Help with lack of pension quandary

Waspyyy

Hi all,

I have a bit of a stupid situation I hope someone can help advise on.

I am 42 with no pension - I opted out of my company pension about 3-4 years ago because I needed the cash. I've been at the company for around 6 years so I have about £3.5k in a pension pot thanks to the auto-enrolment but for all intents and purposes it's nothing. I also have a similar amount from my first job but again, this is essentially nothing. The interim years were spend in short term perm positions where I'd opted out (or just didn't enrol, no auto enrolment in those days) and 12 years contracting, so never set up anything.

To top it, I am around £30k in debt and are spending more than I earn right now. Assuming I can get the spending under control, here is my question: 

 is it wiser to use the £80 minimum pension payment I am not spending towards paying my debts off or paying in to the pension scheme? My wife is insistent I pay in to the scheme but even with 5% contributions from the company I doubt it will make more money than the debt interest takes away. I earn around £70k if that is useful info.

Many thanks

Dazed_and_C0nfused

Waspyyy said:

Hi all,

I have a bit of a stupid situation I hope someone can help advise on.

I am 42 with no pension - I opted out of my company pension about 3-4 years ago because I needed the cash. I've been at the company for around 6 years so I have about £3.5k in a pension pot thanks to the auto-enrolment but for all intents and purposes it's nothing. I also have a similar amount from my first job but again, this is essentially nothing. The interim years were spend in short term perm positions where I'd opted out (or just didn't enrol, no auto enrolment in those days) and 12 years contracting, so never set up anything.

To top it, I am around £30k in debt and are spending more than I earn right now. Assuming I can get the spending under control, here is my question: 

 is it wiser to use the £80 minimum pension payment I am not spending towards paying my debts off or paying in to the pension scheme? My wife is insistent I pay in to the scheme but even with 5% contributions from the company I doubt it will make more money than the debt interest takes away. I earn around £70k if that is useful info.

Many thanks

It is and I think the most likely view is going to be it's bonkers to give up part of your remuneration and pay more tax than is necessary for the privilege.

Even if you only contribute the minimum needed to get your maximum employer contributions that would seem the best place to start.

Depending on which method your employer uses you will either pay less tax (net pay), pay less tax and NI (salary sacrifice) or initially pay the same tax but get 25% added to what you pay within your pension and be able to claim some higher rate relief from HMRC (relief at source).

MallyGirl

with the pension you should get some matching from your employer plus you save on 40% tax - I really hope your debt interest is not worse than this.

MEM62

My first thought, you earn £70K and are spending more than you earn.  You really need to look at that.  Your debts are less than 50% of your income so you really should be able to get a handle on them.  I suggest you post an SoA. 

My second thought is that, without any retirement provision, you are going to go from earning £70 per year (along with whatever increases you might receive) to the State Pension income of £11,500 per year.  You really need to start ploughing as much as you can into your pension or retirement for you is going to extremely frugal.     

kimwp

Link to a statement of affairs calculator in my signature - this is the one we use on the debt free wannabe forum.

Waspyyy

Dazed_and_C0nfused said:

Waspyyy said:

Hi all,

I have a bit of a stupid situation I hope someone can help advise on.

I am 42 with no pension - I opted out of my company pension about 3-4 years ago because I needed the cash. I've been at the company for around 6 years so I have about £3.5k in a pension pot thanks to the auto-enrolment but for all intents and purposes it's nothing. I also have a similar amount from my first job but again, this is essentially nothing. The interim years were spend in short term perm positions where I'd opted out (or just didn't enrol, no auto enrolment in those days) and 12 years contracting, so never set up anything.

To top it, I am around £30k in debt and are spending more than I earn right now. Assuming I can get the spending under control, here is my question: 

 is it wiser to use the £80 minimum pension payment I am not spending towards paying my debts off or paying in to the pension scheme? My wife is insistent I pay in to the scheme but even with 5% contributions from the company I doubt it will make more money than the debt interest takes away. I earn around £70k if that is useful info.

Many thanks

It is and I think the most likely view is going to be it's bonkers to give up part of your remuneration and pay more tax than is necessary for the privilege.

Even if you only contribute the minimum needed to get your maximum employer contributions that would seem the best place to start.

Depending on which method your employer uses you will either pay less tax (net pay), pay less tax and NI (salary sacrifice) or initially pay the same tax but get 25% added to what you pay within your pension and be able to claim some higher rate relief from HMRC (relief at source).

Dazed_and_C0nfused said:

Waspyyy said:

Hi all,

I have a bit of a stupid situation I hope someone can help advise on.

I am 42 with no pension - I opted out of my company pension about 3-4 years ago because I needed the cash. I've been at the company for around 6 years so I have about £3.5k in a pension pot thanks to the auto-enrolment but for all intents and purposes it's nothing. I also have a similar amount from my first job but again, this is essentially nothing. The interim years were spend in short term perm positions where I'd opted out (or just didn't enrol, no auto enrolment in those days) and 12 years contracting, so never set up anything.

To top it, I am around £30k in debt and are spending more than I earn right now. Assuming I can get the spending under control, here is my question: 

 is it wiser to use the £80 minimum pension payment I am not spending towards paying my debts off or paying in to the pension scheme? My wife is insistent I pay in to the scheme but even with 5% contributions from the company I doubt it will make more money than the debt interest takes away. I earn around £70k if that is useful info.

Many thanks

It is and I think the most likely view is going to be it's bonkers to give up part of your remuneration and pay more tax than is necessary for the privilege.

Even if you only contribute the minimum needed to get your maximum employer contributions that would seem the best place to start.

Depending on which method your employer uses you will either pay less tax (net pay), pay less tax and NI (salary sacrifice) or initially pay the same tax but get 25% added to what you pay within your pension and be able to claim some higher rate relief from HMRC (relief at source).

Ok thanks, it's salary sacrifice 5% contribution 

So the general advice is pay in minimum to get 5% contributions?

Marcon

Waspyyy said:

Dazed_and_C0nfused said:

Waspyyy said:

Hi all,

I have a bit of a stupid situation I hope someone can help advise on.

I am 42 with no pension - I opted out of my company pension about 3-4 years ago because I needed the cash. I've been at the company for around 6 years so I have about £3.5k in a pension pot thanks to the auto-enrolment but for all intents and purposes it's nothing. I also have a similar amount from my first job but again, this is essentially nothing. The interim years were spend in short term perm positions where I'd opted out (or just didn't enrol, no auto enrolment in those days) and 12 years contracting, so never set up anything.

To top it, I am around £30k in debt and are spending more than I earn right now. Assuming I can get the spending under control, here is my question: 

 is it wiser to use the £80 minimum pension payment I am not spending towards paying my debts off or paying in to the pension scheme? My wife is insistent I pay in to the scheme but even with 5% contributions from the company I doubt it will make more money than the debt interest takes away. I earn around £70k if that is useful info.

Many thanks

It is and I think the most likely view is going to be it's bonkers to give up part of your remuneration and pay more tax than is necessary for the privilege.

Even if you only contribute the minimum needed to get your maximum employer contributions that would seem the best place to start.

Depending on which method your employer uses you will either pay less tax (net pay), pay less tax and NI (salary sacrifice) or initially pay the same tax but get 25% added to what you pay within your pension and be able to claim some higher rate relief from HMRC (relief at source).

Dazed_and_C0nfused said:

Waspyyy said:

Hi all,

I have a bit of a stupid situation I hope someone can help advise on.

I am 42 with no pension - I opted out of my company pension about 3-4 years ago because I needed the cash. I've been at the company for around 6 years so I have about £3.5k in a pension pot thanks to the auto-enrolment but for all intents and purposes it's nothing. I also have a similar amount from my first job but again, this is essentially nothing. The interim years were spend in short term perm positions where I'd opted out (or just didn't enrol, no auto enrolment in those days) and 12 years contracting, so never set up anything.

To top it, I am around £30k in debt and are spending more than I earn right now. Assuming I can get the spending under control, here is my question: 

 is it wiser to use the £80 minimum pension payment I am not spending towards paying my debts off or paying in to the pension scheme? My wife is insistent I pay in to the scheme but even with 5% contributions from the company I doubt it will make more money than the debt interest takes away. I earn around £70k if that is useful info.

Many thanks

It is and I think the most likely view is going to be it's bonkers to give up part of your remuneration and pay more tax than is necessary for the privilege.

Even if you only contribute the minimum needed to get your maximum employer contributions that would seem the best place to start.

Depending on which method your employer uses you will either pay less tax (net pay), pay less tax and NI (salary sacrifice) or initially pay the same tax but get 25% added to what you pay within your pension and be able to claim some higher rate relief from HMRC (relief at source).

Ok thanks, it's salary sacrifice 5% contribution 

So the general advice is pay in minimum to get 5% contributions?

Never mind what people say here (although it's a lot of good sense and worthy of note/action!) - have YOU actually done the relevant calculations to see if you are correct in your belief that:

'....even with 5% contributions from the company I doubt it will make more money than the debt interest takes away.'

Waspyyy

MEM62 said:

My first thought, you earn £70K and are spending more than you earn.  You really need to look at that.  Your debts are less than 50% of your income so you really should be able to get a handle on them.  I suggest you post an SoA. 

My second thought is that, without any retirement provision, you are going to go from earning £70 per year (along with whatever increases you might receive) to the State Pension income of £11,500 per year.  You really need to start ploughing as much as you can into your pension or retirement for you is going to extremely frugal.     

Is it less than 50% though? Seeing as I only actually see about £50k of that is it not more like 60% of my salary is debt?

As far as I am concerned state pension a) is effectively nothing and b) might not even exist in 25 - 30 years time so I am not expecting or counting on it. I am fully expecting to work to 70 and beyond if I can, it's fine.

Agreed I need to sort this out though, it's ridiculous. Hence my post here, appreciate the advice 

IvanOpinion

You seem to know where the problem is, your level of spending.
Ideally you should be putting nearly £20K of a £70K salary into the pension to avoid 40% tax

Waspyyy

Marcon said:

Waspyyy said:

Dazed_and_C0nfused said:

Waspyyy said:

Hi all,

I have a bit of a stupid situation I hope someone can help advise on.

I am 42 with no pension - I opted out of my company pension about 3-4 years ago because I needed the cash. I've been at the company for around 6 years so I have about £3.5k in a pension pot thanks to the auto-enrolment but for all intents and purposes it's nothing. I also have a similar amount from my first job but again, this is essentially nothing. The interim years were spend in short term perm positions where I'd opted out (or just didn't enrol, no auto enrolment in those days) and 12 years contracting, so never set up anything.

To top it, I am around £30k in debt and are spending more than I earn right now. Assuming I can get the spending under control, here is my question: 

 is it wiser to use the £80 minimum pension payment I am not spending towards paying my debts off or paying in to the pension scheme? My wife is insistent I pay in to the scheme but even with 5% contributions from the company I doubt it will make more money than the debt interest takes away. I earn around £70k if that is useful info.

Many thanks

It is and I think the most likely view is going to be it's bonkers to give up part of your remuneration and pay more tax than is necessary for the privilege.

Even if you only contribute the minimum needed to get your maximum employer contributions that would seem the best place to start.

Depending on which method your employer uses you will either pay less tax (net pay), pay less tax and NI (salary sacrifice) or initially pay the same tax but get 25% added to what you pay within your pension and be able to claim some higher rate relief from HMRC (relief at source).

Dazed_and_C0nfused said:

Waspyyy said:

Hi all,

I have a bit of a stupid situation I hope someone can help advise on.

I am 42 with no pension - I opted out of my company pension about 3-4 years ago because I needed the cash. I've been at the company for around 6 years so I have about £3.5k in a pension pot thanks to the auto-enrolment but for all intents and purposes it's nothing. I also have a similar amount from my first job but again, this is essentially nothing. The interim years were spend in short term perm positions where I'd opted out (or just didn't enrol, no auto enrolment in those days) and 12 years contracting, so never set up anything.

To top it, I am around £30k in debt and are spending more than I earn right now. Assuming I can get the spending under control, here is my question: 

 is it wiser to use the £80 minimum pension payment I am not spending towards paying my debts off or paying in to the pension scheme? My wife is insistent I pay in to the scheme but even with 5% contributions from the company I doubt it will make more money than the debt interest takes away. I earn around £70k if that is useful info.

Many thanks

It is and I think the most likely view is going to be it's bonkers to give up part of your remuneration and pay more tax than is necessary for the privilege.

Even if you only contribute the minimum needed to get your maximum employer contributions that would seem the best place to start.

Depending on which method your employer uses you will either pay less tax (net pay), pay less tax and NI (salary sacrifice) or initially pay the same tax but get 25% added to what you pay within your pension and be able to claim some higher rate relief from HMRC (relief at source).

Ok thanks, it's salary sacrifice 5% contribution 

So the general advice is pay in minimum to get 5% contributions?

Never mind what people say here (although it's a lot of good sense and worthy of note/action!) - have YOU actually done the relevant calculations to see if you are correct in your belief that:

'....even with 5% contributions from the company I doubt it will make more money than the debt interest takes away.'

Errr no, and I wouldn't really know how to. But good point thanks

Marcon

Waspyyy said:

Marcon said:

Waspyyy said:

Dazed_and_C0nfused said:

Waspyyy said:

Hi all,

I have a bit of a stupid situation I hope someone can help advise on.

I am 42 with no pension - I opted out of my company pension about 3-4 years ago because I needed the cash. I've been at the company for around 6 years so I have about £3.5k in a pension pot thanks to the auto-enrolment but for all intents and purposes it's nothing. I also have a similar amount from my first job but again, this is essentially nothing. The interim years were spend in short term perm positions where I'd opted out (or just didn't enrol, no auto enrolment in those days) and 12 years contracting, so never set up anything.

To top it, I am around £30k in debt and are spending more than I earn right now. Assuming I can get the spending under control, here is my question: 

 is it wiser to use the £80 minimum pension payment I am not spending towards paying my debts off or paying in to the pension scheme? My wife is insistent I pay in to the scheme but even with 5% contributions from the company I doubt it will make more money than the debt interest takes away. I earn around £70k if that is useful info.

Many thanks

It is and I think the most likely view is going to be it's bonkers to give up part of your remuneration and pay more tax than is necessary for the privilege.

Even if you only contribute the minimum needed to get your maximum employer contributions that would seem the best place to start.

Depending on which method your employer uses you will either pay less tax (net pay), pay less tax and NI (salary sacrifice) or initially pay the same tax but get 25% added to what you pay within your pension and be able to claim some higher rate relief from HMRC (relief at source).

Dazed_and_C0nfused said:

Waspyyy said:

Hi all,

I have a bit of a stupid situation I hope someone can help advise on.

I am 42 with no pension - I opted out of my company pension about 3-4 years ago because I needed the cash. I've been at the company for around 6 years so I have about £3.5k in a pension pot thanks to the auto-enrolment but for all intents and purposes it's nothing. I also have a similar amount from my first job but again, this is essentially nothing. The interim years were spend in short term perm positions where I'd opted out (or just didn't enrol, no auto enrolment in those days) and 12 years contracting, so never set up anything.

To top it, I am around £30k in debt and are spending more than I earn right now. Assuming I can get the spending under control, here is my question: 

 is it wiser to use the £80 minimum pension payment I am not spending towards paying my debts off or paying in to the pension scheme? My wife is insistent I pay in to the scheme but even with 5% contributions from the company I doubt it will make more money than the debt interest takes away. I earn around £70k if that is useful info.

Many thanks

It is and I think the most likely view is going to be it's bonkers to give up part of your remuneration and pay more tax than is necessary for the privilege.

Even if you only contribute the minimum needed to get your maximum employer contributions that would seem the best place to start.

Depending on which method your employer uses you will either pay less tax (net pay), pay less tax and NI (salary sacrifice) or initially pay the same tax but get 25% added to what you pay within your pension and be able to claim some higher rate relief from HMRC (relief at source).

Ok thanks, it's salary sacrifice 5% contribution 

So the general advice is pay in minimum to get 5% contributions?

Never mind what people say here (although it's a lot of good sense and worthy of note/action!) - have YOU actually done the relevant calculations to see if you are correct in your belief that:

'....even with 5% contributions from the company I doubt it will make more money than the debt interest takes away.'

Errr no, and I wouldn't really know how to. But good point thanks

Some debt advice from a reliable source might be of real help to you. Good starting point: https://www.moneysavingexpert.com/loans/debt-help-plan/