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daniel stallion

Pension Scheme Decision

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I have a friend who is about to accept a role at a very large IT company. As part of the package he has an option to join a pension scheme - his options are:

- To opt out altogether

- To join and contribute salary @ 3.5% (matched by the company)

- To join and contribute salary @ 7% (matched by the company)

He is worried that he will be contributing to a scheme (managed by a very large financial services firm) that may well dissolve by the time he retires (he is 30). He also resents the nature of pensions (you can't take a lump sum). On the other hand he hasn't paid in to a pension previously, and is thus worried about retirement.

He asked me, I know sod all about pensions, but don't want to admit it, so thought I'd ask you lot!

Should he join the scheme or save the money and invest elsewhere?

Any wider general advice that I can pass off as my own, would also be greatly appreciated!

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It depends on how you think things will play out.

If the company is matching his contributions he's getting an instant 100% return on his investment. This is obviously a good thing :)

Currently he can't touch the money until he's 55 (this will probably go up) and there's a possibility that the whole financial system could collapse before he gets to see any of the money. This would obviously be bad :(

You pays your money (or not!) and you takes your chance

My personal view is that if the whole system falls over then I'm ******ed anyway so I'm paying into my works pension scheme.

He's probably also got the option of choosing where the money gets invested (I've got a small amount in an old pension with aviva that lets me do this). So if he's financially savvy he can choose where the money gets invested (I'm currently losing money compared to their default standard investment funds so this isn't for the faint hearted)

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I say pay in, definitely. It's still one of the best ways assuming he has some say in what is invested. Plus they're matching up to 7% which is awesome! I think ours is 4% or something. He'd be mad not to take it IMO. He can always put alternate savings away himself (that's what I do).

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If he wants to be a slave for life and delay living until retirement, like most sheeple, then tell him to do it and put as much as possible into it.

Personally, I'd recommend he puts this money into several business investments.

Even with tax relief and incentives, pensions are still a way to rob people.

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If he wants to be a slave for life and delay living until retirement, like most sheeple, then tell him to do it and put as much as possible into it.

Personally, I'd recommend he puts this money into several business investments.

Even with tax relief and incentives, pensions are still a way to rob people.

Thanks.

To be honest I think he is thinking along these lines himself.

He sees a pension as (potentially) giving money to an organisation that will 'allow' you to have some of it back when and how they decide and will keep the change if you die. I think he really hates the idea of all that money being 'locked' away out of his control, even if it is financially beneficial in theory.

Since he asked me I have been doing some research. I genuinely cannot really find any information that isn't either: VI financial services scare mongering or rage fuelled ranting from someone that has been 'ripped off'.

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It depends on how you think things will play out.

If the company is matching his contributions he's getting an instant 100% return on his investment. This is obviously a good thing :)

Currently he can't touch the money until he's 55 (this will probably go up) and there's a possibility that the whole financial system could collapse before he gets to see any of the money. This would obviously be bad :(

You pays your money (or not!) and you takes your chance

My personal view is that if the whole system falls over then I'm ******ed anyway so I'm paying into my works pension scheme.

He's probably also got the option of choosing where the money gets invested (I've got a small amount in an old pension with aviva that lets me do this). So if he's financially savvy he can choose where the money gets invested (I'm currently losing money compared to their default standard investment funds so this isn't for the faint hearted)

Yeah, he has actually, but they want him to decide as he fills in all the BS paperwork involved in accepting the job - obviously it mostly means nothing to him without research and he needs to fire of the acceptance pretty much immediately. It is funny, looking at the stuff he needs to complete it just 'feels' like a scam - if you do nothing you automatically join and contribute the maximum - I guess that is more related to the benefit to the firm?

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I say pay in, definitely. It's still one of the best ways assuming he has some say in what is invested. Plus they're matching up to 7% which is awesome! I think ours is 4% or something. He'd be mad not to take it IMO. He can always put alternate savings away himself (that's what I do).

Yeah, I just mentioned this to him.

To give you some idea of his 'perspective' he just replied 'yeah, but for the amount I could pocket each month instead of contributing, I could lease a Porsche and kill myself before I need a pension' ....

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Join it for the free money!

Unless it's final-salary (unlikely these days) he has the option to transfer it into a SIPP and take full control at a future date, if he has any concerns about his employer's provider. And Osbourne is looking to make pension money more flexible than it is today.

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Join it for the free money!

Unless it's final-salary (unlikely these days) he has the option to transfer it into a SIPP and take full control at a future date, if he has any concerns about his employer's provider. And Osbourne is looking to make pension money more flexible than it is today.

Agreed.

if the Company match your contribution it's a no brainer. Also if he is a middle income 40% earner the tax relief on the pension will further improve the return.

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Yeah, I just mentioned this to him.

To give you some idea of his 'perspective' he just replied 'yeah, but for the amount I could pocket each month instead of contributing, I could lease a Porsche and kill myself before I need a pension' ....

If he can afford to lease a POrsche on 7% of his salary then frankly I couldn't give a duck whether he made the better financial decision or not.

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Thanks.

I genuinely cannot really find any information that isn't either: VI financial services scare mongering or rage fuelled ranting from someone that has been 'ripped off'.

That should answer his question then.

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If he can afford to lease a POrsche on 7% of his salary then frankly I couldn't give a duck whether he made the better financial decision or not.

Ha, ha. Good point.

He can't, though, he was just demonstrating the needlessly dramatic and extreme position he often takes to make a point. The ****. I love him for it, though.

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  • 150 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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