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

[BHouse19]

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?

@icantbecani so what does your mother get after 40 years of contributions to an NHS pension??

I think you are perhaps living in a privilege bubble. Some people can’t afford rent, bills and pension payments. Also some people may not appreciate the free money given by employer contributions. Even if you do understand this, it may simply be common sense causing many people to prioritise needs today over your needs in the future.

Unfortunately it is likely many older people will be living in extreme poverty in the future.

@Acciocats
Yes I agree with you there. People who are used to a lot more would definitely struggle. It has been said that MN has a higher proportion of middle class/higher earners and maybe that is why these pension threads are always full of doom and gloom! I don't disagree at all that it's sensible to plan. I just don't think anyone should be scared of having to sleep on the streets or not be able to afford food, because I genuinely don't think that will happen.

Dontdisturbmenow maybe we don't know about taxes on pensions in the future. I always laugh when people say that the Conservative party give tax breaks to the wealthy when since they took office they have hammered high earners by reducing what they can contribute to pensions, and hitting those with large pensions with a much lower lifetime allowance. Its boring and complicated so it is probably why it escapes peoples attention, its not a great headline, but if you're interested google Tapered Annual Allowance, Changes to the Annual Allowance and Changes to the Lifetime Allowance.

For us mere mortals, all we have to go on is the current reliefs available which are extremely generous, and have been for some while. Neither the magic Grandpa or Boris Buffoon have suggested a change in their manifestos so i'd say the current efficiency is unlikely to be diminished, at least for the next 5 years.

@Acciocats she's dead now but got about £670 a month. She retired early 90's.

Plus full state pension

He got pension credit before she died but a smaller amount, about £80pm it's since she died it has increased.

I work minimum wage on zero contact.

I’m not stupid. Just too poor.

So she had 40 years of NHS pension contributions and in the early nineties your father was receiving more than that in state pension and pension credits??

@LagunaBubbles

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

You need to check your sums. That’s the rate for someone half way up the band 7 scale.

I am mid-40's and have a pension pot worth a massive £8k . Far far from ideal but given I don't have any savings either it's hardly surprising. We are both self employed in lowish income industries (nursery worker and mechanic) and spend every penny that comes in (and some on occasion.

However, we were lucky with property purchases and will be mortgage free in 10 years with a house currently worth c.£700k and are expecting to continue working until at least 70 (part time if not full time) then down size and either move abroad or to a much cheaper area. There is also a possibility of sizeable £1m+ inheritance from parents if care home fees don't eat it all up!

What? No I haven't said that. I said my mum has died and since then my dad has received more in pension credit that she received from her nhs pension

He doesn't qualify for nhs survivors pension. She died this year.

I'm not contributing to a pension at the moment, can't afford it. Current me is more important than future me for the time being.

@icantbecani I was just trying to clarify because your initial post made it sound like your father gets more in state pension and pension credits than your mum gets after 40 years of NHS contributions.

But if your mum retired and was receiving her pension in the early nineties and has since died, you’re not really comparing like with like are you? Because your mum would have been on a final salary index linked pension. So her pension payments would go up every year and would be considerably more now than almost 30 years ago! Presumably she got a tax free cash lump sum too?

I just feel there’s so much scare mongering about pensions not being good, when in fact people should look at it as ‘free money’ with employer contributions and probably the best thing anyone can do is to pay into one.

I agree there are some people who literally cannot afford to which is awful, but anyone who can really should if they want peace of mind

I haven't read beyond page 1 so don't know if it's been corrected but the idea that tenants have to pay rent out of their pension is incorrect - retired tenants get housing benefit and are not subject to the bedroom tax. So actually if you're a tenant and likely to remain so, it may well be not in your interest to put money into a pension or indeed to save at all given that your housing benefit starts to reduce once your non-pension savings go over £6000. What I mean is that unless your pension is going to pay out more than whatever your monthly housing benefit + state pension is, you should really look into whether it's worth it at all because effectively you'll have no more spending money than you would have if you didn't bother putting anything away. Housing benefit + state pension could be, depending on what part of the country you're in, as much as £400 a week. If your pension pays as much as that, you're breaking even ie getting as much as you would on housing benefit + state pension having never saved at all.

I think the other thing that people don't consider is that not all of us have followed the "traditional" route of employment or have worked for 30 years as someone up thread suggested for someone in their 50's.

I spent quite a long time as a student, have worked in a few different industries, each with their own pension plans, but not for long enough to have made an impact. I have also worked across a few countries so pension plans and schemes have been problematic. I now work as a sole practitioner and, in my 50's, a wee bit of savings every month will come to almost nothing over 10 years.
I have some savings but they are sitting in an account somewhere and I am taxed on the interest. I have an obstructive Husband who is fearful of investment so I'm leaving it where it is. I do need to seek some advice but my trust levels for financial advisers are very low

You can get some good information about pension saving on a low income on the Low Incomes Tax Reform Group website. It's a great charity. Just thought I'd mention it - useful resources for everyone except the seriously wealthy available.

www.litrg.org.uk/latest-news/news/180802-auto-enrolment-%E2%80%93-thinking-opting-out-make-sure-you-understand-what-you-could

There is also the charity Tax Help for Older People -

e.g.

taxvol.org.uk/index.php/2015/04/22/new-tax-guidance-on-pensions/

Put £100 a MONTH into a pension??? I do NOT have that kind of money. And if I did, realistically, I'm not going to get it all back. It might be 'tax efficient' but that's in comparison to other types of pension/savings. It isn't actually efficient. It's just been sold to us as an essential, because otherwise the government is going to have to foot the bill for all the people living longer lives.

Yes, I think people should take some responsibility for their post-retirement life if they are in a position to do so. And if they are able to do so, and choose not to trust a pension plan, that does not make them 'foolish'.

If pensions weren't profitable to the companies that run them, they wouldn't run them. We're cash cows, not 'hardworking and sensible'.

Also, some of us got stung back in the day when companies were sold/merged etc without pension liabilities which was quite the fashion 20 years ago. Illegal now, obviously, but that's no use to people it happened to. And try as you might it is actually quite difficult to make up those years of contributions+ interest.

We have a pension calculator at work and in order for me to receive £30,000 a year I would need to have a pension pot of £750,000.

I just wrote a really long reply and lost it. @Acciocats my mum only died in September when she was receiving £670 a month. I am comparing like with like.

I contribute over £600 a month, matched by my employer and topped up by tax relief. I'm all for personal pensions. But even with that level of contribution I'm not in for a particularly comfortable retirement.

There is a lot of scaremongering but I don't think pensioners are going to be left cold, hungry and destitute.

Acciocats.......if you’re only self employed, there is no free money from an employer

If you’re also a single parent with young children, there isn’t any spare money

Not everyone is in the same situation as you

WorryBadger I'm sorry. I am sure you are a nice person but you are talking rubbish. They say empty vessels make the most noise and this seems to be the case with pensions!

Yes of course a pension provider charges a fee. No person or organisation is going to administer your contributions, invest them, send you statements and administrate your pension benefits for free. Why on earth should they? They have to pay their staff and keep the lights on, and god forbid, turn in a profit.

Some providers in the past have charged excessively, however these charges must now be clearly illustrated and disclosed. Some providers actually offer pensions at a cost of as low as 0.15% of its value p.a. Stakeholder pension charges are capped at 1%.

In terms of 'getting it all back' there is no compulsion to purchase an annuity. You can take it all out in one go if you like as a lump sum, or draw from it as and when needed.