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Anyone out there opted out of their company pension?

(35 Posts)
Millie3030 Mon 23-Jun-14 21:52:46

Hi,

I I'm a teacher and have been paying into my pension for 7 years. It costs over £200 a month for the pension and I have to work until I'm 68 to see any of my pension money.

Sounds morbid but my nan died at 65, my mum at 59, I really don't think I'm going to live to see that pension money. Has anyone opted out of he pension and just enjoyed the money now, whilst they are young and have a family and can benefit now??

I feel like I'm saving for a rainy day that I may never see, £2400 a year is a holiday my family could go on every year! I know there are tax deductions so it won't be as much as that, but it's still more every month whilst I'm young ish (30) that could make a difference.

TalkinPeace Mon 23-Jun-14 22:16:30

You are a teacher.

You would be UTTERLY MAD to leave the scheme.
If you were to die young there is a huge lump sum "death in service" benefit that would look after your kids
your DH will get half your pension if you die young

you need to URGENTLY read up on the terms of your scheme
but basically DB schemes like yours are like gold dust. HOLD ON TO IT WHILE YOU CAN

trixymalixy Mon 23-Jun-14 22:18:55

NO NO NO!!!! You would have to be seriously off your trolley to give up a teacher's pension!!!! Please I implore you, don't even consider doing this, I would kill for a pension like yours!

Heatherbell1978 Mon 23-Jun-14 23:17:51

What the others say....I work in a bank and pay about £500 a month into a pension which is still not going to give me the quality of life I would ideally want. If you have a public sector pension you should make the most of it. Too many young people these days (I am also fairly young I should add!) can't see past their 20s/30s and will probably regret not putting money aside when they're living on the bread line after they retire.

inneed36 Mon 23-Jun-14 23:22:04

What the others above have said! It would be madness to opt out. You will not get a better pension scheme, stick with it

trixymalixy Mon 23-Jun-14 23:35:48

If you opt out of the pension you are effectively opting out of a huge chunk of your salary. It effectively costs your employer far far more per month than it does you.

mrselizabethdarcy Mon 23-Jun-14 23:52:10

No no no please don't do it. I know the money you would save is tempting but I work in public sector pensions and you would be mad. By staying in the teachers scheme you are covered for death in service, widowers benefits and children's benefits if you die and ill health / redundancy etc.

Please think carefully about this. X

CogitoErgoSometimes Tue 24-Jun-14 16:59:11

What did your relatives die of and why do you think you're destined to the same fate? Average life-expectancy for a woman today is over 80 and increasing, medical treatment gets better all the time and, even if you are genetically predisposed to particular conditions, there is quite a lot of preventative stuff that can be done.

Millie3030 Tue 24-Jun-14 21:53:16

Thanks for your replies ladies. I know everyone says it's good to have a teachers pension, but surely this is if you live beyond 68? My nan had a stroke and mum cancer, both had diabetes. I try to live healthily as possibly, keep weight low to avoid diabetes, don't smoke anymore, dont drink excessively. If I die my husband gets death in service which is three times my salary (so not massive) and we have life insurance that pays off the mortgage anyway, so it's not like he would rely on the money.

I also think if I saved £2400 a year in an ISA, in 38 years (68 when I can retire) I would have £91,200, that's without any interest so maybe nearer£100,000 in the bank? I would be able to have as much as I want when I want and also still get state pension wouldn't i?

If I wanted to finish work when I'm 55 I would still have £60,000 without interest. So I could go get an easier job earning £12,000 a year, and pay off my mortgage (if I still have some)

Other than my employer paying more money too, I just see me giving someone else my money for years that I may never see. If I save it myself I can access it when I want. Other than you will be 'mad' not to what other really practical reasons are there?

TalkinPeace Tue 24-Jun-14 21:58:30

Millie
you REALLY REALLY need to understand YOUR pension more
if you put your money into an ISA, it would only be your money going into that ISA
and would produce an income of fuck all compared with what the 20% of your wages that the government allocates to your pension

FFS
I am anti pensions
but would never, ever, encourage an employee to leave a public sector scheme

you need to talk to the scheme managers and get them to disabuse you of your erroneous notions that you have picked up from the shite newspapers

trixymalixy Tue 24-Jun-14 22:53:01

To get the equivalent pension by saving yourself you would have to be saving something like a third of your salary every month. That's what you are chucking away by opting out. It'd be like giving yourself a massive pay cut and that would be really fucking stupid.

Final salary pensions are a very very valuable benefit. Why do you think teachers are so keen to hang on to them?!?!?!

AlpacaYourThings Tue 24-Jun-14 22:57:02

Honestly, do NOT opt out. JUST DONT

You will regret it in years to come. You have a final salary scheme, you really would be mad to come out of it.

An ISA doesn't compare.

zikreetdreaming Wed 25-Jun-14 05:03:31

So Millie you've forgotten inflation. Taking a fairly conservative average inflation of 3%, in 38 years that 100k is worth about 33k in today's money. ISA interest is highly unlikely to keep up with inflation over the longterm and if there's any period of significant inflation your savings could be wiped out in a matter of years.

To put it in perspective, DH and I do not get any employer assistance we pensions (expats) we save GBP 1000 per month and it's unlikely to be anywhere near enough even for a fairly modest income unless we are pretty lucky with investment returns.

trixymalixy Wed 25-Jun-14 19:14:38

Also if your health is bad with a final salary pension you may be eligible for early retirement on the grounds of ill health. With an isa, it'll just depend on how much you have managed to save up until that point.

Millie3030 Fri 27-Jun-14 22:10:03

Ok ladies, thank you. Think I may not go rushing to opt out anytime soon.

Talking peace - why are you anti pensions?

TalkinPeace Fri 27-Jun-14 23:01:27

Millie
because I'm a cynical old accountant who studies these things on a 30 year window and writes spreadsheets for amusement.

DB schemes like yours are GREAT for the employee and crap for the employer

DC schemes like the rest of us have are crap for the employee and irrelevant for the employer

they are all a Ponzi scheme for the rent seeking sharks in the city
I utterly believe in savings, but not in "pension schemes"

specialsubject Sat 28-Jun-14 19:03:50

I was also going to say that you have forgotten inflation.

MIL has a great story about a plan she took out back in the 1960s which was going to pay off £2000 30 years later. She laughs and says 'we thought we would be SO rich'...

although I don't entirely agree with TalkinPeace, my DC scheme is looking quite good at the moment - but it is not my only retirement plan, eggs need to be spread among many baskets.

AlpacaYourThings Sun 29-Jun-14 10:25:40

Talkin I think the pensions market has changed significantly after the budget this year.

Sparkle9 Sun 29-Jun-14 13:57:54

I don't think the teacher pension scheme is final salary anymore. The contribution went up recently and I'm pretty sure all future years are based on career average salary rather than final salary. So the OP would only have a very tiny final salary pot. The rest will be career average.

I am also a teacher and sometimes do wonder about the point of paying over 9% of my salary into this scheme.

MaxsMummy2012 Sun 29-Jun-14 14:10:07

Um well I'm a teacher of 7 years and opted out from day 1. For us it was a choice of paying the pension or affording bills and a mortgage - we opted to buy a house and have a mortgage over a pension and now that they have increased contributions we definitely can 't afford the pension. My other reasons included the worry that something would happen to the pension scheme and I'd end up with nothing and finally the fact the retirement age keeps increasing so by the time I can retire they'll probably have raised it to 80 ha ha! I'm also in my 30's - 31.

Teeb Sun 29-Jun-14 14:17:39

What do you plan to do when you do come to retirement age maxsmummy?

MaxsMummy2012 Sun 29-Jun-14 14:26:55

At the moment we dont have a plan - but we do have 34 years left to come up with a plan :D. When money isnt so tight we will begin to save, we'll also get some inheritence from elderly relatives (although obviously hope that isn't any time soon!) and we'll downsize our property and release some equity that way. But I imagine retirement age will go up again a few times before I get to retirement anyway.

MaxsMummy2012 Sun 29-Jun-14 14:27:38

*sorry I actually mean 38 years left to plan

Sparkle9 Sun 29-Jun-14 14:31:05

I get very cross about the TPS because when I joined it the retirement age was 60. It is now 68. I've only been a teacher for 9 years. How high will the retirement age go and will I ever reach it? I fully understood the need for higher contributions and can see the sense in career average rather than final (sort of.... I'm unsure how inflation plays into this) but the age thing is worrying. Most teachers I know in their late 50s are more than ready for retirement to be at 60 (exceptions, of course!).

smiler75 Sun 29-Jun-14 16:09:50

I'm also a teacher. 11 years service so far that will be based on the final salary scheme (calcuated as 1/80 of final salary for every yr served, retirement age of 60). The change over to the average salary scheme is next March which will be calculated at 1/57 for each yr served under the new scheme, retirement age of 68. I currently have to pay 11% of my salary into it and will definitely not be leaving. There will always be some early retirement option where you can sacrifice some pension in order to retire early....I have no intention of still being in the classroom at 68!! But that does not mean that you shouldn't save into the scheme

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