Is my workplace pension worth it

dumbo

I currently have a workplace pension with workers pension trust, I only work 26 hours per week, I pay approx £15 per week & my employer £13 for last 4 years. My statement arrived recently & said I would receive £750 per year assuming the amounts paid in were the same. I have a SIPP with another company & im thinking of stopping my workplace pension & paying my £15 in there on top of what I currently pay, the figure of £750 seems very low. Could I transfer what has been paid in to my own SIPP as I don't think £750 will be any use to me.
I'm not sure if this is allowed & would appreciate your feedback.TIA

NoMore

So you don't like free money? Fair enough, but I would rather have 28 (15+13) going into a pension every week rather than 15.

Ignore the projections of the pension, they are usually very pessimistic .

Dazed_and_confused

You don't say how much you are earning but if you stop contributing your PAYE tax will probably increase by £3 and you will lose your employer's contribution of £13.

But you would gain basic rate tax relief at source on the SIPP contribution. So paying in £15 (assuming you can suffer the extra PAYE tax hit) would add £18.75 into your SIPP pension.

So overall a net loss of £12.25 (£16 less £3.75)

Why not continue with the company pension, keeping tax as it is, and getting the £13 free money from your employer and contribute separately into your SIPP?

And four years isn't a massive period to have built up much in the first place.

dumbo

I understand that I will lose £13 from my employer, but at today's assumptions I would only receive approx. £62 per month, which is almost equivalent to what I myself pay into the workplace pension. I only earn £11000 approx per year & im 47 years old & due to disability I don't expect to work past 60, if I'm even able to get that far. Can I transfer the amount which is transferable on statement into my SIPP, meaning I havnt lost anything? I don't really understand pensions, so please forgive my ignorance.

Dazed_and_confused

You might not actually benefit from tax relief on that pension then as it operates a "net pay" system.

Depends if you have any other taxable income and whether you have applied for Marriage Allowance.

You'd have to ask scheme administrator if it was transferrable but giving up that £13 from your employer shouldn't be done lightly. Don't forget that the pension might be paid for 30-40 years.

Albermarle

but at today's assumptions I would only receive approx. £62 per month,

As already mentioned , this projection will be on the very pessimistic side ( once they used to be too optimistic but after new rules they have swung the other way ) so I would not base a decision just on that .

dumbo

Thank you for your advice, I will speak with the administrator & see what my options are. Thank you again ��

Sea_Shell

Pension predictions seem to have swung mega pessimistic these days.

Just had one statement in (Phoenix Life) where they're using...-2.3%, -1.95% & 1.46% for their predictions!!! Wowsers.

Linton

The £750/year is probably in todays £s, so at 2.5% inflation this would be £1229 in cash terms. However as has been said the projections use pessimistic assumptions. You do not know whether the money would get a better return in your SIPP especially taking into account the loss of your employers contribution.


If you paid more into your work pension would your employer pay in more?

dunstonh

My statement arrived recently & said I would receive £750 per year assuming the amounts paid in were the same.

Ignore that. It uses assumptions that are woefully low and unrealistic. Plus, it shows it in todays term. Not future money terms.

I have a SIPP with another company & im thinking of stopping my workplace pension & paying my £15 in there on top of what I currently pay, the figure of £750 seems very low.

That would be daft. £15 going into the SIPP costing you £15 but £30 going into the workplace pension costing you £15. Clearly the workplace pension is miles better and the SIPP will never match it.

The rate you draw as an income would be the same whether its in a SIPP, workplace pension or whatever. It is a flaw in the statements that requires them to use such silly rates at this time.

dunstonh

Sea_Shell wrote: »

Pension predictions seem to have swung mega pessimistic these days.

Just had one statement in (Phoenix Life) where they're using...-2.3%, -1.95% & 1.46% for their predictions!!! Wowsers.

And they are the gross return rates before charges. Just to make them even worse.