To not be bothered about my pension?

[mytartanscarf]

I paid in for ten years and now I'm taking some "time out" to "find myself." I know that is an extremely poncey statement!

I think my mum and dads influence is leaning very heavily on me because they were very concerned with pensions and used to regularly tell me to pay extras in so I could retire early.

So - aibu for not being bothered just at the moment (am 32?)

Let's hope auto enrolment has some effect. Or is that pennies dressed up as policy?

arsenic
Auto-enrolment will have no impact at all.

6 Million people are self employed - they have no employer to enrol them.

Millions of others earn so little that they can, and will, opt out - part time workers, shift workers, zero hours workers.

Remember that somebody with three part time jobs that add up to one full time one will have paid no NI so will have no state pension entitlement - and there are MILLIONS of those.

I was doing the calculations for one of my part time jobs.
After 17 years on contributions into a NEST, on what they pay me, my annual pension would be £275 a year.

But if you've never paid into a pension, or paid any NI contributions, will the government not top you up anyway with income support? And assuming you don't own a house, the goverment will pay your rent too? And then because you don't own a house, won't the government pay your nursing home fees too?

What, me?

I have paid into a pension and do pay NI; no they won't top me up with income support; I do own a house; I'm unlikely to live long enough to go into a nursing home! Anyway ...

rita68
Probably : the vast bulk of the benefits bill goes to pensioners because they turn out and vote for nice Mr Cameroon

Mytartan
If you have TPS you should be OK with that for now. AVCs are often badly performing as they are DC rather than DB

I can see why people prefer to live for the day. But being really hard up when you're older is absolutely no fun whatsoever. So you have to at least consider that. It's anybody's guess what will happen to pensions in the years to come. How much will the government top up people who haven't provided for themselves. Nobody knows that.

Teachers pension is reasonably generous so probably no need to worry about a few years plus you can pay AVCs when you go back to work. However, will it be easy to get back into a teaching job after a 3 year break?

Yes, teaching English means I am rarely out of work!

I think OP if you have paid in since 22 and in to a defined pension scheme then you are already ahead of most people and a couple of years out isn' t likely to do massive damage. The point about earlier contributions being worth more is not relevant to defined benefit schemes. And as a teacher you will hopefully have options (supply etc) if you can't afford to retire but don't feel you can manage full time work.

I'm slightly younger than you and don't know anyone who started a pension at 22, friends were on gap years or still at uni or worried about student debt so I think 22 is a good starting point.

I have only made 5 years contributions but it gives me a return of 3.5k pa equivalent already despite being on not a particularly high wage (also defined benefit) and I am 35 years prior to current retirement so like you I don't think a year or two out would hurt me- my partner pays in 3 times more than me but his employer pays 5% mine 18%.

The thing I am most concerned about is that my pension is soon to be linked to state pension age,(the 3.5,k I get at 65 ,but anything after that links to state pension). I don't know if its the same for teachers but if not I think all public sector pensions are heading the same way. In which case my pension may be decent but who knows what age I'll be allowed to access it. So I need my own savings as well.... Like you I have just lost a parent in their 50s whose fitness and health exceeded mine by far (rare untreatable cancer) so like you wonder if I'll see my pension. I think for every year in work I get £650 pension per year....so 2 years out would mean I lose £1300 a year.... May be worth doing the sums

Thanks not; v informative

QT
Read what the OP has said : her profession still has a DB scheme

I had one but have had years out and more children than would ever be good for finances. I plan to downsize and/ or get rental income and to keep on with self employed contracting. Won't be rich but honestly I can live happily on pretty little. My gran stripped back everything and used to live mainly in her camper van until about 85! Soup, gin and fags and she was in heaven:)

For a year or so don't worry about it. At least you have so far and will continue to make provision.
DH is definitely retiring early (55ish) and on a good pension from his job. My work is p/time, much less stressful and I get loads of holidays so I could carry on longer if need be.
Retirement has not had it's time here, we have worked hard and saved hard to ensure we will be able to retire early without any hand outs if necessary.

The OP does not need to speak to a financial adviser, as somebody suggested.

It's quite simple. No professional advice (for which she'll have to pay) needed. Carry on paying into your pension. You need to look after your own future. It doesn't mean that you can't simultaneously enjoy your life ("living for today" doesn't mean "spend everything and don't bother saving because you might die at 50").

I find it irksome when women make excuses for stopping their own pension contributions. Take responsibility for yourself; nobody else is going to do it for you, and that includes the government.

If you want to live the same sort of life when you retire (or semi-retire; like Talkinpeace I don't intend to stop working entirely the moment I turn 67, or whatever the retirement age is then) as you do now, you need to be diligent about pension contributions.

I don't consider it unreasonable that the public sector DB schemes are increasingly linked to state pension age, either. I say this as a member of one of those schemes. They need to be made more affordable or they will vanish. Count your blessings that you still have access to a DB scheme, even if you do need to wait a few more years to access your pension.

A DB benefit scheme is worth it - keep hold of that if you can. (IMHO)

Otherwise a "pension" is not witchcraft - it is simply money put to one side which you can use later. Look carefully at any scheme which does not allow you to get hold of your own money when you want it .
Perhaps think about a cleverer way of saving money for when you are older. This to me is a perfect example of when you might pay someone for their expertise , because it could reap you dividends in the long run.

When you are 32, your 60s and 70s seem so remote it is hard to believe reaching those ages will actually happen. When you get there, I can assure you that you will be very thankful indeed that you have a decent pension.

We 70 year olds may look ancient to you, but in our heads we are as lively and capable of having fun as we ever were, and having the money to continue to enjoy life is wonderful.

OP, even though you will have left your job and so will leave the DB pension scheme, you could set up a SIPP (self-invested personal pension) fairly easily and cheaply.

I have one alongside my occupational DB pension scheme, to make maximum use of the annual tax reliefs (which may be reduced by future governments; all the more reason to save now).

Now that we're not forced to buy annuities, I think that the SIPP is an excellent vehicle for anybody in my position, or anybody self-employed.

If you can afford to, you can still make pension contributions of up to £2880 pa even if you don't earn enough to pay tax. Pension contributions attract tax relief so a 20% boost is a no brainer. I'm not a live for today person but more of a short term pain for long term gain type. Admittedly, I'm very sensible and boring financially though (parental brainwashing).

I'm honestly quite surprised that so many think I'm BU given there is a significant chance I won't ever see my pension and if I do, I'll still have over forty years of contributions into it! I guess in that context two years doesn't seem particularly important!

Someone has said that at 32 being in your 60s and 70s must seem ancient. It isn't that at all :) however it seems to me really stupid to put money aside NOW when I am scraping every penny together to do something I want to do, when there's a good chance I won't reach that age and if I do i will still have many years of contributions.

You did ask AIBU - so don't be surprised..

Can you guarantee that you will be able to re-join your DB scheme if you opt out for a year or so? It's worth checking and probably not a good idea to stop contributing if you can't be sure that you can continue it at a later date.

Wouldn't she have to leave her occupational scheme anyway, Cuthbert? That's how most schemes work. As soon as you leave your job, you leave the pension scheme that goes with it, albeit the benefits are preserved.

The OP's risk is that as soon as she stops contributing to a pension automatically, through her salary, she gets out of the habit of it. Self-discipline is hard, as we all know!

Also, OP, don't be so sure that you will 'never see your pension'. You may have special insight into how long you will live, but today's thirty and forty-somethings stand a good chance of living into their nineties. As other posters have wisely noted, you don't want to be old and poor.

Another poster suggested that the OP see a financial adviser to find 'a cleverer way of saving for when you are older'. There is no cleverer way than a pension, which you can supplement with an ISA if you have spare cash and want to build in a little flexibility. You get tax relief on pension contributions, which makes them very clever indeed!

So long as you are prepared to be working past your 65th birthday, then there's no problem. If you want to retire before 60, don't stop paying.