Clueless about auto enrolment

HappyBirthday

I have just returned to the UK on PAYE for the first time in many, many years. I have just discovered the auto enrolment into a private pension for employees regime. 
Bearing in mind ;
1. I am 50.
2. I have my own considerable 'pension pot' in ISA's.
3. I think I will live longer than the average.
What would be the pros and cons of staying in or opting out of this auto enrolled private pension. Here are my 'clueless' ideas
Pros
Stingy employer is forced to cough up 3% of my net salary in contributions to bump up the private pension.
I get some an extra £1 in tax relief for every £4 I put in.
Cons
I don't trust my employer to manage my money. Could they fiddle it somehow by having a relationship with the pension provider?
I don't trust the government. Could they move the goalposts somehow?
I definitely don't want to be forced to buy an annuity somewhere down the line.
The money will be locked in until I am 55, 60, 65 or 67. With my ISA's I can take money out whenever I like (though I hardly ever do).


Any advice or links would be welcome.

Stubod

I guess it's up to you depending on your future needs, but in general all employers now have to auto enroll all employees into an approved scheme. The employee can then choose to "opt out" if they don't like the idea of free money or having a pension in later life. Legislation ensures that the pension schemes are "protected" so your money is "safe". If you do opt out I think the employer still has to "opt you back in" every so often and you then have to chose to opt out again, (I think that's correct but I may have dreamt it!) Basically the gov. are trying to ensure that everybody has a private pension, I assume because at some point in the future they can remove / reduce / means test the state pension...

hyubh

Stubod said:

Basically the gov. are trying to ensure that everybody has a private pension, I assume because at some point in the future they can remove / reduce / means test the state pension...

No need to speculate about future changes - AE directly facilitated the replacement of old basic + additional state pension with the (lower) single tier one.

hyubh

Stingy employer is forced to cough up 3% of my net salary in contributions to bump up the private pension.

Yes, opt out and you won't get the money as salary instead.

I don't trust my employer to manage my money. Could they fiddle it somehow by having a relationship with the pension provider?

Unless you work for an insurer, it will be pushing it to say they will be managing your pension money. By law they need to have appointed a pension provider, but beyond the interaction with payroll, that will basically be that in terms of the employer's 'hands on' role.

I don't trust the government. Could they move the goalposts somehow?

Of course, there's fiddling with the tax regime every year.

I definitely don't want to be forced to buy an annuity somewhere down the line.

Very unlikely blanket compulsory annuitisation would occur in the next 15 years - aside from no political party calling for it currently, there are serious practical issues with the mass of small pension pots under AE.

The money will be locked in until I am 55, 60, 65 or 67.

55 at present, prospectively to be kept 10 years before SPA, but hasn't happened. And you're already 50!

Albermarle

Pros
Stingy employer is forced to cough up 3% of my net salary in contributions to bump up the private pension.
I get some an extra £1 in tax relief for every £4 I put in.

I don't trust my employer to manage my money. Could they fiddle it somehow by having a relationship with the pension provider?

So you pay £4 and get £8. Probably pay 15% tax when you take it ( 25% tax free and the rest at 20%) so you are left with £6.80.
If you pay £4 into your ISA , you have £4 . Not sure what you are complaining about .

Your employer does not manage your money and if you leave the company the pension comes with you .

JoeCrystal

HappyBirthday said:

I have just returned to the UK on PAYE for the first time in many, many years. I have just discovered the auto enrolment into a private pension for employees regime. 
Bearing in mind ;
1. I am 50.
2. I have my own considerable 'pension pot' in ISA's.
3. I think I will live longer than the average.
What would be the pros and cons of staying in or opting out of this auto enrolled private pension.

The main pro will be getting extra money, of course. If you opted out, you would be taking a pay cut.  Nothing is stopping you from contributing money from ISA to get tax relief on it up to your salary as well.

HappyBirthday said:

Cons
I don't trust my employer to manage my money. Could they fiddle it somehow by having a relationship with the pension provider?
I don't trust the government. Could they move the goalposts somehow?
I definitely don't want to be forced to buy an annuity somewhere down the line.
The money will be locked in until I am 55, 60, 65 or 67. With my ISA's I can take money out whenever I like (though I hardly ever do).
Any advice or links would be welcome

The only relationship with the pension provider is to choose the pension scheme and pay into it. It is up to you to manage your money, not the employer (If it is a DC pension scheme). As for the government, so? of course, they will move the goalposts. There is always a slim possibility of withdrawing the tax-free status of ISAs as well. You are no longer forced to buy an annuity either.

Barney_Rubble_0403

The employer is not the one doing the investment. They act as the go between and pass the funds deducted from your salary along with their own employers contribution onto the approved pension provider (Nest being one).
You are under no obligation to enrole.

badmemory

Turning down a pension contribution from your employer seems like a really bad idea.  Most of these pensions now allow you to see online how your pension is doing.  Employers have a date (sorry forgotten how long it is) by which they should pay the contributions (their & yours) into your "fund", so if you really distrust them then you can access this & check that the contribution has been received by that date.  You may well be able to transfer the fund when you retire into something like a SIPP rather than taking an annuity.  Once the employer has tranferred the money that is the end of their input, they have zero access.

Dazed_and_C0nfused

As well as giving up free money not contributing yourself can actually mean you are volunteering to pay more income tax on your wages.  Not something many would do.

xylophone

Have you looked into any state pension provision you may have?

triplea35

If your pension provisions are within ISA's you will not be utilising your personal allowance on retirement. You could effectively withdraw the workplace pension entirely tax free.