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to think £1600 a year to live off in the uk is not worth it

(46 Posts)
wilsonq2 Sun 09-Nov-14 09:34:45

Just been offered a pension with my new company. Got the paperwork thought and if I contribute for the next 32 years and it performs averagely then I will get 1600 a year to live off.

Aibu to not join it and just keep my 30 odd pounds a month myself?

ThisBitchIsResting Sun 09-Nov-14 09:40:26

It is, quite literally, better than nothing though.

mausmaus Sun 09-Nov-14 09:40:55

put the 30 a month into a savings account.

aslo do some simple maths: 30x12x(years left unil retirement) = x
30 divided by x

(I know, no interests considered, but you get the drift)

Hamiltoes Sun 09-Nov-14 09:41:10

Not sure wether you are being unreasonable or not but I'd consider working out how you can contribute more.

To put it in perspective, i'm 22 and have contributed at least £80pm since I started at 17 on min wage. Pensions are important!

gininteacupsandleavesonthelawn Sun 09-Nov-14 09:42:56

I don't understand. Surely if you want more out you pay more in? If your employer is matching contributions then it's always worthwhile. Also if you take the cash now you'll be taxed on it and be worse off in retirement. Depends how old you are and what other pension provisions you gave I guess.

JulietBravoJuliet Sun 09-Nov-14 09:44:47

Well £30 a month for 32 years comes to £11,520, so if you save that amount and take £1,600 a year from it, it will last you 7.2 years. Depends whether you are planning on living more than 7.2 years from retirement I guess! The bonus of the pension is it will continue to pay out that amount regardless of whether you live for 7 years or 40 years after you retire, so overall you'll probably get more back from the pension.

AnotherFurry Sun 09-Nov-14 09:48:35

Hopefully as time moves on you can contribute more and more which will increase your pension pot.

Does it have any other perks such as in death benefits should you die whilst employed?

How are you going to fund your retirement without it?

Whilst you might be tempted to just forget it and spend the money now it is amazing how time creeps by. I am in my 40s and have always had a pension and looking back I wish I had contributed even more when I could as it would have made a big impact due to compound interest.

I know people who don't contribute to a pension nor have any means of supporting themselves when they retire. Putting yourself in the hands of what might be available in terms of benefits in your later life seems very risky to me.

Vitalstatistix Sun 09-Nov-14 09:48:45

well, £30 x 12 x 32 = £11,520 (plus interest. Which won't be a lot.) so I guess it depends how many years after retirement you are planning on living. grin

What will you live off when you retire? How much will you realistically need? That has to be your starting point. It may be that you have to put in a lot more than £30 a month. Old age is always closer than we think.

If this isn't the right plan for you then you'd better find something because I think we all know that we are probably not going to be able to rely on the state as pensioners. Those days are coming to an end!

So look into it and find something that is going to give you the retirement income that you want and need.

rallytog1 Sun 09-Nov-14 09:55:13

Not sure how old you are, but if you can pay in more than £30 you really should. Or if you don't like your workplace pension, at least open your own personal one and put your £30 in there. For all of us who are under 40, we can't depend on getting anything from the state when we retire (which, incidentally, will probably be more around the age of 75 than 65, giving your money another decade to grow...)

GoodtoBetter Sun 09-Nov-14 09:58:21

I don't know. I'm nearly 40, live in rented accommodation abroad with no pension at all. Have savings and may inherit a similar amount in the next 15 years or so, but otherwise I'm a bit stuffed really.

TheoreticalDudeOfFeminism Sun 09-Nov-14 09:58:56

Would you really rather have an extra £30 a month one rather than an extra £30 a week when you retire?

TheoreticalDudeOfFeminism Sun 09-Nov-14 09:59:30

Gaaaah - an extra £30 a month now

MsVestibule Sun 09-Nov-14 10:08:34

I'm guessing you're in your mid-30s? If so £30 a month is really not enough to save for a decent pension, even if your employer is contributing a similar amount. I know it can be difficult to strike the right balance between having enough money now and making sure you're not a poverty stricken pensioner.

Have you made any other pension provision yet?

greenfolder Sun 09-Nov-14 10:13:12

rather than view it as a pension, view it as long term savings. thats what i do. my employer matches my contribution and i get tax relief on my contributions. that means that i am saving 10 % of my salary but it is only costing a fraction. now it can be taking as cash i am happy doing that. annuity rates that are quoted are useless so would ignore them .

PacificDogwood Sun 09-Nov-14 10:16:32

It is not much but better than nothing.

If you saved £11.520 how long would that last you after retirement?

Also remember the tax saving you're getting while you are saving in to a pension.

WeAreEternal Sun 09-Nov-14 10:19:53

Juliet has said almost word for word exactly what I was going to say.

It's good value for money if you plan on living more than 7.2 years after retirement as you will get more out than you put in.

wingcommandergallic Sun 09-Nov-14 10:22:05

How much is your employer paying in? In effect their contribution is part of your remuneration package so is delayed earnings in a way.
Also if you pay into a pension, you pay slightly less tax and NI so the net cost is less than £30.

FraidyCat Sun 09-Nov-14 10:24:03

There is insufficient information to know if this is a good deal, however if this is a NEST pension scheme it probably is, as it has low charges. (I estimated that there's an implicit 4.2% above-inflation return on money invested, which is reasonably good, but what I don't know is if the £1600 a year projection is based on high assumed returns out of which some middle-man has levied exorbitant charges. The high assumed returns might not materialise, but the middleman-charges are guaranteed to.)

You shouldn't expect to get a decent pension from contributing £30 a month. Presumably this is some sort of minimum contribution and the idea is you're supposed to top it up.

£8000 a year on top of a the state pension sounds to me like a reasonable minimum to aim for, 30*8000/1600 = £150 a month, so that is a more reasonable contribution.

HermioneWeasley Sun 09-Nov-14 10:40:18

There have been a few threads about pensions to this effect recently. What do you expect £30/month contribution to add up to? As another poster has said, it will create a pot if about £11k for you to live on for the rest of your life, which could be 20-30 years if you retire in your 60s. Have you previously been contributing to a pension? If you want to have more to retire on you need to save more. You can have your money now, or you can have it when you retire, but you can't have it both times.

maddening Sun 09-Nov-14 10:42:44

To live on £15k per year pension you have to save around £140 pension per month from 30-65, you need to aim to increase it.

ilovesooty Sun 09-Nov-14 10:53:02

Agree with other posters. If you want a better return, put more in. If you're expecting money for nothing or the state to prop you up you'rebeing unreali stic.

TheoreticalDudeOfFeminism Sun 09-Nov-14 11:36:24

YABU by the way - £1600 per year is better than nothing (which is what you will get if you keep the money now instead of putting it in a pension pot).

As others have already said, it is better to save more than the minimum amount (I put 15% of my salary into my pension each month).

specialsubject Sun 09-Nov-14 11:49:37

nobody has mentioned inflation. Your £30 a month in savings will disappear in about 10 years.

but if you want more, put more in.

Weetabixwife Sun 09-Nov-14 12:52:10

Message withdrawn at poster's request.

WooWooOwl Sun 09-Nov-14 12:57:03

So how else are you planning to fund your retirement?

If you have a different plan, then maybe it won't be worth it, but it's unlikely seeing as how your company would contribute to your pension as well.

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