Any Pension Experts out there?

Zyyb

Hi All,

Ok, i had a company pension with CT I paid 2.5% they paid 3.5% - we were bought by SW and have been moved over to their scheme, they offer a 5% match, so i pay 5% and they pay 5% and they leave me contracted into SSP2.

So i'm now paying in over double what i used to with old my CT Pension, I'm 23 and i only paid into CT for a year and a half, but thanks to some great growth there is £1800 in it. However, with my new pension taking up 5% of my salary i dont have any money to save at the end of the month - Just recently i wound up with a £600 car bill and it wiped my 3 years of holiday savings out! (resigned to the fact i will never have a holiday)

So my question is, can i take the £1800 from my old pension and put it into a savings account? I take it i would have to pay 22% tax on it if it can be done - If not i will transfer it to my new pension but as so much more is being paid in i'd like to be able to have some savings just in case something big happens like my car again, i have no other savings.

Hoep i've made myself clear, any help?

dunstonh

So my question is, can i take the £1800 from my old pension and put it into a savings account?

No. The Govt doesnt give tax relief and allow employers to pay tax efficiently into pensions and then give tax free growth for people to then draw it to spend on other things.

Its a bit worrying that at age 23 you cannot afford 3.9% of your salary to go into a pension (The 5% is before tax so the net contribution to you is 3.9%). Even the NPSS coming in 2012 is going to have a 4% contribution and thats aimed really at low earners.

You have an opportunity to build up a nice lump sum by using free money from your employer. Dont go wasting it by reducing the amount you pay in.

Zyyb

dunstonh wrote: »

No. The Govt doesnt give tax relief and allow employers to pay tax efficiently into pensions and then give tax free growth for people to then draw it to spend on other things.

Its a bit worrying that at age 23 you cannot afford 3.9% of your salary to go into a pension (The 5% is before tax so the net contribution to you is 3.9%). Even the NPSS coming in 2012 is going to have a 4% contribution and thats aimed really at low earners.

You have an opportunity to build up a nice lump sum by using free money from your employer. Dont go wasting it by reducing the amount you pay in.

Wow, what a pleasant, unhelpful attitude. I wonder if i can't afford it because i am a low earner, Oh, yes, i am. I have a tight budget to adhere to and £67.50 a month makes a big difference. It took 3 years for me to save £600 and now i have nothing in reserve.

I'm going to keep this going in case anybody else does know, i'm sure a friend once told me she left a job within 2 years and her contributions amounted to less then £1500 and she got them refunded, so can anybody help?

Retired_I.F.A.

I'm not surprised you have a tight budget, maybe because unlike Dunstonh i've clocked your signature.

At 23 with £14k of debt if you were my son I'd kick yer !!!!.:D

She had a refund because she was in a final salary scheme whereby the trustees allowed such for early leavers. Yours is money purchase where there no such option.

dunstonh

Oh, yes, i am. I have a tight budget to adhere to and £67.50 a month makes a big difference.

You mean £52.65. Possibly a tad less. It is £67.50 gross.

You earn around £1400pm at age 23. That isnt low earner territory. I would say its about typical for someone of that age. You want us to believe that you cannot afford £52 out of that £1400?

Wow, what a pleasant, unhelpful attitude.

I think you need a reality check. You are 23 years old and have a debt higher than your annual income. You think you cannot afford 3.9% of your income into a pension and your more concerned about your holiday spending than things with a greater priority.

Your spending habits cannot be in line with your income if you cannot afford that and your debt certainly suggests it too.

No doubt you will find that unhelpful too but those who cannot live within their means usually do try to blame others.

Zyyb

Retired_I.F.A. wrote: »

I'm not surprised you have a tight budget, maybe because unlike Dunstonh i've clocked your signature.

At 23 with £14k of debt if you were my son I'd kick yer !!!!.:D

She had a refund because she was in a final salary scheme whereby the trustees allowed such for early leavers. Yours is money purchase where there no such option.

Thanks IFA - That could be it!

Yep, it's a fair amount, but it's being whittled away and i've learnt my lesson! Show some leniency!!

Case closed, guess i'll transfer it to my new pension

Zyyb

dunstonh wrote: »

You mean £52.65. Possibly a tad less. It is £67.50 gross.

You earn around £1400pm at age 23. That isnt low earner territory. I would say its about typical for someone of that age. You want us to believe that you cannot afford £52 out of that £1400?



I think you need a reality check. You are 23 years old and have a debt higher than your annual income. You think you cannot afford 3.9% of your income into a pension and your more concerned about your holiday spending than things with a greater priority.

Your spending habits cannot be in line with your income if you cannot afford that and your debt certainly suggests it too.

No doubt you will find that unhelpful too but those who cannot live within their means usually do try to blame others.

You're right that is unhelpful, but me finding your advice unhelpful has nothing to do with living beyond my means (which i dont anymore). I would find it unhelpful if i earnt the national average. You seem to take pleasure in belittling others.

And just so the facts are straight, if £62.50 is 5%, you'll see my gross monthly pay is £1250, my take home pay is just under £1000pm.

I'm not going to continue this discussion anymore because IFA has helped with my query, thanks for your attempt DunstonH (Do you work at Dunston Hall?)

Retired_I.F.A.

Re : At 23 with £14k of debt if you were my son I'd kick yer !!!!.:D

On second thoughts if the debt was to buy a '57 chevy a '32 five window coupe and it were black n flamed then i'd be kissin yer !!!! to borrow the keys.

Merlot

Zyyb,

Come over to the Debt Wanabee board and post there, you will offered useful and helpful advice on how to reduce your debts. The DFW have a wealth of knowledge and they follow the forum etiquette "Please be nice to all moneysavers".

Merlot

jamesd

Zyyb, yours is one situation where it might be useful to temporarily not make the pension payments at all for two to three years, to help reduce the debt interest cost more quickly. It'll lose you the employer matching but debt clearing is useful and probably of greater value to you in setting you up for an eventual property purchase.

If you get a raise that can also help to speed up the debt repayment, or you could use that as an opportunity to restart the pension contributions.

For the existing pension, transferring it is reasonable enough - you'd really want to compare the investments available in the two and their costs.

Zyyb

Hi Merlot, You're right, i should check that board more often! Will head over later!

JamesD - Hi James, yeah i have thought about that, i'm up for a raise in July, if it's not as much as i'm hoping it will be then i probably will pause the contributions. I just dont like to give up the matching contribution!