Broker suggesting that I stop pension contributions

PensionNs

Thank you all for your comments, relieved to hear that it wouldn't be fraud.

Also I really appreciate the comments around my pension situation and will most definitely get in touch with the Pensions board when appropriate.

dimbo61

Auto enrolment from April means your now paying 5 percent and 3 percent from your employer plus tax relief so 10 percent in total.
Giving this up is madness.

muhandis

That's incorrect.

The minimum auto contributions are as follows -

Employee - 5% (including the tax relief)
Employer - 3%

Also, the statutory minimum is that these figures be calculated on the 'qualifying earnings' (above the LEL of 6,136), not the entire salary so effectively the contributions are likely to be less than 8% in total.

dimbo61 wrote: »

Auto enrolment from April means your now paying 5 percent and 3 percent from your employer plus tax relief so 10 percent in total.

Mortgage_Adviser

dimbo61 wrote: »

Auto enrolment from April means your now paying 5 percent and 3 percent from your employer plus tax relief so 10 percent in total.
Giving this up is madness.

This all is very debateable.


Continuing to rent but contributing to pension would potentially mean that there is signifiant amoutn of money will be wasted monthly for many many years (As the money paid in rent is 100% wasted as opposed to mortgage where proportion reduces the debt).


So there is a choice of having a good pension at 65-68 yo to which you may or may not to leave, or to live in your own home all those years and potentially benefit from a property value growths over those years.


Again it is debateable what will achieve a greater growth over the years, the pension fund or the propertty.


So this is very much about the priorities. Pension is a tricky thing. You may be contributing a lot but never see anything out of it if you were to die early.


You start benefiting from the home ownership straight away.

PensionNs

My priority at the moment is to buy a safe, stable and secure house to live in and start rebuilding my life. I completely understand the importance of a pension and will most certainly review my options once the former is completed.

I've started viewing properties and am just waiting for the first payslip without the deductions to go back to the broker. He sounded quite optimistic so hopefully it'll all work out!

Thrugelmir

Mortgage_Adviser wrote: »

This all is very debateable.

Pension provision , even at the minimum contribution levels, is sound personal financial management. While it doesn't seem a priority when one is younger. As the years tick by reality will kick in. Compounding is the key. Starting as early as possible makes a significant difference.

Thrugelmir

PensionNs wrote: »

However, my payslip has a deduction for pension payments which due to some new rules went up to 5% (as per HR) recently. This reduced my monthly net pay by a little less than £200 compared to my first 2 payslips in the job.

Does this include a back dated adjustment though?

[Deleted User]

Some lenders may ask for 3+ payslips, particularly if you are high LTV. So waiting for your first one without deductions won't work - you'd need at least 3 clear. That'll delay you further.

If you are using any variable income (overtime, bonus etc) they may ask for last years to support - and then query why you were in the pension then, but aren't now.

Although many are saying it isn't fraud, I'd say if the intention is to opt back in, it is certainly making a misleading declaration as to income/expenditure and so potentially fraud IMO.

I'm not a fraud specialist, but we'd refer income manipulation to our fraud team. Whatever it eventually gets 'flagged' as I'm not sure, but I'd certainly not want to do it. As above, so many lenders don't include it - there must be more for you.

If you're that tight on affordability that you need to opt out of the pension to pass, is it really the right thing to do to be getting a mortgage now? Particularly given the 'issue' around the pension opt out situation.

I do completely understand the house over pension argument, I'm a FTB with the same situation and had to opt out for 2 years to save my deposit, regrettably (my employer provides a really good pension). In the long run, getting a house is more important to me. Potentially could release equity in that too at a later date, however then the whole 'sell and downsize' argument comes into it.

I'd strongly recommend just going to another lender that works on gross pay. And if the broker is 'recommending'/'discussing' opting out of a pension to improve affordability, possibly another broker too!