Why would someone want to opt out from a pension scheme?

MetaPhysical

I'm 58 this year, paid into pensions all my working life and I thank god that I never opted out now that I want to stop working later this year and enjoy travelling.  How can you possibly get the context of that across to a 20 year old?

MetaPhysical

westv said:

It reminds me of the scams where someone rings and tells you to download software or transfer funds from your account. I have seen these mentioned numerous times on tv etc. with warnings that you should never do anything like that but still people fall for it no matter how intelligent they are.

These con artist people are often extremely convincing and very well versed in the con they are pedalling.  It sounds comical almost and people naturally think that the people who were duped are idiots and that they themselves would never fall for such a trap.  But make no mistake, these scam artists ate extremely sophisticated, convincing and believable and everyone should always be on their guard.  Lonely people, weight loss miracles, improve their financial position, people are desperate and want to hear positive stories that the con-artists so confidently pedal.

crv1963

MetaPhysical said:

I'm 58 this year, paid into pensions all my working life and I thank god that I never opted out now that I want to stop working later this year and enjoy travelling.  How can you possibly get the context of that across to a 20 year old?

Education is the only way I think. When I started seriously looking at my wife and I pension provision and retirement planning roughly 10 years ago, I explained to my sons then 17 and 18 years old the importance of retirement planning. Oldest always good at saving younger son less so. Fast forward a decade, youngest has had several jobs/ career moves and always asks at interview about the employer pension scheme and matching. He was told when he was 20 that it was the first time anyone under 40 had asked that particular question at interview. Both have made pension saving a goal since they started employment. Both intend retiring at least a decade before their respective SPA.

TonyMMM

My pension was the best investment I ever made ....

Moonwolf

MetaPhysical said:

westv said:

It reminds me of the scams where someone rings and tells you to download software or transfer funds from your account. I have seen these mentioned numerous times on tv etc. with warnings that you should never do anything like that but still people fall for it no matter how intelligent they are.

These con artist people are often extremely convincing and very well versed in the con they are pedalling.  It sounds comical almost and people naturally think that the people who were duped are idiots and that they themselves would never fall for such a trap.  But make no mistake, these scam artists ate extremely sophisticated, convincing and believable and everyone should always be on their guard.  Lonely people, weight loss miracles, improve their financial position, people are desperate and want to hear positive stories that the con-artists so confidently pedal.

It is only going to get harder.  Your and yours on Radio 4 recently demonstrated that AI voice generators made using a small voice sample could be used to log into telephone banking and I saw recently in the US there have been a couple of cases of the "Hello mum" message fraud being committed using AI versions of a child's voice.

It isn't really scf-fi anymore.

Perhaps at the moment it is only the richest that are victims but soon these scams will be done by getting relationships, background and the required voice samples from tiktok, instagram and facebook. "That's why I'm not on facebook" doesn't really work if the convincing call comes from a grandchild where all the required details have been harvested from their account.

eltisley98

incus432 said:

eltisley98 said:

crv1963 said:

I know several well educated and competent in their field professionals who refuse to join the NHS Pension scheme, generally when asked why I get told

1) I don't trust the Govt to pay me a pension
2) It's better in my pocket now I can't afford it
3) I don't expect to live that long my father/ grandfather died when he was 50 something
4) I'm only 20 something.....why would I put money away for forty years time?

I also know several who have previously opted out and are now in scheme, regretting having missed sometimes twenty years of contributions as arriving in their 40s and 50s focused them on the 60s and beyond!

As far as I can see, their reason 3) is not entirely unreasonable.

Really bad logic. The father and grandfather may have been smokers, heavy drinkers, got cancer, or any number of things that have no bearing on your own life expectancy.

I see (and agree) the point of you and others. Perhaps I should be clearer as my thought depends on my own situation.

If you are like me, who has accumulated a decent defined benefit pension already, opting out can be a good idea because:

1) your accumulated DB pension, along with your DC pensions and other savings, plus the new state pension, will give you a comfortable retirement

2) you are going to exceed the LTA at some point and incur penalties

3) paying more into the DB pension has little advantage as your children, once adult, won't inherit any of it if you die at 67

4) likewise paying into a DC pot has lost (at least some of) its previous advantage now

5) adding to these you suspect that this or the next government will means test state pension, so that you may lose your state pension if you keep accumulating DB/DC

6) adding to all above there has been constant speculation that this or the next government may tweak the tax relief (although this is a less concern because you can always decide to stop paying to your DC pot after any policy change, not now)

Apparently I haven't done a quantitative calculation and I am still paying into my pension scheme. And I am not a pension denier by any gauge. But the above reasons have made me to think recently that at some point I'd better stop paying. The only thing is that I am not sure if I can opt out of a DB scheme anytime.

Albermarle

eltisley98 said:

crv1963 said:

I know several well educated and competent in their field professionals who refuse to join the NHS Pension scheme, generally when asked why I get told

1) I don't trust the Govt to pay me a pension
2) It's better in my pocket now I can't afford it
3) I don't expect to live that long my father/ grandfather died when he was 50 something
4) I'm only 20 something.....why would I put money away for forty years time?

I also know several who have previously opted out and are now in scheme, regretting having missed sometimes twenty years of contributions as arriving in their 40s and 50s focused them on the 60s and beyond!

As far as I can see, their reason 3) is not entirely unreasonable.

Apart from actually opting out of a pension, the two most common mistakes people make in their retirement planning are ;
1) Underestimating how much money they need.
2) Underestimating their likely longevity.

eltisley98

Albermarle said:

eltisley98 said:

crv1963 said:

I know several well educated and competent in their field professionals who refuse to join the NHS Pension scheme, generally when asked why I get told

1) I don't trust the Govt to pay me a pension
2) It's better in my pocket now I can't afford it
3) I don't expect to live that long my father/ grandfather died when he was 50 something
4) I'm only 20 something.....why would I put money away for forty years time?

I also know several who have previously opted out and are now in scheme, regretting having missed sometimes twenty years of contributions as arriving in their 40s and 50s focused them on the 60s and beyond!

As far as I can see, their reason 3) is not entirely unreasonable.

Apart from actually opting out of a pension, the two most common mistakes people make in their retirement planning are ;
1) Underestimating how much money they need.
2) Underestimating their likely longevity.

I agree with you. See my reply to incus432 above.

Silvertabby

eltisley98 said:

Albermarle said:

eltisley98 said:

crv1963 said:

I know several well educated and competent in their field professionals who refuse to join the NHS Pension scheme, generally when asked why I get told

1) I don't trust the Govt to pay me a pension
2) It's better in my pocket now I can't afford it
3) I don't expect to live that long my father/ grandfather died when he was 50 something
4) I'm only 20 something.....why would I put money away for forty years time?

I also know several who have previously opted out and are now in scheme, regretting having missed sometimes twenty years of contributions as arriving in their 40s and 50s focused them on the 60s and beyond!

As far as I can see, their reason 3) is not entirely unreasonable.

Apart from actually opting out of a pension, the two most common mistakes people make in their retirement planning are ;
1) Underestimating how much money they need.
2) Underestimating their likely longevity.

I agree with you. See my reply to incus432 above.

Many people, even on these boards, seem to be factoring in that they will need less money as they age, as they will be spending less on holidays etc.

Whereas we have factored in the costs of cleaners, gardeners, and all those DIY jobs that we currently do ourselves.

crv1963

Silvertabby said:

eltisley98 said:

Albermarle said:

eltisley98 said:

crv1963 said:

I know several well educated and competent in their field professionals who refuse to join the NHS Pension scheme, generally when asked why I get told

1) I don't trust the Govt to pay me a pension
2) It's better in my pocket now I can't afford it
3) I don't expect to live that long my father/ grandfather died when he was 50 something
4) I'm only 20 something.....why would I put money away for forty years time?

I also know several who have previously opted out and are now in scheme, regretting having missed sometimes twenty years of contributions as arriving in their 40s and 50s focused them on the 60s and beyond!

As far as I can see, their reason 3) is not entirely unreasonable.

Apart from actually opting out of a pension, the two most common mistakes people make in their retirement planning are ;
1) Underestimating how much money they need.
2) Underestimating their likely longevity.

I agree with you. See my reply to incus432 above.

Many people, even on these boards, seem to be factoring in that they will need less money as they age, as they will be spending less on holidays etc.

Whereas we have factored in the costs of cleaners, gardeners, and all those DIY jobs that we currently do ourselves.

Spot on Silvertabby. My mother- mid 80s now finds she needs to employ services for tasks she previously was quite able to do such as having someone trim her tall hedges, do decorating and other DIY tasks. Her spending hasn't reduced it has simply evolved.