Workplace pension, worth it for me?

jimfdowning

Hi all
Got a quick question about the workplace pension scheme.

I'm 51 and just got a part time job after been self employed for a number of years.

I'm working three days a weeks and taking home around £800 a month which falls under the income tax threshold.

My employer advised me not to bother with the work place pension as I was too old for it to make a difference when I could retire and collect it, which hopefully would be 65.

I would like to ask the forum if this is true?

I understand it wouldn't be a livable pension but wondered roughly how much a week I would get back if I worked these hours at the same hourly rate for the next 14 years until retirement contributing 10% of my income and the lowest 1% employer contribution?

Any advice would be appreciated.

James

MallyGirl

Hi
It is still 'free money' from your employer and the rate they have to contribute is set to rise:
1.0% of your qualifying earnings until 6 April 2018 rising to 2.0% until 6 April 2019 then rising to 3.0%.
If you are 51 I think you might not be able to get state pension till 67

Also, even though you are below the tax threshold you will still get 20% added by the treasury

lisyloo

If it's done via salary sacrifice you might get more than 20% e.g. 20% tax plus 12% employees NI.
If you're really lucky your employer might pass on 13.8% employers NI.

On the face of it doesn't sound like they are correct IF you have spare income that you don't need to live on and won't need until the scheme lets you retire (access at 55 for private pension)

hjd

Your employer should not be advising you not to join the pension scheme. The employer is required to offer it to all eligible employees.

ex-pat_scot

lisyloo wrote: »

If it's done via salary sacrifice you might get more than 20% e.g. 20% tax plus 12% employees NI.
If you're really lucky your employer might pass on 13.8% employers NI.

On the face of it doesn't sound like they are correct IF you have spare income that you don't need to live on and won't need until the scheme lets you retire (access at 55 for private pension)

Difficult to do if you are not already a taxpayer.


The suggestion from the employer that you are "too old" is disingenuous at best and illegal at worst.
It's in their interest to discourage you from taking up any pension on offer, as it would save them money.
Even if you do not have decades to benefit from compound growth, it's never too late to make provision for your old age.


I have recently encouraged (NB not advised!) a friend to start contributing to his company pension scheme. He's 70 and still working, and benefitting both from HR tax relief and a generous employer contribution. He's delighted on the effective rate of return of his cash, and knows that he can access this flexibly whenever he needs.

Andy_L

hjd wrote: »

Your employer should not be advising you not to join the pension scheme. The employer is required to offer it to all eligible employees.

Isn't doing so illegal?

mark5

Are you married or living with a partner who might lift you out of means tested benefits etc?

I agree Aged 51 and your level of contribution is going to be low so the pension fund will be small but with tax relief and employer contribution I would have thought you could only gain from investing in the pension.

My opinion is the employer is trying to save on the hassle or the employer contribution.

If you pay in 4000, tax free contribution adds 1000 and say the employer pays in 5000 over the next 16 years, without even any growth how can a 4000 contribution from you becoming 10000 at retirement be a bad investment choice on your part? (Don't quote the figures, I don't know how the workplace contributions increase only that they started 2/2%)

lisyloo

Difficult to do if you are not already a taxpayer.

Yes correct (and point taken).

It's still usually advantageous to join a pension scheme because
a) there is a tax free lump sum of 25% which will help anyone who is a tax payer in retirement
and
b) often free money from the employer which you won't get if you don't join

BLB53

My employer advised me not to bother with the work place pension as I was too old for it to make a difference when I could retire and collect it, which hopefully would be 65.

For the reasons given, I recommend you sign up if possible as you will build a modest pension pot over the next 15 yrs or so and from 2019 you will get 3% from your employer. The only snag would be if your earnings are below £10K per year they do not HAVE to let you join the scheme.

xylophone

See

https://www.gov.uk/workplace-pensions/joining-a-workplace-pension

The employer does not have to enrol you but he should not be discouraging you from joining.

You earn more than £490 a month therefore he must contribute to your pension.

What kind of scheme is offered and is it "net pay" or "relief at source"?

http://www.scottishwidows.co.uk/extranet/literature/doc/fp0491

It will be better for you if RAS.

xylophone

The only snag would be if your earnings are below £10K per year they do not HAVE to let you join the scheme.

They do not have to AE you - however, (see link above)

You can usually still join their pension if you want to. Your employer can’t refuse.