Pulling out of pension

sophie142

In recent years I’ve been diagnosed with a long term health condition that on average reduces my life expectancy by 8 years. Plus there are other hereditary health conditions in my family - which I haven’t developed yet, I’m an otherwise healthy 31 year old. My workplace takes 10% of my salary for my pension but I’m thinking of withdrawing because I don’t feel I will fully benefit from it, even if I take it early it will be reduced. What do you think about pulling out? And should I invest my money in another property instead? 

dunstonh

What do you think about pulling out?

Do you have a spouse or other dependents?     Whilst you may not gain if you die before age 57, they would certainly gain from the pension and it's better than any alternatives for them.

And should I invest my money in another property instead? 

That is not a logical option as you are just replacing a tax efficient investment option for the longer term with a less tax-efficient investment option for the longer term (and don't get your employer paying for up to half of it as you do with the pension)

If your life expectancy is 8 years less then you are still looking at late 70s.   So, the pension will have plenty of time for you to access and draw upon it.

Daliah

Why would you want to give up the free money your employer contributes to your pension?

What if you live to the average age a woman in the UK lives to (some 83 years)? What if you live even longer than average? Even if you cannot expect to live past 75 (83 minus 8), what would you expect to live off after you stopped working? 

Why would you want to be landlord? How much do you know about being a landlord?

Alexland

By getting to 31 you have already extended your life expectancy above average as you didn't die in the first 31 years as such even with a reduction of 8 years (or more or less) it still seems likely you will have a decent period of retirement if you invest enough money into your pension to enable you to retire at a reasonable age (or earlier).

Albermarle

My workplace takes 10% of my salary for my pension 

This does not make sense, as the minimum auto enrolment percentages are 3% from employer and 5% from employee. As far as I know you can not be forced to put more in, although many people do, especially if the employer will also increase their % at the same time.

So at some point you must have elected to pay 10%, rather than 5% ? Although I would not recommend it, at least just reducing how much you pay, would be a better option than opting out altogether.

MX5huggy

Is your pension a Defined Benefit scheme (Final salary, likely public sector) or a Defined Contribution?  

Exodi

Albermarle said:

My workplace takes 10% of my salary for my pension 

This does not make sense, as the minimum auto enrolment percentages are 3% from employer and 5% from employee. As far as I know you can not be forced to put more in, although many people do, especially if the employer will also increase their % at the same time.

So at some point you must have elected to pay 10%, rather than 5% ? Although I would not recommend it, at least just reducing how much you pay, would be a better option than opting out altogether.

Probably a DB pension.

@OP I would not stop investing in a pension, especially as it typically forces employers to contribute also.

There's always the option of drawing the money quicker. While not very tax efficient, you are entitled to withdraw the whole lump sum immediately as you reach your mid 50s, - at least you can if the funds were in a DC scheme.

I think it would not be in your financial interests to stop investing in a pension.

callum9999

Alexland said:

By getting to 31 you have already extended your life expectancy above average as you didn't die in the first 31 years as such even with a reduction of 8 years (or more or less) it still seems likely you will have a decent period of retirement if you invest enough money into your pension to enable you to retire at a reasonable age (or earlier).

While I agree with your conclusion, reaching age 31 doesn't at all mean you've "extended beyond average life expectancy".

97% of the UK live beyond the age of 50, so reaching 31 means absolutely nothing whatsoever in terms of future health. But I don't doubt the OP has many healthy years to come.

Albermarle

callum9999 said:

Alexland said:

By getting to 31 you have already extended your life expectancy above average as you didn't die in the first 31 years as such even with a reduction of 8 years (or more or less) it still seems likely you will have a decent period of retirement if you invest enough money into your pension to enable you to retire at a reasonable age (or earlier).

While I agree with your conclusion, reaching age 31 doesn't at all mean you've "extended beyond average life expectancy".

97% of the UK live beyond the age of 50, so reaching 31 means absolutely nothing whatsoever in terms of future health. But I don't doubt the OP has many healthy years to come.

Your average life expectancy increases as you get past a certain age, as you have survived childbirth, childhood serious illnesses/disability and probably more important avoided a fatal car/motorbike/pedestrian/e scooter accident.
The average life expectancy for a male ( from birth) in the UK is 79, but a 65 year old man will live on average 20 years.

lisyloo

callum9999 said:

Alexland said:

By getting to 31 you have already extended your life expectancy above average as you didn't die in the first 31 years as such even with a reduction of 8 years (or more or less) it still seems likely you will have a decent period of retirement if you invest enough money into your pension to enable you to retire at a reasonable age (or earlier).

While I agree with your conclusion, reaching age 31 doesn't at all mean you've "extended beyond average life expectancy".

97% of the UK live beyond the age of 50, so reaching 31 means absolutely nothing whatsoever in terms of future health. But I don't doubt the OP has many healthy years to come.

Err mathematically yes it does.
if 97% live until 50, then the 3% that didn’t are still affecting the “mean” average of life expectancy “at birth”
anyone that lives until 31 has a higher life expectancy than they did at birth, because that figure includes a number who died before 31 (albeit a small number).

an 8 year shortening still leaves a lot of retirèment years to cater for.

callum9999

Albermarle said:

callum9999 said:

Alexland said:

By getting to 31 you have already extended your life expectancy above average as you didn't die in the first 31 years as such even with a reduction of 8 years (or more or less) it still seems likely you will have a decent period of retirement if you invest enough money into your pension to enable you to retire at a reasonable age (or earlier).

While I agree with your conclusion, reaching age 31 doesn't at all mean you've "extended beyond average life expectancy".

97% of the UK live beyond the age of 50, so reaching 31 means absolutely nothing whatsoever in terms of future health. But I don't doubt the OP has many healthy years to come.

Your average life expectancy increases as you get past a certain age, as you have survived childbirth, childhood serious illnesses/disability and probably more important avoided a fatal car/motorbike/pedestrian/e scooter accident.
The average life expectancy for a male ( from birth) in the UK is 79, but a 65 year old man will live on average 20 years.

You're just quoting statistics without appreciating what it actually means in reality... The number of people who die before 31 is so tiny that reaching that age will have no appreciative difference to life expectancy.

You yourself acknowledge that the difference at age 65 is only 6 years, what's the difference at 31 - 6 weeks?