To not understand the point of pensions unless you're on a high salary?

[koolkidsss]

My salary is below average, and the 3% contributions are nothing. I know employers have to match it, but I just don't see the point as the sun at the end will probably last less than five years. I know some companies offer excellent pensions but the bog standard ones seem so pointless.

I also dread to think what the retirement age will be for me. I have grandparents who died in their 60s so the gloomy part of me wonders if I'll even live to retirement.

Unless you're going to stay in one job for years, which offers an excellent pension I don't see the point. AIBU?

I think a pension is more important than getting on the housing ladder

I disagree. Better to get on the housing ladder and pay off a mortgage as soon as you can. Then you've got a property you can sell to fund your retirement if you don't have a (decent) pension. And, if you don't live to retirement age, you haven't wasted your money saving for retirement.

I have inadequate but not completely unreasonable pension provision (no pension at the moment due to having just changed jobs but will get enrolled in a few weeks' time) but I own my house outright and would put housing above pension every time.

I agree wtih itstime.

How the hell can you afford to rent on a pension? At least if you own property, by the time you retire you've likely paid off the mortgage and at least you can be sure of a roof over your head.

I have a very very cheap rent, but my pension won't cover it and bills.

My MIL found various little organisations that the DGPs had paid into in the days before pensions. I think one was The Gardener's Friendly society. The DGPs had forgotten it existed, but it paid out a small sum each week that made a difference to their lives.

I was quite fortunate to have started my pension at 21 when I started my first “proper” job so I’ve never had the money to miss. I’m 47 now and believe I’m one of the first to be hit when the state pension age goes up to 68. To be honest I’ll count myself lucky if it even still exists when I get to that age!
My plan just now is to retire at 55 (we’ll be mortgage free by then), as working shifts is really taking its toll on me, but I’ll have paid into my pension for 34 out of a possible 40 years, and hopefully by then I’ll also manage to make AVCs to cover some of that shortfall. That’s what a pension can allow you to do if you start it young enough

Agree OP. I am mid 50s in lower paying jobs all my life. Started paying into a pension at 22. I wish I hadn't bothered.

The point is that the small pension if you are lower paid that you will get, will often take you just over the amount that would give you extra financial state help, and actually leave you worse off. I will retire at 67 when I get my state pension.

As someone who worked for decades without a pension, that is one thing I would love to go back and tell my 16 year old self.

Start off small, add to it when you can. If you calculate it carefully, it will make no more difference to your mortgageability than say smoking did, or that gym membership you never used. But when you get to your mid 50s you won't sit wondering how the fuck you are going to get enough money to live off when you are retired.

So yes, it is worth it... and is much more than the amount you pay in when it is tax free and matched by your employer - AND it follows you round, you'll never have to go looking for all the little pension pots you might have had!

If you can get mortgage free, that is much better.
For better paid employees, pensions are worth it.

crunchy I'm not sure that is the case any more. It did used to be that small pensions were effectively wasted money as they just took away entitlement to pension credit of a similar amount, but they've now increased the minimum state pension (subject to meeting contribution requirements) to more or less what was the basic pension plus pension credit, with no further top ups, so they're effectively giving everyone the same amount without any needs for means testing and no consideration of what other income they may have.

Housing benefit might be an issue but this would be irrevelant for pensioners who own their own home.

Don't forget your employer also pays in to this.
So, the total amount is 5.0% of your qualifying earnings until 6 April 2019 then rising to 8.0%
The idea behind this is that you/we take responsibility for our future.
With people living longer it is just not possible to retire at the same age and expect a reasonable pension paid for by taxpayers.
A simple piece of maths might help, forget about inflation etc.
Let's assume you work for 40 years and are retired for 20 years.
Whatever pension you want to receive you will have to save half that amount.
If i want to receive 40% of my salary then i need to save 20% for forty years.

It's better than nothing and you may be able to increase contributions later in your working life if you earn more. I know it feels futile but you may well be grateful that you did it if you are quite young now and have many years left to contribute.

Barbara Yes fair point for younger people. People of my age lose out as we get the smaller rate. I feel pretty cheated by paying into a private pension.

Why aren't you building up your own pension? What do you propose to live on in retirement??

I guess the wider point is that people like me make decisions about private pensions at 22, and then the rules can change more than 30 years later, making your decision now the wrong one.

moviesgirl Average life expectancy at the moment is 79 for men and 82 for women. Retiring at 68 means an average retirement of 11 years for men. Pension ages will increase as life expectancy increases.
In general the better off you are, the longer you live. Poorer people like me have a lower average life expectancy.

I've just had info on my pension, on a lowish salary, If I retired today I would get around 4k a year. It doesn't sound much but on top of my state pension it will mean I'm not too badly off. I know it's seems like you'll get nothing but it all adds up

Yes slightly more than I will get. I will get about £3,600. But will lose nearly as much. I would have been better just spending the money on having a good time.

I've worked in the public sector since 23 and always paid into my pension. It's just another deduction and I've never considered it as part of my salary.

My parents didn't save into any pension fund and it's only because of inheritance that they now have any savings for their retirement. Both are now over retirement age and my dad still works part time. I don't really want to rely on my parents for inheritance for my retirement. Having something saved is better than nothing surely?

I won't get any inheritance.
Having something saved is better than nothing only works if you don't lose out any money as a result. All those my age with low wages and small pensions will lose the now increased pension rate. We get the old much lower rate. So we lose out.

Given that people live longer and the costs of social care are increasing, anyone who relies on inheritance (unless you’re the Duke of Westminster or some such) is a fool.

Few people have enough money to pay for residential social care for more than a few years anyway. But the average length of years in residential social care is only a few years anyway. Those who live a long time on residential care will nearly always need to be state funded.

With you op
Better to put that money in savings
They constantly fuck about with pension rules as well.

Yes I wish I had put the money in savings.
Pensions for low earners would only be worthwhile if the rules stayed the same, so you could decide at the point of starting a pension, if it made sense. They don't. They change the rules. So save yes. But pensions are only worth the risk for the better paid.

worridmum: the problem is that pension schemes can and are often stripped by the companies despite it being "Your" money that you have contributed too and if the company goes bust you are the last to receive any money.

The BHS sorts of pensions are in a very small minority of final salary pension/defined benefit schemes offered by private employers. Most private companies would no longer be offering such schemes to their employees. Instead, the majority of pension schemes by private employers are defined contribution schemes where the employee owns the pension pot and not the employer. Therefore, no stripping can occur by the employer.

Don't let BHS put anyone off.

It's a way of sending money into the future when you are more likely to need it. It's not perfect, due to all the fiddling about by government and risk that rules might change, but it's a kind of future insurance that if you can afford it (particularly if employers match contributions) you should probably consider.