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?

We might sell our holiday home or might downsize.

And yes, I am being sarcastic.
There are lots of females I know who have lived off State benefits all their lives.
Job Seekers Allowance, Housing Benefit, Child Benefit, money to pay for smart phones, tattoos, nails, hair extensions etc etc.

Oh, and Disability Allowance, where so many people walk around with sticks, but often forget to hobble.

All the way to getting more State Pension than people who have worked all their lives get.

And then Funeral Benefit when they have drawn their last breath.

Because even say 20 or 30 a month would have an affect on our day to day living. It scares me but my kids come first Now.. As long as they're not without I'll worry about my future when the time comes.

Financial circumstances will play a big part on what anyone can save whether investments ISAs pensions. Isn't there a employers pension now for all if there are a certain lumber of employees. Again this may be based on salary and for some any deduction no matter how low will be felt. Consideration should be seriously given to all expenses to see if they could be trimmed before shunning contributing to a pension or other long term investment.

Lindsayincroydon I can add to that: the single mother who was in debt, on benefits, went to bingo regularly. Mother dies so no babysitter for going to bingo. Placed £100 on Gala bingo online. Did hit the jackpot the second week £500k and two weeks after that £650K. But, had she not won, £100 on bingo and how much had she spent before that!!!

There are lots of females I know who have lived off State benefits all their lives. Job Seekers Allowance, Housing Benefit, Child Benefit, money to pay for smart phones, tattoos, nails, hair extensions etc etc.

But if they didn’t buy those things, it’s not like they could afford to buy a house or save for a pension. Everyone deserves a little bit of something to make them happy. Especially when their lives are so shit because they’re poor.

**I'm not privileged. I'm hard working and sensible.

And yet the circumstances you described, hard-working or otherwise, indicate that you are enormously privileged compared to do many, just by virtue of the fact you have the mental and physical health to be able to do the things you describe.

A private pension means you have no control of your money unless you want to draw it out and pay 40% tax on it. Put money in a savings account when you can and even buy premium bonds. At least you have access to the cash later and some financial shark hasn't stolen it from you or charged extortionate fees for the privilege of doing nothing.

so many

@Ated where are you getting your 40% figure from?

You only pay 40% tax on a pension withdrawal if you are a higher rate tax payer at the time AND you’ve exhausted your 25% tax free lump sum AND used up your personal allowance AND have an income that takes you into the higher rate tax band... so even then you won’t be paying 40% on all of it.

There is plenty of control given that you can choose how your pension fund is invested. You recommend a savings account. You do know that you can hold a pension in a cash account - so no more risk than a savings account, but all the tax benefits? You can choose to in guaranteed return government bonds if you like.

Please explain your 40% comment, as I think you are misleading people.

Eh @Ated?

Yabu to consider that other people's finances are any of your concern

Do some people really not appreciate other people's situation are not the same as theirs.

Do they not realise that some simply don't have extra money at the end of the month and are working to house, clothe and feed a family and it stops there... Wake up people.

I have always paid into a pension but some simply don't have that luxury, despite working their arses off.

Don't have the spare cash to throw at a pension currently. Neither does my mother who is in her 50's. She is a carer and one of the men she is looking after has just lost his £250,000 pension after the company went bust. How does this happen? Do you just put your money into a fund and hope that they don't go bust by the time you retire?

A pension is so important. Start contributing now unless you want a retirement in poverty

@motherheroic company pension schemes are a thing of the past really. Most people who have a pension through their employer have it with a pension company such as Aviva. It therefore is safe if the company goes bust. Company pension schemes tended to be very generous and often final salary. There are also safer public sector pension schemes eg civil service (central government departments), local government (councils) BBC etc. Then there’s the state pension that everyone who has paid their stamps is entitled to (£8.5k per year).

My parents lived very frugally all their lives in order to have the retirement they wanted....they died at 52 and 56...saving for a future i might not have is not something that worries me.

I was shocked the other day when a 25 year old colleague announced she’s retiring in 2 years to start having a family and won’t work again.
She has no plans to continue her private pension.
I mentioned about her state pension and she shrugged and said she’d be fine because of her partner (not even married at present}).

myusername That’s so sad for you and your parents, I’m so sorry that they didn’t live to even reach their retirement let alone enjoy it. 💐

@BlueSkyAtChristmas Thank you for the explanation.

@motherheroic I expect your mother doesn’t have the full story.

Private Company (defined benefit) schemes are covered by the Pension Protection Fund - crested in 2096. The covers 90% of the Pension if a company goes bust.

It does not cover public sector - but none of those have just gone bust.

DB schemes don’t have a pot of money, but a promise to pay a certain amount. So if he talks of £250K, chances are it was a defined contribution scheme - where £250K was invested. So it wouldn’t be subject to his own company going bust. Possibly the company that he was invested in, going bust? And therefore, their share price plummeting, and the value of his investment too. But that would suggest ALL his £250K invested in a single company - unusual.

Possibly he was the victim of a pension liberation scam?

I’m quite curious as to what actually happened! Because I very much doubt it’s a private DB company going bust, because of the PPF. If he’s in the UK.

The problem is that people remember these awful situations from the past - and then talk about them on threads like these - without talking about most pensions bow being DC, and the PPF.

@myusernamewastakenbyme I’m sorry you lost both your parents so young.

I am saving hard for retirement. When people say to me that I might die first, I tell them that the money isn’t wasted. Whilst I’m alive, it buys me peace of mind. Some people have no pension and aren’t worried. But others post here about Dignitas, or being very worried. If I never get to touch my pension, I at least have been free from stress about it - and my children will inherit it.

A private pension means you have no control of your money unless you want to draw it out and pay 40% tax on it. Put money in a savings account when you can and even buy premium bonds. At least you have access to the cash later and some financial shark hasn't stolen it from you or charged extortionate fees for the privilege of doing nothing.

What a load of nonsense! Unless you're a HRT payer you won't pay 40% tax.

Also what about the tax relief on payments going in, do you get that on "premium bonds".

No control over money on PP, apart from how much you put in, where and how you invest it, flexible access when over 55.

@Ated if anyone on this needs financial advice, you do!

I lost money in a pension. I have properties now as my pension. They will actually offer more, so am ok now. But I understand why people don't have pensions.

I think to rely on just having a pension for retirement is a mistake.
Imo it's best to have a mix of investments eg savings, a house paid for by retirement, gifts/inheritance/winnings, small part time income and a passive income from something like a rental property, as well as a pension. All those take a lot of money, planning and luck.