How to not be auto enrolled into pensions?

Silvertabby

Sadly, this attitude isn't new and doesn't only apply to AE.

During my years as a LGPS administrator, I spent more time than you'd like to think trying to persuade people not to opt out of a public sector DB scheme.  I rarely succeeded as, by the time they rang me to request the necessary opt out forms, I suspect that they had already mentally 'spent' their extra money.

I've listed some of the more incredible reasons for opting out on these boards before but, for the benefit of new readers:

My husband has a good pension, so I don't need this one as well.

It's just another Council tax, and if I don't have to pay it I won't.

The LGPS is a rip off - you are charging me over £100 per month when Stakeholder pensions are only  £20 per month.

Now that the State pension will be the same as my wages, I don't need this.  After I had explained what restoring the link between salaries and the State pension really meant (this was some years ago) she still opted out, arguing that the money was better in her pocket than the Council's.

And there were many more....  I wonder how they feel now.

Flugelhorn

I worked for a NHS contracted social enterprise, I had already taken my NHS pension (only they wouldn't have known that) - they wanted to auto-enrol me and gave me warning that that was what they were going to do, no money was taken and when I declined and explained the reasons (ie that I was ineligible) they were fine about it. 

I agree it would be more helpful if people were warned and then could opt to do as they wish. 

Personally I am glad that some HR person in the early 80s said to me "tick this box and you'll get a pension in several decades" 

Grumpy_chap

AnnoyedEnergyUser said:

Every three years I go through the same process without warning I have anything between 60 to 100 pound taken from my wages, I get a letter just after saying I have been auto enrolled into a pension scheme 

You have not mentioned your age, so how long until retirement.

Auto-enrolment contributions are 5% employee plus 3% employer on salary above £6,240 per year.
Assuming the £60 to £100 deductions are from monthly salary, that works out:
£60 per month = £720 per year which is 5%, so salary £14,400 + £6,240 = £20,640
£100 per month = £1,200 per year which is 5%, so salary £24,000 + £6,240 = £30,240
(Some employers apply the auto-enrolment percentage to full salary, if so, that would make the OP's salary £14.4k or £24k)

The OP needs to consider the current salary, from which they want no deductions as money is tight, and their future life-style if they are reliant on state pension only in retirement.  Currently a bit under £10k.

If it were me, getting the pension habit young is a good thing.  If you are too old to get the pension habit young, then get the pension habit as soon as possible.

Obviously, the OP has not given their full information (age - other investments - private income streams - future earning potential much higher than current - etc) so they may not be heading on a path to state pension only retirement.  There is this comment:

AnnoyedEnergyUser said:

I have my own savings, I would rather have access to my own money when its needed 

If you have adequate private means so that the projection of retirement on state pension only will not materialise then, if it were me, having the auto-enrolment pension would be something I'd still do as there is the free money from the employer contribution, tax efficiency, plus this would be another easy diversification of investment.

LHW99

Also, assuming this is a DC pension, if the OP has / will in future have a spouse / family, any (residual) DC savings built up will be tax free to their beneficiaries if they walk under a bus before 75, and taxed at beneficiaries rate afterwards, plus not counted towards their estate (as things are currently, though granted this may be changed, but possibly not retrospectively).

L9XSS

55ryan said:

I'm seeing this kind of 'not interested in a pension' quite a lot. Typically those in their 20's. I have a relative who absolutely refuses to 'give' money to a pension they may not see for 40 years and uses stupid arguments that they want a ps5 console now/go on a holiday with his mates.  Again, much the same as the poster said about a data grabber for the government, my relative has said the same thing.

I think the problem is there are too many social media 'experts' dismissing pensions, saying the government will have it or the world won't exist then due to global warming.

The reality is....pay nothing into a pension at all and you will be back on here in the future blaming the government for not making things more clearer, blaming those on here, blaming.....everyone but yourself.

Pensions, like any form of insurance is foolish not to contribute to. Your future self will be hunting you down.  

My present self regular congratulates my “past self” for the following
a) Overpaying my mortgage so that the 25 year term was paid off 11 years early (saving 000’s in interest payments to the bank.)
b) Setting up a SIPP to run alongside my company pension schemes.
Now allowing my future self in 6 years time to be FIRE.

All the above through help and guidance from these forums.

Sea_Shell

L9XSS said:

55ryan said:

I'm seeing this kind of 'not interested in a pension' quite a lot. Typically those in their 20's. I have a relative who absolutely refuses to 'give' money to a pension they may not see for 40 years and uses stupid arguments that they want a ps5 console now/go on a holiday with his mates.  Again, much the same as the poster said about a data grabber for the government, my relative has said the same thing.

I think the problem is there are too many social media 'experts' dismissing pensions, saying the government will have it or the world won't exist then due to global warming.

The reality is....pay nothing into a pension at all and you will be back on here in the future blaming the government for not making things more clearer, blaming those on here, blaming.....everyone but yourself.

Pensions, like any form of insurance is foolish not to contribute to. Your future self will be hunting you down.  

My present self regular congratulates my “past self” for the following
a) Overpaying my mortgage so that the 25 year term was paid off 11 years early (saving 000’s in interest payments to the bank.)
b) Setting up a SIPP to run alongside my company pension schemes.
Now allowing my future self in 6 years time to be FIRE.

All the above through help and guidance from these forums.

This ^^^^


Decisions you make today, can have profound effects on your future.

Both good and bad.   


Make the good decisions, with all the best information available to you.

Roger175

Here's a tale to make you think - some years ago, when I was probably in my early 40's, I was having a conversation with my brother-in-law. He is 5 years older than me and lives a very different lifestyle. I have always been very health conscious and apart from enjoying a glass of wine or 6 too many on occasions, I am pretty fit and healthy for my age (59 next month). Contrast this with my brother-in-law, who has always eaten total crap and drinks like a fish (I think probably alcoholic), he is seriously overweight (think 25 stone) and has all manner of serious health conditions. He has had both knees replaced and suffers from heart and chest problems etc. You get the picture! Anyway, the chat in question led to me asking him about what he was doing in terms of pension planning - he just burst out laughing, threw his arms in the air and said, "look at me, can you really see me making it to retirement age, not a hope and so I don't bother with all that crap". This is a guy who has always earnt serious money and could easily have set aside a good wedge.  Anyway, you know where this is going!.... 20 years later, and I am winding down to early retirement, my brother-in-law is in a serious way, he can hardly walk and you can see he is in constant pain, yet he simply can't afford to retire and given his lifestyle, he's going to struggle financially even when he gets to SPA. Just saying!

molerat

I have just been looking in my personal dictionary.

Pension  The ability, at the age of 54y 11m, to tell your boss to stick his job where the sun don't shine and never have to look back or worry where your next meal is coming from

Each to their own views I suppose.

Silvertabby

Roger175 said:

Here's a tale to make you think - some years ago, when I was probably in my early 40's, I was having a conversation with my brother-in-law. He is 5 years older than me and lives a very different lifestyle. I have always been very health conscious and apart from enjoying a glass of wine or 6 too many on occasions, I am pretty fit and healthy for my age (59 next month). Contrast this with my brother-in-law, who has always eaten total crap and drinks like a fish (I think probably alcoholic), he is seriously overweight (think 25 stone) and has all manner of serious health conditions. He has had both knees replaced and suffers from heart and chest problems etc. You get the picture! Anyway, the chat in question led to me asking him about what he was doing in terms of pension planning - he just burst out laughing, threw his arms in the air and said, "look at me, can you really see me making it to retirement age, not a hope and so I don't bother with all that crap". This is a guy who has always earnt serious money and could easily have set aside a good wedge.  Anyway, you know where this is going!.... 20 years later, and I am winding down to early retirement, my brother-in-law is in a serious way, he can hardly walk and you can see he is in constant pain, yet he simply can't afford to retire and given his lifestyle, he's going to struggle financially even when he gets to SPA. Just saying!

Even sadder.......

A LGPS member opted out and took a refund of his pension contributions to help pay for his wedding.  He said at the time that he would opt back in as soon as he could afford to, but he never did....

Some years and at least a couple of young children later, he was sadly killed in a RTA.  His line manager (who clearly had no idea that anyone would/could opt out of the LGPS) visited his wife to tell her not to worry about money, as she would get a tax free lump sum of 3 X his (substantial) salary plus an enhanced life time pension for her plus pensions for the children until they left Uni.

They didn't get a penny. 

GingerTim

Silvertabby said:

Roger175 said:

Here's a tale to make you think - some years ago, when I was probably in my early 40's, I was having a conversation with my brother-in-law. He is 5 years older than me and lives a very different lifestyle. I have always been very health conscious and apart from enjoying a glass of wine or 6 too many on occasions, I am pretty fit and healthy for my age (59 next month). Contrast this with my brother-in-law, who has always eaten total crap and drinks like a fish (I think probably alcoholic), he is seriously overweight (think 25 stone) and has all manner of serious health conditions. He has had both knees replaced and suffers from heart and chest problems etc. You get the picture! Anyway, the chat in question led to me asking him about what he was doing in terms of pension planning - he just burst out laughing, threw his arms in the air and said, "look at me, can you really see me making it to retirement age, not a hope and so I don't bother with all that crap". This is a guy who has always earnt serious money and could easily have set aside a good wedge.  Anyway, you know where this is going!.... 20 years later, and I am winding down to early retirement, my brother-in-law is in a serious way, he can hardly walk and you can see he is in constant pain, yet he simply can't afford to retire and given his lifestyle, he's going to struggle financially even when he gets to SPA. Just saying!

Even sadder.......

A LGPS member opted out and took a refund of his pension contributions to help pay for his wedding.  He said at the time that he would opt back in as soon as he could afford to, but he never did....

Some years and at least a couple of young children later, he was sadly killed in a RTA.  His line manager (who clearly had no idea that anyone would/could opt out of the LGPS) visited his wife to tell her not to worry about money, as she would get a tax free lump sum of 3 X his (substantial) salary plus an enhanced life time pension for her plus pensions for the children until they left Uni.

They didn't get a penny. 

That is horrendous.