New job - should I opt-out of pension?

BigBoss

I have just started a new role that will last between 6-12 months. I can contribute anything from 4-8% and the employer tops up to 10%.

I am considering opting out because the length of the contract will mean that the final contribution won't be that much.

Thoughts?

Dazed_and_C0nfused

In which case you might have to pay more tax and would be turning down free money 

TheMilkmansDad

please - for the love of all - don't opt out. Just transfer it when you leave.

ischofie1

Opt in. 

You’re opting for a 10% pay cut + the tax saving from your own contribution if you don’t. 

Any money built up can be transferred to another scheme further down the line. 

Also another word of warning!
I worked with a colleague who didn’t opt in our DB scheme but decided to start his own private pension instead because he didn’t expect to stay long. 

20 years later he is still there. 

You never know what life throws up. 

xylophone

Opt in and transfer to your own personal pension when you leave?

MX5huggy

Opt in (or is that don’t opt out). 

Look at default fund choice maybe go for something at bit more aggressive. 

Sandtree

BigBoss said:

I have just started a new role that will last between 6-12 months. I can contribute anything from 4-8% and the employer tops up to 10%.

I am considering opting out because the length of the contract will mean that the final contribution won't be that much.

Thoughts?

Is this going to be a FTC or are you going via an umbrella or such?

Obviously if you go via umbrella then you pay both the employer and employee contributions and so its more questionable however if its FTC etc then clearly you shouldnt be giving up free money from your employer.

BigBoss

FTC @Sandtree

Thanks for the responses, sounds good. Should I go for the maximum of 8% then, to receive the 10% contribution?

I'm not actually sure if I'll be able to transfer at the end of the contract - can ANYONE do that with ANY pension?

ischofie1

Pay at least the minimum required to get the maximum company contribution. 

With this type of pension you will be able to transfer to any other money purchase (DC) pension further down the line. 

Aretnap

As noted, the fact that the employer matches your contributions, and the government refunds the tax you've paid on them on top, means that by opting out of the pension you would essentially be turning down free money.

Your concern seems to be that it's not worth collecting because it's only a little bit of free money. That's as maybe - but a little bit of free money is still better than no free money.

In fact, the default position is that you stay in the pension, and opting out requires extra work. So perhaps your question should be phrased as "is it worth my time filling in these extra forms in order to avoid receiving this small amount of free money?" When phrased like that, the question hopefully answers itself.

xylophone

I'm not actually sure if I'll be able to transfer at the end of the contract - can ANYONE do that with ANY pension?

There can be difficulties with pensions with " safeguarded benefits" (defined benefit pensions/policies with Guaranteed Annuity Rates etc) but if this is a standard DC/workplace pension, one wouldn't expect any problems.

Do you have a link to the provider's web site?

Example

https://www.nowpensions.com/members/manage-my-pension/transfer-my-pension/