To pension or not to pension?

iwanttobreakfree

just started a new job and have recieved a letter to join a pension scheme - now i know this is a good idea for the future but should I wait until my debts are more manageable? help!:p

kraft_2

No

This is a real difficult one, i am 30 and still dont have a pension plan. I know people should have one but i really want to get myself straight before putting 50-100 quid away each month.

iwanttobreakfree

it comes out of my salary this one but I just cant decide if its more sensible to put that money into my debts

Curious_Moose

What type of pension scheme is it? Defined benefit or money purchase (more likely)?

If it's money purchase, what contribution rate will your employer put in for you?

Personally, most times I'd join the pension scheme just to get the benefit of the employer's contribution.

SarahNeedle1872

Yes

I had the same quandery (SP?) when I started work, but decided to join the pension as my employer matches whatever I put in - I pay 5% of my salary, and they match it.

Because it comes straight out, I don't notice that it's gone, so never inc that money n my monthly budgets

IMHO, I would join it....

Sarah x

iwanttobreakfree

yeah they do contribute - its a stakeholder if that helps anybody!

postingalwaysposting

Yes

do it :j my employers put in 6% of what i do... i pay roughly £28 per month (pay packet) you dont miss it trust me and getting employers contributions is great... i have nearly £1500.00 in just over 2 years i ahve payed in roughly £800... the way the pension system is going unless you are close to retirement you re not likly to get a state pension... so yes best investment ever imo

edit ~ mine is also stakeholder and allows you to add cheque/deposit extra cash too

BWZN93

Yes

Id do it too, my employers put in a whopping amount, and I do 5%. it works out at around 20% of my salary including my contribution. I also have another pension that I put another 5% of my salary in. (All figures pre tax). Its a lovely figure to look at on my annual statement - I want to be able to retire comfortably so for me its a priority. I dont want to struggle financially in retirement.

Jo x

oscar52

Yes

Putting into a pension needs to be done, cant rely (or even live) on the paltry state pension

If your employer matches your contributions as well, its free money - grab it.

ZTD

iwanttobreakfree wrote: »

just started a new job and have recieved a letter to join a pension scheme - now i know this is a good idea for the future but should I wait until my debts are more manageable? help!:p

Calculate it like you would any other saving scheme. If it grows 10% per year (ha ha) add 22% (of the 10%) to account for tax, which leads to 12.2%. And if your employers puts in 100% of what you do, then it will be worth the equivalent of 24.4%. All on the assumption of a 10% growth rate - check your figures.

So if you have any interest rates higher than 24%, then pay them off.

Of course that just illustrates the process, and you'll need to slot your own figures in. If you want to go for the "big picture" you also need to allocate an amount to risk. There is risk in pensions - you can end up with nothing. There is no risk with debt - they'll always make you repay.

iwanttobreakfree

ZTD - thats an interesting point you make and not something I know a whole lot about - can you clarify further? I had just always assumed a pension was something you did - never actually knowing if it really is worth it - its just mind boggling!