Standard Life work pension

Gam2015

I’m currently 35 and paying in to a standard work pension with standard life. I’ve been paying in for the last 5 years is it worth ditching it and not bothering with it? 

Dazed_and_C0nfused

Gam2015 said:

I’m currently 35 and paying in to a standard work pension with standard life. I’ve been paying in for the last 5 years is it worth ditching it and not bothering with it? 

If you want to potentially pay more tax and give up free money from your employer and have a poorer retirement then yes you are wasting money putting it into the pension.

Albermarle

Gam2015 said:

I’m currently 35 and paying in to a standard work pension with standard life. I’ve been paying in for the last 5 years is it worth ditching it and not bothering with it? 

More likely that it would be a good idea to put more in it.

gm0

Various things to take into account:

1) Bad news in markets this year like other times before - 2007/8 as a big example and .com crash 1990s, and many others. Is not a reason to stop saving.  Quite the opposite.  A good opportunity to keep on buying investment assets at cheaper prices.  When markets recover (sometimes much later) the cash saved during the dip bought more units than at the peak and you have more money at the end than if the journey had been smoother.  Pound cost averaging working for you.

2) Pension access age is 55 (and rising) - will generally be around State Pension age -10 or so but government tend to meddle - but once money is inside a pension it's locked up "for retirement".  Not flexible. All promises made by sales people to unlock it or deliver it to you earlier than pension access age are scams of one kind or another. 

3) Because of 2 and a desire that people make private provision for retirement - you get an incentive from the government - tax relief on the contributions made to pension saving.  Free money.  Don't enrol. Don't get. Sure - the salary deductions not going to the pension (less income tax) will turn up in net pay if not in the scheme.  But you lost out on the tax relief added on in the pension.  And some % employer matching contributions are added on as well in many cases.  Double whammy for opting out.

Because pension saving in employment is a common part of salary packages and has been for decades - employers often add a contribution alongside the employee salary deduction as part of your benefits.  This is also more free money.
And if not enrolled because you opted out.  You don't get it - it is typically just lost.  Happy employer.  Unhappy you (later).
More rarely you are able to negotiate how your salary and benefits are structured but for most people what I wrote is a fair summary.

Because of 2,3 - this is the best deal that is likely to be on offer to save money out of earnings for later on. 
Tax relief added on.  No CGT on capital gains.  No inheritance tax either.  

Now none of this means that the SL product your employer's scheme uses is good/bad/indifferent - it is just the structure of pensions more generally.   It also doesn't make the fund you are invested in good/bad.  It may be bad this year - if you have just had a letter with a negative investment return on it.  The worst of those I had along the way was down by about 50% in the days when they wrote to you once a year and there was no web access to look at it.

So the questions you should ask yourself are:

1) How much does the employer put in ?  Is it affected by what I put in or my age ?.  Am I getting all the free money I could get.   Can I manage this level of saving ? Less ? More ? What is the right level for me (long term) given other goals ?

2) Is the pension invested the way you want - enough risk taken to grow - often expressed as % Equities but it's more than that ?

3) How much is it costing to "run" this pension i.e. SL charges.  Should you move job you may later want to move it, or not depending upon the answer to this.  By default it commonly stays where it is and you enrol/don't in a new one at a new employer.

Good luck working out what to do

dunstonh

Gam2015 said:

I’m currently 35 and paying in to a standard work pension with standard life. I’ve been paying in for the last 5 years is it worth ditching it and not bothering with it? 

It may help us answer your question better if you explain why you think being on the breadline for 25 or so years at the end of your life is a good idea.

LV_426

Gam2015 said:

I’m currently 35 and paying in to a standard work pension with standard life. I’ve been paying in for the last 5 years is it worth ditching it and not bothering with it? 

No. Unless you're already in possession of a £1m pension fund.