Workplace Pension

pollyanna24

Currently I believe I pay 1% into my work pension as does my employer.

He has received an e-mail which says that it will go up to 3% (my contribution) and 2% (his contribution in April.

I know you can opt out of the pension altogether, but can I opt out of any rises?

I also have a private pension that I pay into (which started before auto enrollment) and was thinking a better course (at the moment as I have young children and two mortgages to pay) might be lowering the amount of the private pension monthly amount.

TAMB

Re your workplace pension, you have two broad options:
1) Pay the minimum or more (you can't opt to pay less than the minimum)
2) Opt out completely

I would think paying into your work pension is better than your personal pension due to the fact that the employer will pay in 2% (this will increase to 3%). Basically free money!

pollyanna24

TAMB wrote: »

Re your workplace pension, you have two broad options:
1) Pay the minimum or more (you can't opt to pay less than the minimum)
2) Opt out completely

I would think paying into your work pension is better than your personal pension due to the fact that the employer will pay in 2% (this will increase to 3%). Basically free money!

Thanks for this. I agree. When the time comes and I'm finding it hard (seeing as the payment is tripling for me), I might reduce down the private one for a while. Thanks again.

pollyanna24

Looking at the payment next year (April 2019) onwards, I might have to think about stopping the private one.

I'm assuming that what I have in there already will just sit and wait for me to retire? haha. It's not a huge amount, but I have been paying for the last four or five years or so.

TAMB

pollyanna24 wrote: »

Looking at the payment next year (April 2019) onwards, I might have to think about stopping the private one.

I'm assuming that what I have in there already will just sit and wait for me to retire? haha. It's not a huge amount, but I have been paying for the last four or five years or so.

It will most likely just remaining within the pension wrapper and stay invested. You should be able to restart contributions at anytime.

PeacefulWaters

Your employer is offering you free money. Prioritise getting that before any additional private pension arrangement you have.

Are there any circumstances where your employer would contribute more than 2%?

atush

Have you dont an MSE makeover? Checked you are getting the best deals on insurance/Utilities/phones etc?


If there is any waste to cut out, you might be able to afford both? When was your last pay rise?

pollyanna24

Thanks for everyone's replies.

I'm on the lowest I can for everything.

I chuck any spare money at my mortgages.

I know that my pension is very important which is why I started my private one. And I will continue paying both as long as I can, but I suppose in my head, my first priority is getting the mortgage payment down as I don't know how long I will be in my current job.

greatkingrat

Just to note that the minimum contribution will increase again in April 2019 to 5% employee and 3% employer, so you may want to bear that in mind when planning ahead.

kidmugsy

greatkingrat wrote: »

Just to note that the minimum contribution will increase again in April 2019 to 5% employee and 3% employer, so you may want to bear that in mind when planning ahead.

In which case she might be wise immediately to stop contributing to the private pension and to stop overpaying the mortgage. She could put the money aside for imminent and future contributions to the employer scheme. Free money should be harvested whenever possible.

If she eventually finds the cost of the employer scheme insupportable then she could return to overpaying the mortgage instead. Or maybe drop out temporarily, save like billy-oh, and then return to it for a while. Even intermittent membership would garner free money. Is jumping in and out allowed?

pennystretcher

Remember that even though your contribution rate will increase you will also get the tax relief on the contributions, so if you can, wait for the first payment to come off your salary to see the actual impact before you change your private pension contributions.

ps. I assume you have an emergency fund? If not, move the mortgage OPs into that until you have enough put aside - I think general recommendation is 6 months' income somewhere that you can access relatively easily.