To stop paying into my pension?

[Sleepdeprivationistorture]

Okay okay, I know to stop paying into my pension is on the face of it utterly unreasonable, but hear me out!

Dp and I are mid 20’s. We have a 9month old dd and I’m just about to go back to work after mat leave. Our plan once I go back to work is to save hard to buy a house.

We can save about £500 a month if we are are super disciplined. But we will need about £15,000 for even a 5% deposit in our area so this is going to take us at least 2-3 years. (I know in reality it isn’t that long, and we’re lucky to be in a position where we can save that, but to me it feels an eternity away!)

Between us we pay nearly £400 into our pensions each month. So my idea is that we could stop paying into our pensions for a couple of years and instead put that money straight into our savings, then once we have the house we’ll opt back in to the pensions and also still be saving a little alongside it. To me, a house would give us more security than a pension and not paying into our pensions would enable us to do that in almost half the time.

Is this a bad idea? Does anybody know if there are any repercussions with stopping pension payments for a couple of years? Mine is a private pension and dp’s is government if that makes any difference!

You wouldn’t believe where the money goes when you want a nice lifestyle as pensioners
My dh had next to nothing, despite working for 40 years
Thankfully our combined pensions and my rental income and our savings and the fact I own my home outright mean we have a very good lifestyle . We aren’t extravagant though.
We buy secondhand hand cars, air travel economy, stay in self catering apartments abroad but eat out every night, not big drinkers
Oh yes and we love our meerkat meals
If we only had state pension each we would really struggle.
On the other hand..he would be very happy on holiday in a tent, eating pasta while watching the rain lash down.
😡
We are thinking of staying at the ritz next month for our 4 th wedding anniversary.
If we can be arsed lol

Sounds good jojo

We are only in such a good position as we both owned our own homes and I inherited two

Don’t do it. Whoever said it’s like setting £5 notes on fire is spot on. Especially if your employers’ contribution is a decent one. Rent is no more money down the drain than mortgage interest is.

Rent is no more money down the drain than mortgage interest is

A lot more. Often 3 times as much.

We need to stop viewing rent as money down the drain. Rent is a payment for a good or service. In this case somewhere to live.

Paying rent is more common elsewhere, our culture views it as money wasted.

It's not though. It's paying for a home

A mortgage is only different because you might build an asset (could easily be wiped out) and the mortgage might be cheaper than rent.

Though when you have a mortgage other things become more expensive.

Don't stop pension payments, but do reduce, if any free money on offer (employers contributions) max those out with your payment.

My main worry would be getting locked out of a great scheme (e.g. use to work somewhere where the employer contributed 10% if you paid 3% - changed the scheme to only 3% for new entrants, in this case you'd be out of the great scheme and in the new scheme 😢)

I was referring to the principle, not the amount @JoJoSM2. Mortgage interest is money down the drain too, the quality is irrelevant.

Quantity even. Bloody autocorrect.

I did this last year when I bought by house but I gave myself a strict rejoin date (my 25th birthday) knowing it was finite. I now have a mortgage less than half the monthly payments my rent used to be and I still have 40 years of working life ahead of me so feel pretty secure I will be able to build up enough.

If you are going to do it, make sure it has an absolute end date when you will opt back in. To a certain extent you have to live for now and I'm all for anything that will get you away from literally burning money paying rent. Life is now, enjoy not endure.

As a financial advisor & mortgage broker I'd day its not a bad strategy as long as you do re-join your respective schemes as soon as you buy your property.

You are still young & probably have 40 odd years to contribute into a pension. If you feel getting on the housing ladder is more important to YOU (not anyone else ) then go for it. Missing 2 or 3 years contributions out of a 50 year working life isn't going to do too much harm.

Your pension might also be linked to other benefits - if I am not a member of our pension scheme I don't get death in service benefits etc. Check you won't be missing out on anything else.

Thank you everybody, this has given us a lot of food for thought.

If we did choose to opt out we would definitely be opting back in as soon as we had a deposit together, like I say if we were to do it we wouldn’t see the extra money, it would go straight into savings and never seen. We are quite disciplined and we do completely understand the importance of having a good pension, but wasting so much on rent each month seems more of a waste than what we would lose out in our pensions.

So much to think about! We’ll get there sooner or later either way I guess

Don’t opt out whatever you do because you will always regret it. You need to get into the mindset that the money isn’t yours now but will be later. My ex-colleague didn’t pay in for about 15 years (NHS) and bitterly regrets it. She will have to work a lot longer because of that decision.