Private pension or several smaller employee ones?

MoonChild91

I've started to think about getting my finances more in order for the future, but can't get my head around pensions!

For background, I'm 31, own no property, and currently have 8 years full NI payments so should receive the state pension if I carry on as I'm doing. I currently have about £2k in a pension pot from a previous job I was at for 3 years, but in others have never earnt enough to pay in - I've had at least 2 jobs at any one time since about 2016 (I work in the arts, so this is really quite common). At the moment I'm working one job for 21 hours a week in a university and have recently been auto-enrolled for their company pension scheme, and have been working temporary contracts in museums and galleries on the side which obviously don't qualify for pension schemes. This wasn't the plan, but I quit a full time job in April with nothing lined up and couldn't be out of work for long. I am however enjoying this set-up as it allows me to make sure my essentials are covered by a main job whilst still working something I enjoy on the side; though I don't think I'm planning on staying at the university long as I don't enjoy this particular position. 

My worry is that by working temporary contracts and part-time positions I'm setting myself up for a fall later when it comes to retirement. Would I be potentially better by opting out of any employer pensions and just contributing a % of my OVERALL monthly salary from both jobs into a private scheme, and therefore having one pension pot, or continuing in having multiple smaller pots from various jobs? I'm aware that the amount paid in by employers is not to be sniffed at, but if this only takes into account 2/3 or 3/4 of my overall earnings is this enough?

El_Torro

You should definitely stay in your employer's pension scheme. They contribute too so there's no point in giving up that contribution.

There's nothing stopping you from also setting up a private pension and paying into that. Or making additional voluntary contributions to your employer's scheme. 

Albermarle

 I'm aware that the amount paid in by employers is not to be sniffed at,

Correct, throwing away free money is not the way to increase your retirement pot.

 and therefore having one pension pot, or continuing in having multiple smaller pots 

The main issue is how much money is going in, either from your or your employer . Whether the pot is held in one pension or ten is of secondary importance. Personally for simplicity I would first consider increasing your contributions to your current employer pension. Later you could look at consolidating the various pots/reducing the number , just for ease of admin. If you change address make sure you tell them all. 

My worry is that by working temporary contracts and part-time positions I'm setting myself up for a fall later when it comes to retirement.

Yes having a well paid full time employment is likely to improve your prospects of building up a decent retirement pot. Also you might be wanting to buy a property at some point, which will need funding. On the other hand you are enjoying the current flexibility, so maybe something for the future. 

MoonChild91

Thank you, this makes a little more sense! I was worried I would some how lose out by having multiple pensions rather than one larger one. 

Is there any benefit to paying more in to my current employer pension vs setting up a longer term private one?

Brie

Check to see if your temp contract are willing to pay into NEST.  That way you will accumulate some ££ in one place when you change jobs.  But this is only if they are not offering their own scheme.

Also - be careful in case you leave a job with it's own scheme within 2 years.  You may find some schemes will suggest that you need to either have a refund of your contributions (losing any addition contributions made by the employer) or they can transfer the entire pot to another scheme.  You may want to be ready by setting up a private pension for yourself when you are approaching a leave date with an employer so you don't lose out.

biscan25

Even if you do not meet the qualifying criteria for auto-enrolment in your temporary jobs (earning over £10k pa), you may be able to opt in and receive an employer contribution if your earnings are over £6k pa.

Employer pension schemes tend to have lower expenses than private pensions as a rule of thumb, but this is not universally true.

Albermarle

Also - be careful in case you leave a job with it's own scheme within 2 years.  You may find some schemes will suggest that you need to either have a refund of your contributions (losing any addition contributions made by the employer) or they can transfer the entire pot to another scheme.  You may want to be ready by setting up a private pension for yourself when you are approaching a leave date with an employer so you don't lose out.

Normally this type of issue only crops up AFAIK, with defined benefit/public sector pensions, which are directly linked with the employer. The type of small DC/autoenrolment pensions the OP is collecting , will not be refunded and they will keep them, however small they are.

Is there any benefit to paying more in to my current employer pension vs setting up a longer term private one?

Some employers pay more % ( up to a limit) the more you pay. If this is the case you should always maximise employer contributions by paying the appropiate % yourself into the employer scheme.

Otherwise you need to compare the charges from your employer scheme to a separate one, but whilst the level of funds are still low, it is unlikely to make any significant difference. Also some employer schemes have limited investments choice, but for the large majority this is not an issue.

I would just concentrate on adding as much as you can afford to the employer scheme for now. When you leave the pension will just come with you. 

MoonChild91

Ah, I didn't know about NEST - though most of my temporary contracts are with charities or for less than 3 months, so I doubt they'd be willing to go this route. My current 2nd job is well under £6k a year too... I feel I should say here I am obviously looking for something better, but this is a little bit of a blip and the industry I work in is in general underpaid, though I am still managing to be a good saver and put £100/£200 a month away. 

So far I've never been with a job with its own pension scheme luckily! My current one is The People's Pension which is guaranteed for life even if you've only been in it a month and eligible for tax savings which seems pretty good? Though I can only increase my DC percentage rather than pay in differing amounts (which is ideally what I'd want to do as my earnings can vary quite a lot month to month). I am considering moving my existing pension pot mentioned earlier into this one, but I'm unsure if this is really worth doing?

I think what I've gathered so far is that I'm best to stick with my existing employer scheme, and then either increase my pay-ins to this, or invest any money I would consider adding to the pot into something else which would benefit me financially in the future (such as a property or an MA). Seems like private pensions can be quite complicated and expensive if you can't afford to pay large amounts in!

Albermarle

Peoples pension is fine, with low charges.

Are you aware that within a pension of this sort, your money is actually in investments within the pension?
There is a choice within the peoples pension, but if you do not choose anything it defaults to a middle of the road fund. As you are young, you might be be better off in the long term in a more adventurous option.

Investing your pension | The People's Pension (thepeoplespension.co.uk)