query re my pension

weegie_2

I have a very quick pension question - my first post on this board so please be gentle :-)

I pay into my work pension, £120 a month. It's a good pension and I've been paying into it approx 10 years.

I'm a bit strapped for cash at the moment, been using credit card too much, decorating etc etc. Living beyond my means basically which is a daft thing to do. I want to get myself out of this financial pickle asap and along with various other cutbacks etc I spoke to my employer about opting out of the pension scheme for 6 months to a year (so that I could then use my money that I pay to my pension to then pay off some bills).

I can opt out and then back in. If I rejoin I will have 2 periods of pensionable service.

I don't understand an awful lot about pensions really but would this be a really bad thing to do? Opt out for a maximum of a year?

jonathon_hart

Are the contributions you pay Voluntary or Compulsory? i.e does the money automatically get deducted from your pay or did you ask them to pay in additional amounts on your behalf.

If they are voluntary then you should be able to statr and stop them whenever you wish.

If they are compulsory then it is a bit more difficult. If you opt-out of the pension scheme entirely then you may not be allowed back in or may be different terms. In addition have they confirmed that you will definitely be paid that extra money.

Be careful with the term opting-out it is a very specific term that relates to leaving the pension entirely.

EdInvestor

weegie wrote: »

I can opt out and then back in. If I rejoin I will have 2 periods of pensionable service.

Check that the terms and conditions of the second period are the same as the first.Many final salary pensions have recently been closed to new entrants (which would be how they classify you when you opt back in) and an inferior type of pension substituted.

If this is the case it would be a bad move to opt out and then in again.

weegie_2

many thanks for getting back to me.

The pension is voluntary not compulsory and I can rejoin no problem.

Good point about the second pension and the terms/conditions of it. I'll check that out.

Much appreciated!

jonathon_hart

In that case why do you need to optout? Simply stop the voluntary contribution - this is not the same as opting out. This will mean the point about the second pension is now redundant.

wayoflife

regardless of anything I wouldn't opt out then back in, as it has been mentioned there will almost certainly be new T&C'S which will be disadvantageous

also if you do it this time, then you will be tempted to do it again, and again.

...And you must remember that the pension contributions are NOT TAXED therefore your £120.00 will end up about £80.40 (assuming 33% Tax and NI)

my advice is post something in the credit cards section about what you need to pay off and how long, how much interest e.t.c. the chances are youll be MUCH better off by doing a credit card shuffle (there are some very good deals out at the moment)