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

t0rt0ise

marycanary said:

I previously mentioned that before my retirement, I managed local government services with a staff of about 200 people. Out of this group, only two individuals hadn’t enrolled in the Local Government Pension Scheme (LGPS). One anticipated inheriting a substantial amount of money, while the other was a lifelong Jehovah's Witness. I was told that he confidently believed the world would end soon, which was why he chose not to contribute to a pension. I did not question him on his faith so do not know if this was correct.

That was my son in law.. his potential inheritance giver then remarried and oops.. the inheritance rather less certain so he then joined the LGPS. 

westv

Blue_Butterfly said:

In my early nursing career I had some colleagues who had previously worked at a different hospital for a few years. At that time you were able to take out your Superannuation when leaving. Many nurses did this to buy furniture, cars, or just to have some cash. They did re enroll in their new hospital, but when discussing pensions in our 50's they really regretted losing the 3-5 years of service from their pension calculations especially those in senior roles.

Not quite the same but, I started my first job at 16 but had to wait until I was 25 before I could join the pension scheme.

GibbsRule_No3.

I wonder if younger people, reading about the benefits of being entitled to Pension Credits and the extra opportunities that often now brings, are considering why they need to join a Pension scheme if they can use the money now?  PPOV I am still better off by being in the schemes I was in (still am in) during my current 54 years of work but there are a lot of stories where people are a little over the limit for PC and they say they would have been better off not having a Private pension. I’d like to see a graph showing a cut off point of when it is not financially worth joining but I don’t think Government Departments would like that. Probably not able to do it anyway, too many variables.

kinger101

GibbsRule_No3. said:

I wonder if younger people, reading about the benefits of being entitled to Pension Credits and the extra opportunities that often now brings, are considering why they need to join a Pension scheme if they can use the money now?  PPOV I am still better off by being in the schemes I was in (still am in) during my current 54 years of work but there are a lot of stories where people are a little over the limit for PC and they say they would have been better off not having a Private pension. I’d like to see a graph showing a cut off point of when it is not financially worth joining but I don’t think Government Departments would like that. Probably not able to do it anyway, too many variables.

An interesting point.  I'm sure there are losers, but that hinges on them deciding they'll always be on the breadline, and the pension credit will be available when they retire.

Silvertabby

GibbsRule_No3. said:

I wonder if younger people, reading about the benefits of being entitled to Pension Credits and the extra opportunities that often now brings, are considering why they need to join a Pension scheme if they can use the money now?  PPOV I am still better off by being in the schemes I was in (still am in) during my current 54 years of work but there are a lot of stories where people are a little over the limit for PC and they say they would have been better off not having a Private pension. I’d like to see a graph showing a cut off point of when it is not financially worth joining but I don’t think Government Departments would like that. Probably not able to do it anyway, too many variables.

The new single tier State pension is set at a couple of quid over the Pension Credit means test limit.

Today's youngsters will almost certainly accrue the full rate nSP, either by working or by receiving working age benefits with NI credits.  So, no PC or any of the other benefits that being in receipt of PC currently opens the door to.

SouthCoastBoy

I have always been careful with money and never wanted to get into debt, even as a student in the 80s I never went overdrawn unlike a number  of my contemporaries. 

When I got my first job in London after graduating I needed every penny as the wage wasn't great so I opted out of the pension scheme, in hindsight, I should have just gone overdrawn every month.In total I missed out on 4 years and 9 mths of pension contributions, I regret that now but unfortunately not a lot I can do about it.

LHW99

Silvertabby said:

GibbsRule_No3. said:

I wonder if younger people, reading about the benefits of being entitled to Pension Credits and the extra opportunities that often now brings, are considering why they need to join a Pension scheme if they can use the money now?  PPOV I am still better off by being in the schemes I was in (still am in) during my current 54 years of work but there are a lot of stories where people are a little over the limit for PC and they say they would have been better off not having a Private pension. I’d like to see a graph showing a cut off point of when it is not financially worth joining but I don’t think Government Departments would like that. Probably not able to do it anyway, too many variables.

The new single tier State pension is set at a couple of quid over the Pension Credit means test limit.

Today's youngsters will almost certainly accrue the full rate nSP, either by working or by receiving working age benefits with NI credits.  So, no PC or any of the other benefits that being in receipt of PC currently opens the door to.

And even the nSP is a little below what the retirement living standards think is a basic retirement income level for a single person!

hugheskevi

Silvertabby said:

GibbsRule_No3. said:

I wonder if younger people, reading about the benefits of being entitled to Pension Credits and the extra opportunities that often now brings, are considering why they need to join a Pension scheme if they can use the money now?  PPOV I am still better off by being in the schemes I was in (still am in) during my current 54 years of work but there are a lot of stories where people are a little over the limit for PC and they say they would have been better off not having a Private pension. I’d like to see a graph showing a cut off point of when it is not financially worth joining but I don’t think Government Departments would like that. Probably not able to do it anyway, too many variables.

The new single tier State pension is set at a couple of quid over the Pension Credit means test limit.

Today's youngsters will almost certainly accrue the full rate nSP, either by working or by receiving working age benefits with NI credits.  So, no PC or any of the other benefits that being in receipt of PC currently opens the door to.

All true, assuming:

• That the Triple Lock uprating remains unchanged over the next 50 years, or as a minimum that Pension Credit is uprated by the same or lower rate as new State Pension
• That State Pension is not reformed in the next 50 years
• That Pension Credit is not reformed in the next 50 years
• We ignore disabled and carers getting a higher rate of Pension Credit

Those are such strong assumptions given the history of change to State Pension and Pension Credit (and Income Support, and Minimum Income Guarantee, its predecessors) over the last 25 years that any young person basing any saving decision on these things would be, at best, wildly naive.

The best strategy in the face of inevitable but unpredictable future policy change is usually to take the incentives on offer today, try to keep all options open for as long as possible, don't go all-in on any one strategy very early and instead try to keep a balance across as many things as possible, and keep an eye on possible change to see if you can position yourself to exploit the change should it happen.

There is a reasonable argument that if you can't provide a coherent savings incentives policy, the next best thing is complete uncertainty that no-one can rely on, as at least that should have the least impact on driving perverse incentives 

EnPointe

GibbsRule_No3. said:

I wonder if younger people, reading about the benefits of being entitled to Pension Credits and the extra opportunities that often now brings, are considering why they need to join a Pension scheme if they can use the money now?  PPOV I am still better off by being in the schemes I was in (still am in) during my current 54 years of work but there are a lot of stories where people are a little over the limit for PC and they say they would have been better off not having a Private pension. I’d like to see a graph showing a cut off point of when it is not financially worth joining but I don’t think Government Departments would like that. Probably not able to do it anyway, too many variables.

given that pension credit  is  something which is only paid to those o nthe absolute breadline because they don;t  for whatever reason have entitlment to a full state pension ...

EnPointe

LHW99 said:

Silvertabby said:

GibbsRule_No3. said:

I wonder if younger people, reading about the benefits of being entitled to Pension Credits and the extra opportunities that often now brings, are considering why they need to join a Pension scheme if they can use the money now?  PPOV I am still better off by being in the schemes I was in (still am in) during my current 54 years of work but there are a lot of stories where people are a little over the limit for PC and they say they would have been better off not having a Private pension. I’d like to see a graph showing a cut off point of when it is not financially worth joining but I don’t think Government Departments would like that. Probably not able to do it anyway, too many variables.

The new single tier State pension is set at a couple of quid over the Pension Credit means test limit.

Today's youngsters will almost certainly accrue the full rate nSP, either by working or by receiving working age benefits with NI credits.  So, no PC or any of the other benefits that being in receipt of PC currently opens the door to.

And even the nSP is a little below what the retirement living standards think is a basic retirement income level for a single person!

however  we are a decade or more into  auto enrolment  so those retiring  without  any additional  'private' pension will be those who either were not working  for whatever reason or those who actively chose  not  recieve  free money from their employers and tax relief  from the government