Going to be claiming Housing Benefit when I retire- worth having employers pension?

Comstock

dunstonh wrote: »

I know someone who has just gone through a breakdown and his tone was very similar to yours in the lead up to it. Totally negative, bad decision making and thinking everything and everyone was against him. If you are feeling that way, then please visit your GP or someone who can give you support. Don't get angry with the internet. Get help.

Hi Dunston. I didn't want to start this thread with a post about mental health, but, yes I suffer from depression and anxiety, and yes, I'm already under a GP etc. It's one of the reasons I'd struggle with a better paying (read more stressful) job.

I didn't come to this thread, though, with a feeling everyone was against me. But being made to feel like a benefit scrounger for asking a simple question about a small workplace pension is ridculous.

All I wanted to know was 'is this worth doing or will the money simply be taken back off me in means testing when I retire'. I mentioned housing benefit in the thread title because it is the main means tested benefit I'm likely to be using post retirement, and hence relevant.

HappyMJ

Comstock wrote: »

Hi Dunston. I didn't want to start this thread with a post about mental health, but, yes I suffer from depression and anxiety, and yes, I'm already under a GP etc. It's one of the reasons I'd struggle with a better paying (read more stressful) job.

I didn't come to this thread, though, with a feeling everyone was against me. But being made to feel like a benefit scrounger for asking a simple question about a small workplace pension is ridculous.

All I wanted to know was 'is this worth doing or will the money simply be taken back off me in means testing when I retire'. I mentioned housing benefit in the thread title because it is the main means tested benefit I'm likely to be using post retirement, and hence relevant.

No it's not worth doing...in my opinion...but do try and save some money for emergencies. You're allowed £10,000 cash in the bank, a car, household goods etc so make sure that by the time you do retire you've got all that sorted as new so you don't need to replace the car or any of the household goods....and also hope that you don't last much longer than about 10-15 years (the lifespan of a car and the household goods).

You don't "need" a car. I don't have one now and rely on buses which may or may not be free in retirement and trains and taxi's which I have to pay for.

Alice_Holt

Do bear in mind that (under current rules) you can access a pension from the age of 55.
25% can be accessed tax free. (dunstonh & others are far more expert than I on this)
It could provide a small fund for (post 55) emergencies substantially paid for by your employer.

Most means tested benefits have a capital limit of £16k (HB, IB - JSa, IB - ESa).

I can see where you are coming from, but given that the HB withdraw rate is not £1 for £1 and that Pensions Savings Credit could be payable even if you have a small occupational pension, my view (FWIW) is that opting in is a sensible decision. You will always have the option to opt out again if it really isn't affordable. If you opt out now you are giving up the "free" money from your employer.

MacMickster

HappyMJ wrote: »

No it's not worth doing...in my opinion...but do try and save some money for emergencies. You're allowed £10,000 cash in the bank, a car, household goods etc so make sure that by the time you do retire you've got all that sorted as new so you don't need to replace the car or any of the household goods....and also hope that you don't last much longer than about 10-15 years (the lifespan of a car and the household goods).

You don't "need" a car. I don't have one now and rely on buses which may or may not be free in retirement and trains and taxi's which I have to pay for.

If his salary stayed the same then the OP would probably not even contribute £10,000 to his pension over those 25 years.

If we assume that he did so, then the tax man would also contribute £2,500 while his employer (matching his gross contributions) would pay in £12,500, so a total pot of £25,000.

Taking 25% lump sum, and income as required which would also be tax free if he ensured that he didn't exceed his personal allowance for the year.

I would strongly suggest that OP would be far better off saving for his retirement through the pension than putting his taxed income away in a savings account.

edinburgher

Am I the only person assuming this is a wind up?

Comstock

edinburgher wrote: »

Am I the only person assuming this is a wind up?

not a wind up, a serious question, thanks.

robin61

If you could get £50 per month including your employer contribution into a pension and it made 5% interest over 25 years then with compound interest that would be £29.7k
Over time your pay will increase and you might be able to put in a bit more later. So there might be even more in the pot.
You could get 25% out tax free to give you a retirement nest egg. You can buy an annuity or draw it out more quickly with the new pension freedoms.
If you turn down the employer contribution it's sort of like turning down a pay increase. You wouldn't t do that would you?
Having a pension is going to provide some options you will probably not have otherwise.

worried_jim

Comstock wrote: »

What a nasty, self righteous lot you are.

We are the taxpayers who will end up paying for your lifestyle choices, did you expect a round of applause for your scheme?

colsten

OP, as you didn't start out by saying you would be unable to afford to pay into a pension, I assume you would be able to afford it. Therefore the question: what would you do with the money if you didn't put it into a pension?

As others have already remarked, not paying into the pension also means you turn down free money from your employer. Why would you do that?

I also agree with those who said you shouldn't plan that the benefits system in 25 years will be the same as today's. There is one single reason for why everyone is encouraged to make good use of workplace pensions, and it is that State Pensions become increasingly less affordable for society.

I agree with all the ones that have suggested you should save into the works pension. Opting out in a rush would be a terrible decision.

HappyMJ

colsten wrote: »

OP, as you didn't start out by saying you would be unable to afford to pay into a pension, I assume you would be. Therefore the question: what would you do with the money if you didn't put it into a pension?

As others have already remarked, not paying into the pension also means you turn down free money from your employer.

I also agree with those who said you shouldn't plan that the benefits system in 25 years will be the same as today's. There is one single reason for why everyone is encouraged to make good use of workplace pensions, and it is that State Pensions become increasingly less affordable for society.

I agree with all the ones that have suggested you should save into the works pension. Opting out in a rush would be a terrible decision.

The OP will lose what would currently be 85% of the pension when it's paid.

65% is housing benefit deductions and 20% is council tax reduction.

They'd get 0.8% extra on their net pay on earnings in excess of £5,824. So if OP earns £7.20 and works 37.5 hours a week they'd get an extra £1.26 a week now.