Pension - 1 year in, advice needed

chesky369

"Don't know much about pensions as I consider them too risky"

quote from nrsql today on another thread.

dannynixon

Haha, only just checked back adn I can't believe the responses.

I have a few small debts which are controlled and I am not on the bare bones either. I earn 20k and my partner earns 15k. I have a new baby coming in August and it just means that I wouldn't feel the pinch as much.

My debts do not matter, they are paid and sorted every month. I was onsidering it because of the new baby, thats all (btw this is my second child).

RE: Clapton about a payrise, yes I do. I get one every september for another 5 years. In 5 years I will be guaranteed to be on 29k (incraments of about 1.5k to 2 k every year up to this) I get the payrise every year in the september so if I decide to opt out, I would opt back in the month that I am due a payrise and this way, I would not miss the money (see what I'm getting at?)



Right now,

I need to speak to my union. Do they have an IFA or do I have to seek out this individually?

Secondly, I need to ring up and find if I can opt out and join again.

Thanks for the advice guys,

any more advice would be appreciated now I have given a little more

(Again, this is not to keep up repayments on debt)

Dan

CLAPTON

you need to establish whether you can opt back in without any problems
and need to check what other benefits there might be (as I said probably death in service benefits)

other than that, I can't really see how an IFA or your union can assist much
as you simply need to make a decision as follows

if you miss 2 years pension contributions then your pension is reduced by

2/80 x your final salary (or whatever the exact rules are) for you retirement period

so say your final salary in todays terms (ignoring inflation) will be 40,000
then you lose 2/80 x 40,000 = 1000 per annum for say 30 years of retirement i.e. £30,000 in todays money

compare that with what you gain ... a net £55 a month for two years ..lets say £1,320
In my view an absolute no brainer but if you're desperate (which I dont think you are.............)

seven-day-weekend

Put like that Clapton, it is very much a no-brainer, isn't it, if the guy doesn't really need the money.

OP, you could make more than that trading on eBay.

dannynixon

CLAPTON wrote: »

you need to establish whether you can opt back in without any problems
and need to check what other benefits there might be (as I said probably death in service benefits)

other than that, I can't really see how an IFA or your union can assist much
as you simply need to make a decision as follows

if you miss 2 years pension contributions then your pension is reduced by

2/80 x your final salary (or whatever the exact rules are) for you retirement period

so say your final salary in todays terms (ignoring inflation) will be 40,000
then you lose 2/80 x 40,000 = 1000 per annum for say 30 years of retirement i.e. £30,000 in todays money

compare that with what you gain ... a net £55 a month for two years ..lets say £1,320
In my view an absolute no brainer but if you're desperate (which I dont think you are.............)

Think this topic is now ended, cheers for your advice Clapton. To be honest, didn't really know much so I guess it was a good idea posting on here then.

Will just plan ahead a little better and I am sure we will be fine. Thanks again Clapton.

nrsql

chesky369 wrote: »

"Don't know much about pensions as I consider them too risky"

quote from nrsql today on another thread.

Don't know what that has to do with the thread. I actually don't think many people on this board know much about pensions or they would realise the risk involved and be able to value them properly.

As the OP has said he doesn't really need the money but just wants to feel more comfortable then tightening the belt would seem to be a reasonable plan.
But I would still suggest that he be cautious about financing a pension through escalating debt (which I have seen people do).

As to the pension risk I think the pension scheme he will be in would probably be worth the risk and a lot more imho.

Dithering_Dad

nrsql wrote: »

Don't know what that has to do with the thread. I actually don't think many people on this board know much about pensions or they would realise the risk involved and be able to value them properly.

Why not clue us all up about the risks? I for one would be very interested.

nrsql wrote: »

As the OP has said he doesn't really need the money but just wants to feel more comfortable then tightening the belt would seem to be a reasonable plan.
But I would still suggest that he be cautious about financing a pension through escalating debt (which I have seen people do).

I think we've established already that the OP does not have an "escalating debt" problem, he is just like a large number of UK citizens who use loans and credit cards to subsidise their lifestyle, but within manageable parameters. Stopping payments into a pension plan in this case would be insane. He would simply be improving his lifestyle today but decimating it for tomorrow.

nrsql wrote: »

As to the pension risk I think the pension scheme he will be in would probably be worth the risk and a lot more imho.

Probably? The TPS is one of the safest pensions going. If things get so bad in the UK economy that the TPS goes under, then it won't matter because we'll all be in deep doo doo.

purch

and make some purchases (ie new baby).

I don't think 100 quid a month will make much of a dent in the cost of a new Baby (whether or not you buy it, or make it in the conventional way)

dannynixon

purch wrote: »

I don't think 100 quid a month will make much of a dent in the cost of a new Baby (whether or not you buy it, or make it in the conventional way)

Haha, just realised how this could have been perceived, lol

Thanks for the advice everyone, appreciate it. I will be staying in my pension lol. I may not have a clue about pensions but it doesn't help that my partner has absolutley no clue about money full stop.

When she first found out she was pregnant, I took a look at our savings account about a month after and it was missing some money. I asked her where it had gone and she had bought a pram for £500!!! (Well 480) £500 for a pram, what is the world coming to???

chesky369

Now, now Danny boy......... why weren't you involved in the pram buying? I bet if it had been a car you'd have been right there.