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Not contributing towards a pension is at best foolish and at worst utter stupidity?

(507 Posts)
BHouse19 Wed 11-Dec-19 08:08:56

I was really surprised (and concerned) having met with a large group of friends last night that some of them aren't contributing towards a pension (two stay at home mums for two + years and one who has opted out of her work place pension).

So I'm just wondering, if you're not contributing, how are you planning to survive during your retirement? Projections tell us that the state pension (if it still exists as we now recognise it) is in no way going to keep up with inflation.

Your husband or wife may be contributing to one but if the marriage breaks down the value of this to you is going to dramatically reduce for you as a single person

AIBU in thinking that saving for a pension is one of our most important financial responsibilities?

GiveHerHellFromUs Wed 11-Dec-19 08:10:28

YANBU at all. I find it particularly concerning when people who rent don't have a private pension. They will have 0 assets and their rent will cost more than their state pension.

It makes no sense.

BaronessBomburst Wed 11-Dec-19 08:11:17

No, not the way most pension plans seem to perform. By all means invest in your future and for your retirement but it doesn't have to be a pension.

LagunaBubbles Wed 11-Dec-19 08:11:45

Well of course it's the ideal but it's not thst simple. I'm a full time Band 6 Nurse and I'm not not in the NHS pension which of course concerns me. But I don't have £30 left every month to pay into it never mind the £330 approx it would cost me. I can't magic that money out of thin air.

MellowBird85 Wed 11-Dec-19 08:12:36

I was enrolled into a LGPS when I started my current job at 18. It meant nothing to me then and I intended to cancel it. I’m so glad I never got round to it because now I have 16 years worth of contributions. YANBU, it is really important.

justcly Wed 11-Dec-19 08:14:06

YAB slightly U. It depends on the circumstances of the individual. I opted out for a few years, because money was tight, knowing that there was time for me to opt in later (which I did). Of course, regarding those who have no plans to opt in ever, you are absolutely right.

BackOnceAgainWithABurnerEmail Wed 11-Dec-19 08:14:22

I agree particularly having been a trustee at an organisation where we agreed to make someone redundant rather than them retire because they had opted out of the pension. The redundancy pay will have been a drop in the ocean - I still worry about how she fared.

custardbear Wed 11-Dec-19 08:14:48

Personal future plans, whatever they are, are non negotiable - but yes I know people who don't have a pension or any assets or likely inheritance either - it's scary!
Saying that my beloved grandad paid into a pension for his whole life, stayed with the same company too, he got stuffed when the owners children took over the firm (about 50 years ago) and essentially sold off/spent the pension pot so he was left with no pension for him or my grandmother ... bless his heart - it was tough for him but he managed and died at 101

CuriousaboutSamphire Wed 11-Dec-19 08:16:26

Wait til you get to my age... mid 50s... and then you'll be even more perplexed.

Having just found out that some apparently savvy women I have known for years do NOT have anything other than the state pension in place, despite all the options available now that weren't when we started work, I am gobsmacked.

We network, share information, have discussed savings and pensions a few times. Now, with a decade to go, they are discussing their options and not liking the look of them!

Best advice to ANYONE is save if and when you can. Keep your eye on the small saving possibilities. Even a tenner a month adds up over the years.

beautifulstranger101 Wed 11-Dec-19 08:18:33

Some people are on such low pay that to take out pension money now for 30 years in the future would mean they dont have enough to live now. Surely thats not hard to grasp? When I started work in the NHS, my wages were so low that if I had taken out pension money I would have struggled to pay my student rent so yeah, calling it "foolish" is a rather ignorant viewpoint when you are in a privileged position to be able to afford to put aside money.

I also know people who have invested heavily in pensions and based their entire lives on "waiting to retire" and literally the same year they've retired- they died. I'm not saying this is a reason people shouldn't invest in pensions but I am saying that putting yourself in hardship TODAY because you might live to be 99 is not a good idea either.

nannynick Wed 11-Dec-19 08:19:25

Depends on an individuals situation. If someone has consumer debt then paying that off over as short a period of time as possible is better than putting money in a pension. However once long term then with investments it is time in the market and contribution rate that is important.

Relying on there being a State Pension is perhaps foolish. It may exist in some form when someone currently in their 30's retires but at what age would they get it - 70+? Would it be worth much?

Missing out on employer contribution to a workplace pension is also foolish as it is free money. Another form of free money is tax relief on pension contribution... even someone with no income from employment can contribute around £2800 to a personal pension and get tax relief added to that contribution.

I think some people do not know much about pensions so information from UK financial planners is helpful to educate people... this podcast series is great for an explanation of pensions for those in the UK: https://meaningfulmoney.tv/2018/08/08/what-is-a-pension-pensions-masterclass-1/

ThisMustBeMyDream Wed 11-Dec-19 08:19:29

YABU. I am 35. I have only this year been able to join the NHS pension. I'd imagine most single parents of young children to be in a similar position with not having any spare for pensions/savings. My youngest is at school now - so instead of £1200 a month childcare, it is £200 a month. Hence why I joined the pension.

However, I am set to inherit from both divorced parents and the only child and only person named in both wills. My dad has c. 3million in assets and savings. He doesn't live a lavish life and he is in his mid 60's. Even with care costs of 2k a week, it would take 30 years of care to wipe that out. So whether I joined the pension or not, it really didn't worry me. I joined "just in case".

DeathStare Wed 11-Dec-19 08:20:11

I don't have a pension. I can't afford that and to feed my children. This isn't a position I would wish to be in and to be honest it terrifies me.

I don't thin calling people in the same position as me foolish or stupid is helpful. There isn't much we can do about it.

Instead we need to look more widely at a system that allows people to work bloody hard all their lives, to always live hand-to-mouth, and to never be able to afford to retire.

Schoolchoicesucks Wed 11-Dec-19 08:21:02

I agree to some extent however there are those who have nothing left at the end of the month to be able to pay in and those who have been burnt from contributing to pension schemes that went under and have nothing or little to show for it.

The government do back pension schemes so that if individual ones fail, the government step in to ensure the majority.

I work with a lot of young people who are paying student loans and it's difficult for them to also contribute to a pension. However starting it young and ensuring the fees are low is key. If you are able to start paying in at 25, you'll get a much bigger pot from lower contributions than if you start at 35 or 45.

GirlRaisedInTheSouth Wed 11-Dec-19 08:21:55

No pension, can’t afford it. Plan to shuffle off to Dignatas when I reach retirement age.

PineappleDanish Wed 11-Dec-19 08:22:17

Agree that pensions aren't the be all and end all, but making the conscious decision to invest/save in other ways is a very different scenario than just not bothering to even think about it.

SAH parents can have a private pension.

Booberella9 Wed 11-Dec-19 08:22:34

Very privileged OP.

Where do you think people get the money from to save into a pension?

Also do you not think maybe some people have looked at the amount needed to give a decent income in retirement and have drawn the conclusion that without a large pot there's no point in it?

5% of not much is still not much. It doesn't somehow become a lot.

In contrast, 5% of a lot is a lot. Enjoy your privilege!

Northernsoullover Wed 11-Dec-19 08:23:07

My God you do live in a different world don't you? I don't have a pension. It keeps me awake a lot. I'm not spending the money recklessly you fools. Most of my money goes on that private rent of which you speak. That private rent that stops me saving to buy.

ohprettybaby Wed 11-Dec-19 08:23:53

It is one of the most important decisions you ever make. However, I can understand why some don't pay into a pension where they have low incomes and feel that to contribute to a pension would just put more financial strain on them.

I assume they will claim Housing Benefit and Council Tax Support if they cannot afford to rent when they are on their State pensions.

Caramel78 Wed 11-Dec-19 08:26:44

My sister is 35 and doesn’t have any sort of pension and she also rents and is self employed. It irritates me beyond belief that she always says she can’t afford to pay into a pension - yet she just bought herself a pair of £100 boots the other day and also paid £250 for a tattoo the month before.
We are set to inherit a good amount when our parents die but I think it’s always incredibly risky to ever rely on inheritance as a pension as there’s no guarantees. My mum lost most of her inheritance because my grandad unexpectedly had a stroke at a fairly young age and then needed very expensive care for about 20 years

GirlRaisedInTheSouth Wed 11-Dec-19 08:27:53

Some people (me included) are not even entitled to a State Pension so will have NOTHING when we stop work.

I hate sneery threads like this sad.

Cremebrule Wed 11-Dec-19 08:27:55

You have to start young and try not to miss it. Anyone not paying into a public sector pension is likely to regret it later on. I didn’t fully appreciate mine but since moving to a private scheme you realise just how valuable even a few years in a defined benefit scheme can be.

VioletCharlotte Wed 11-Dec-19 08:29:47

The NHS pension scheme needs to be reviewed urgently to give people a choice of what percentage they contribute. It's not flexible and based entirely on salary, it doesn't take account of people's individual circumstances. On my salary, I would have to contribute 12.5%. I'm a single parent with teenagers at university, I just can't afford to do that so have opted out for now. If the scheme was flexible, I could have dropped my contribution down to a percentage that was more affordable for the next few years, then increases it again in the future

JosephineDeBeauharnais Wed 11-Dec-19 08:30:17

I was robbed of my pension in the mis-selling scandal. The small amount of compensation I was awarded is now invested in a plan which I regard with morbid fascination as it's value decreases year on year. I'm reconciled to the eventuality that at the current rate of decline there will be nothing left by the time I retire.

Between the theft and the extortionate fees, the advisers will have done very well out of it. Instead of a pension paying around £20k per year, I'm currently projected to get £8k and falling. DH and I will live in poverty - it is what it is.

Santasleftboot Wed 11-Dec-19 08:30:19

What's the difference between foolish and utterly stupid?

Both terms are derogatory.

If someone is on minimum wage on a zero hours contract, how does their private pension add up? Seriously, I am interested and would like to know.

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