Sign in to follow this  
Followers 0
Branigan

Should I Pay More Into My Company Pension Scheme?

8 posts in this topic

Our company has been taken over by a larger company and as such the "harmonisation" of contracts process has begun.

Where my previous company paid 8% into my pension pot if I matched it, the new company pays 3% and has increased my salary to counteract the loss.

My question is: Is there any point in paying much into a pension pot? What can we forsee on the horizon for pensions?

It seems that the current retiring generation have been screwed out of their final salary pension scemes and (as I am 30 now) feel that when my time for retirement comes, it will be my time to bend over.

Share this post


Link to post
Share on other sites

I hope the spelling police are not around :) I don't have a spell checker on this phone :)

Pensions are sadly now a thing of the past. Simply due to the economic chaos that is coming...

They are also high risk now If you look what they invest the pension money into...

6 months ago I quit my pension scheme and decided each month to invest £400 in commodities. Including mining and exploration stocks.

The more you look into Pensions the more you realise they are just a giant pyramid ponzi scheme.

Share this post


Link to post
Share on other sites

I hope the spelling police are not around :) I don't have a spell checker on this phone :)

Pensions are sadly now a thing of the past. Simply due to the economic chaos that is coming...

They are also high risk now If you look what they invest the pension money into...

6 months ago I quit my pension scheme and decided each month to invest £400 in commodities. Including mining and exploration stocks.

The more you look into Pensions the more you realise they are just a giant pyramid ponzi scheme.

If your company matches your contribution and you can choose your funds you can choose to invest your pension in commodity heavy funds anyway but you also get:

The 22% or 40% tax benefit and the "free" contribution from your employer. Its basically much for effective. You do loose out on the fees charged but then if your provider offers vanguard funds you can get down to as little as 0.1% charges.

Share this post


Link to post
Share on other sites

I hope the spelling police are not around :) I don't have a spell checker on this phone :)

Pensions are sadly now a thing of the past. Simply due to the economic chaos that is coming...

They are also high risk now If you look what they invest the pension money into...

6 months ago I quit my pension scheme and decided each month to invest £400 in commodities. Including mining and exploration stocks.

The more you look into Pensions the more you realise they are just a giant pyramid ponzi scheme.

If your company matches your contribution and you can choose your funds you can choose to invest your pension in commodity heavy funds anyway but you also get:

The 22% or 40% tax benefit

The "free" additional top up contribution from your employer.

Its basically much more tax efficient using your pre-tax money to invest rather than giving it to the tax man. You do loose out on the fees charged by pension providers 1-2%+ but then if your provider offers Vanguard funds you can get down to as little as 0.1%.

Share this post


Link to post
Share on other sites

My question is: Is there any point in paying much into a pension pot? What can we forsee on the horizon for pensions?

Whether it's a good idea depends on a number of factors, many of which cannot be known as they will depend on developments over the next 3 or 4 decades in your case:

What proportion you may need to commit to buying an annuity and when.

What annuity rates will be in 30 - 40 years.

What your total income will be and the tax banding levels in 30 - 40 years.

The tax treatment of income into the fund in the interim.

What restrictions will be placed on investment for pension funds - will they remain flexible?

Whether you may need the money in the interim - Buying a house? Starting a business?

What benefits or state "entitlements" will it preclude you from?

You may end up with a lot of money committed which may be earning little or declining in real terms while paying more than the returns in interest rates on short term debt.

Personally I'd retain flexibility and invest it mainly in shares ISAs which would enable the ability to get the money or draw an income if and when required. As things stand there's no further tax liability on income from an ISA. If you have faith in future governments to treat you fairly and are certain that you have no need of the money in the meantime then go right ahead.

Share this post


Link to post
Share on other sites

Our company has been taken over by a larger company and as such the "harmonisation" of contracts process has begun.

Where my previous company paid 8% into my pension pot if I matched it, the new company pays 3% and has increased my salary to counteract the loss.

My question is: Is there any point in paying much into a pension pot? What can we forsee on the horizon for pensions?

It seems that the current retiring generation have been screwed out of their final salary pension scemes and (as I am 30 now) feel that when my time for retirement comes, it will be my time to bend over.

Can't speak for short-term influences (boom&bust), but you can look at long-term demographics.

At age 30 you're well clear of the demographic bulge, so your pension prospects are much better than people currently in the later years of working life. So don't abandon it, unless you have a clear reason to want the money now!

At the same time, it would be a leap of faith to commit any large sums over such a long period.

Things likely to tip the balance one way or the other are company contributions and tax advantages.

Share this post


Link to post
Share on other sites

Thanks for the replies guys.

I think I will keep my bases covered and keep paying the minimum into it for now.

Share this post


Link to post
Share on other sites

I just switched jobs and had the same problem to mull over (aged 30). My previous company ran a final salary scheme so i was pretty lucky, they closed it to new entrants just after I joined. My new company matches 7.5%. I've decided to chuck in 9%, which after higher rate tax relief is 15%. I have no mortgage or kids at the moment do thought I would chuck in a reasonable amount whilst I can afford it. Yeah it could all evaporate the day before I retire but it seems a reasonable long term bet for me.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now
Sign in to follow this  
Followers 0

  • Recently Browsing   0 members

    No registered users viewing this page.