to give up paying into my pension

[laurageordie]

It seems like the rates on return have really gone down. Just had a statement through and it says if I carry on paying into it till I'm 65 and it does averagely well then I will get 3000 a year. Ffs it is impossible to live off that today let alone in 30 odd years time. I earn about the average and put away 5% a month

If you stop paying in will your employer stop paying in?

Because currently for every £100 you pay in:-
Mr Taxman pays £25.
Your employer pays £125.

So you get £250.

Which is a pretty d@mn good deal IMO.

It is free money in the context of the poster above who was discussing the fact it can be done by non earners who haven't paid that tax in the first place. And "no idea what tax could be like in 40 years" well no but the same is true of your ISA which is just a different tax wrapper. They could just as easily change the rules on that.

Well im only putting it into an is a for a few years,then as I said above will be investing in London property.

Yes they stop paying in if I do.

Seriously all of you who talk about BTL need to look at commercial property. I paid £125k for my commercial property, it brings in £13,500 per year in rent, the tenant has a 25 year repairing lease and has to pay the buildings insurance, all standard commercial property terms.
For the last 6 years all I have needed to do is say yes I am happy with the insurance policy and collect the rent. I have had BTL too it is so much more hassle.

How do you get into commercial property?

If you stop your contributions, will you also loose the 5% employers contribution?
If no, give it a go - you'll see a 4% ish increase in take home - it will get taxed.
If yes, consider seriously leaving it in - if the stockmarket halves, you are on par with what went in.

Sorry, too slow in typing. Are you seriously considering throwing 5% of your salary back into your employers face?

Just looked in my local area, and this came up - surely its missing a zero?

www.rightmove.co.uk/commercial-property-for-sale/property-39054325.html

It's the business not the building.

Ah I see,what about this www.rightmove.co.uk/commercial-property-for-sale/property-32370066.html?premiumA=true

A 10% return sounds pretty good, unless I'm being stupid?

the scheme I referred to is a standard personal pension, which you can open with or without an employer and with or without employment. I opened mine as a 'stakeholder pension' which was designed (11 years ago) to offer low charges. The money is from my taxable income, although as I don't have enough income to pay tax I suppose it is free money for me.

this is not the state pension. As an aside on that, the number of contributing years that you need for a full state pension was 39, went down to 30 and is going up again to 35.

the comments about changing rules are entirely valid and it is important to keep informed.

You get into to commercial property by buying a property and finding a tenant. The properties are relatively cheap though don't expect a lot of growth the value in commercial property is the income you then reinvest the income.
Mine is a shop, a destination business rents the shop, they were already in the town ( had been for 40 years) needed bigger premise and so took 25 year lease.

Normal DC pensions - like the one OP has have generated negative returns over the last 15 years

Three things I don't like about this remark:-

1. Using the past to predict the future. If anything future returns are likely to be good when past returns have been bad. (Some might argue that there is no correlation, I disagree.) Except on very short time-scales (say about a year) things being bad/good in the past is not a sign they will be bad/good in the future.
2. If you contribute to a pension over many years, then withdraw from it over many years, the ups and downs get averaged out, the dramatic illustrations (good or bad) that come from looking at any one fixed time period are irrelevant to most people. (To illustrate, someone who saves monthly for 30 years then withdraws monthly for 30 years can think of each months savings as funding a months spending 30 years later. It is highly unlikely that returns over a 30 year period will be dramatically good or bad, and by definition impossible for the average of multiple such 30 year returns to be extreme.)
3. This particular illustration is doubly misleading because it starts from one of the worst starting points in recorded history. Shares are currently 30% cheaper than they were at the 2000 peak. I reckon an all-Europe tracker will yield (on average over decades) more than 6% above inflation, going forward. (American and Japanese shares are more expensive so will yield less though.)

OP, please take time to seriously think about your options.

By participating in your current pension scheme you are investing 10% of your salary and it is only costing you 4%. So for every £100 being invested you are only paying £40. Even after charges and allowing for some bad years it is unlikely (although not impossible) that your investment would fall in value by more than half.

Over the course of a year, for every £480 that you have paid, £1,200 will have been invested on your behalf. You will not get anywhere near that figure by investing in an ISA.

Don't pay in even if the employer contributes.

If you have very little when you retire you get pension credit and housing benefit anyway so the state just rewards those who choose not to pay in anyway. Also most people need their money now for food etc. When they are older and children have gone and their costs are less they can just save the money as cash. investment returns are so low at the moment it is not worth saving and if your fund is in equities as many are it will have dropped like a rock in the last week or two never mind all those past scandals like Equitable life etc.

it is all a bit of a scam. Keep well away. Definitely save money but put that into paying off any mortgage or as cash at bank.

It's not "all a bit of a scam" a pension is just a tax wrapper, lie an isa that's all it is.

Turning away 6% of your salary each year is pretty bad advice.

"Greengrow" thats assuming pensions are still operated the same way in 20/30/40 years when retirement age is reached. How likely is that? I know pensions are often protected by governments, but know not much more.

Every change has been against the pension holder, hasn't it? Gordon Brown with the massive new tax - ACT changes. Then we had the life time cap which gets lower and lower and lower - if your fund gets up to it which that of senior teachers even now can, then a huge charge is imposed on the fund.

Alose the rules keep changing. When I took my pension out you could draw it at 50. Then the state arbitrarily has changed the rules for everyone to make it 55. They have now accounted it as 57 in a few years. Youc annot trust these people at all. Also all this talk of taking your fund out as cash - if I do that the state confiscated 45% of 75% the pension lump sum. If I buy an annuity I will barely get back what I paid in and over 30 years of drawing it inflation will make it worth even less and the income I draw will be taxed at 45% as I will still be working.

If you earn very little then you need the cash to eat and having it as cash savings gives you much more control over it. Harder for the state to confiscate or change rules over your cash than over something you lock away in a pension. Those on very low wages who go for auto enrolment will find had they not bothered to pay into it they would have got pension credit and housing benefit anyway - a massive scam in the making - a Government sponsored scam.

Pension credit is being abolishes. Advising someone to keep well away from a tax efficient product and turn down 6% of their salary because you think it's a bit of a scam is stupid advice

Sorry, Greengrow you were supposed to be in bold there, not quotes.
I don't know. I don't take a massive amount of notice of the pension bits of manifestos / budgets I know, I really should but I got the impression there was a song and a dance about protecting pensioners - fuel allowance etc. Does that mean they have made a song and dance about the small stuff, and slipped the big stuff under the radar? But actually, if I was meaning pensioners (ie already drawing a pension), and you are talking about those actively contributing to a pension, I guess it looks pretty different, and those who will be (hopefully) drawing a pension in many years get the potential £ reduced.

money in the bank is being hammered by inflation. Even if you get interest on it, the real inflation rate is much higher than the government figure - as anyone who goes to the shops or pays bills will know.

petrol has gone down a bit and that makes a big difference to the official inflation figure - but most of us spend a lot more on food and bills than we do on petrol.

have six months or more emergency savings, absolutely - but keep money in cash accounts and just watch it devalue.

Greengrow I would have thought the new rules would be much more beneficial for you. Freedom to take your fund when you want, able to pass down free of tax.

For the current pensioners the best thing they could of done is just spend all their money then get enhanced state pension, rent paid and council tax paid. Having a small pension would have been a waste of time.

Clearly MN is not a good place to get pension planning advice.

It's been a long time since I heard a tory supporter anyone throw in the "Gordon Brown with the massive new tax - ACT changes" but it is not accurate.