didn't really understand pensions then but I'd heard LGPS (and before that TPS) was 'a good one'. Nearing retirement I realise just how lucky I have been, and how quickly the years fly by. I am so glad I didn't have to find my way through the maze of private pensions and that being a public servant has its (financial) rewards in the end.

Seriously, think very carefully about this.... you would be making a very serious mistake not to contribute.

mania112

The biggest mistake would be to delay or not take up their offer. If the contribution is made from the first payday you will manage much easier than thinking you'll wait a few months first.

I wouldn't say you should cancel Netflix (good value if used), Gym (if you use it), Phone (need some luxury in life). But white goods insurance and sky tv are usually more expensive than they're worth in my experience.

bigadaj

mania112 wrote: »

The biggest mistake would be to delay or not take up their offer. If the contribution is made from the first payday you will manage much easier than thinking you'll wait a few months first.

I wouldn't say you should cancel Netflix (good value if used), Gym (if you use it), Phone (need some luxury in life). But white goods insurance and sky tv are usually more expensive than they're worth in my experience.

Impressive if you go into that level of detail of financial advice for your clients!

bigfreddiel

bigadaj wrote: »

Impressive if you go into that level of detail of financial advice for your clients!

Actually cancelling Netflix etc was my suggestion and I am definitely not a financial advisor.

As the OP is a teacher there is no way she needs Netflix, Sky, contract phone and definitely a lease hire car.

Dump all these unnecessary expenses, pension paid for.

How do I know, experience. Taking myself as an example.

I have never earned more than £30k in my career.

So now I'm retired, pension income £20k - after tax

No mortgage

Investments approx £350k

And ditto for my wife, ex NHS audit clerk.

We run two cars, just about to buy a nearly new car at half its original price!

We use payg phones, cost £20-30/ year
,

No sky, no Netflix, pay off credit card every month and so on.

Just follow my way of living and it will all fall into place, easy when you get used to it.

Good luck fj

AnotherJoe

3 years on I am about to return to work after having a baby, moving house and quite a big promotion. I was hoping to rejoin the teachers pension scheme but I've just found out I will be expected to pay 10.2% which I can't afford.
=========

How does that work? You arent currently earning, will now earn a lot,yet cant afford to take something out of that salary that you arent getting at the moment????????

Did you actually mean "I've earmarked my spending for that money already so I dont wish to spend it on a pension instead".

justme111

Everybody says how good the pension is but unless op is given numbers she is not going to relate to it.
Op , it used to be that if you were to put money into private pension you would roughly have to put in 3 times more to get the same level of benefits. It has got worse but still is not far off that proportion.So if you do not want to contribute to teachers pension it does not make much sense to contribute to any pension at all. Imagine washing powder to be sold in packs of six boxes at £6 a pack and by one box at £3 a box. How beneficial to one would be to buy it by one box only consistently because one has £3 but doesn't have £6 ?
AnotherJoe seems very much on point. If you are going to have income that only about 10% of working population have and you "can not afford" to contribute to pension 6/7%of your income (as pointed out before you are not going to see part of money you would not contribute to pension anyway so in real terms it is not 10% but 6/7.) it is your choice , not affordability issue. Your life , your priorities.
Replying your question - If the choice is made and you are not going to contribute to teacher's this year then you likely to be better off not to contribute to private pension this year but put money which you could have contributed to it aside and use it next year so that you are able to contribute to teachers pension.

lottie-cat

I've got to get rid of the car loan, I know that's my biggest expense (apart from my mortgage) and I can halve it by getting a smaller, cheaper car. Im not able to do that until around April of next year without incurring charges but it will be my priority. I also pay my student loan off around that time.
Thanks for all your replies, it seems the best thing to do is wait and opt back in next April and transfer my other pension over and hope that helps cover some of the missed payments.
You are all right about lifestyle choices, I could very easily return to work full time and earn an extra 12k but obviously I will miss time with my daughter. My childcare will be £800 per month... I really don't know how people afford to live when they have kids!