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?

*bringing

Ok I am not the best person to discuss alternatives. Or pensions. Sorry I was so illogical and uninformed.

@MiniGuinness well owned!

It's my assumption, that despite having always worked and contributed, that I won't get a state pension (or at least, not until I'm almost ready to drop dead anyhow, as they're going to have to raise and raise the state pension age).

I paid off the mortgage instead. Yes, pension contributions are tax free, yes, they're met, but at the time (less so now), I did my sums, every pound I put into my mortgage was worth more than 3 pounds by the end of it. As a result I paid off my mortgage 10 years early, then had to move for work so rented it out and got a new mortgage that I am also over-paying on (in a large part thanks to the rental income from the first house).

By the time I'm 60 I'll have at least 2 houses paid off (probably 3) - so that's somewhere to live, and income, which will be very freeing as I hit the point where I might like to start winding down on work, and if I need cash urgently I have a house to sell or re-mortgage. I'll take that over a pension, which I have had in the past, and were wiped out in the crash (my measly 5k went down to 2k), and I can't access until I'm 60 odd.

Haven't RTFT but obviously a lot of people barely have enough to make ends meet which prevents them from saving for retirement. It's hardly foolish to prioritize a roof over your head now more than in 30 years time.

However asides from that, does anyone actually believe in retirement anymore? We're looking at all options and are contributing small amounts to a retirement fund but I find the whole idea of retirement to be rather naive at this point. It has only been a thing for a short period of time in human history and I expect it will disappear again given its inability to sustain itself, likely in my kids or grandkids lifetime if not mine.

Currently I fully expect to work until I die (even in reduced capacity) or have to live an alternative lifestyle with either multi-family or multi-generation accommodation, thereby multiple sources of income pooled into taking care of everyone, with as much food as we can grow and an off-grid lifestyle as much as possible. DH and I are making plans for this already (mid30s) as with climate change and living in a low-wage high-expense country retirement definitely doesn't seem likely for very many of my peers and certainly not the generations after us.

I know. Not worth it is it! I'm very very good But my experience probably is very unusual. So it probably is better for most to pay into a pension.

spingly~:
Well good for you, but try accessing all of your cash and see what happens. I'm retired and I've been through the system. It doesn't matter if you are a high rate taxpayer when you are retired and after any 25% allowance and a paltry allowance for tax which makes negligible difference it all gets added to any existing income and you will get hit for 40% and so if after those allowances you have 100k left and you want to draw it all out in one go, watch out for the 40% hit from HMRC. As you and a couple of others are the font of all knowledge perhaps you could tell me how I can avoid the HMRC request for this amount. Numerous financial advisors and institutions have advised me over the years and apart from minimal drawdown, I can't touch my cash.

It’s undeniably better for most people to pay into a pension, provided they don’t make stupid investments or bad decisions with it.

The fact that a minority of people make poor choices/ opt out / never start a pension and subsequently have to use other means to fund their retirement does not negate this fact.

(And yes I’m aware some people have no spare money to pay anything in but this is in the context of people who do. And I for one don’t want to be ‘ok’, I want to have a comfortable retirement.)

@Ated what is a pension? It's an INCOME in retirement?

Income over £50,000 is taxed at 40% that's quite a high income in retirement so lucky you!

Of course you are deterred from taking it all out, how many people would do that and waste it? Then have no money for their retirement and go knocking on the benefit door.

Please don't try and tell me the rules of pensions, I know them all.

If you were my client, I would sack you off.

Honestly, wanting to take your entire retirement income in one go and do what?

It's an INCOME for retirement!

. It doesn't matter if you are a high rate taxpayer when you are retired and after any 25% allowance and a paltry allowance for tax which makes negligible difference it all gets added to any existing income and you will get hit for 40%

@Ated this makes no sense to me? I assume that you are referring somehow to the 25% tax free pension commencement lump sum?

@spangly thanks for your clear factual responses- I have to admit I didn’t even get what Ated was on about there!

Why in gods name would any sane person want to draw down their entire pension?!

What’s becoming apparent is that a few posters have no understanding of what a pension actually is and how it works. Or they’ve made really poor past decisions, either opting out of company schemes, or invested in high risk schemes which don’t have FSCS protection and so on... and then they come out with these blanket statements like ‘pensions are bad’ simply because of their own poor understanding or decisions

Ooh sorry spingly not spangly!

I have been single since my DC were 4 and 5 and struggled to keep a roof over our heads never mind save or pay into a pension!
My employers pay a decent amount into a private pension but I can’t afford to top it up
I’m now mid 50s and saving tiny amounts which then get spent when the roof leaks or the boiler breaks down
I’m hoping to pay mortgage off in next 5 years at which point I will be able to save the £10k a year I pay on mortgage at present
I would hope to start retirement mortgage free with a tiny pension and a bit of savings

Agreed @Acciocats pensions are not bad, poor investment choices are bad!

Of course these are the people who won't and don't take advice.

@JaceLancs you'll also presumably have your state pension? Have you made full contributions?

poor investment choices are bad what if you are lied to? How is that a bad choice?

Of course these are the people who won't and don't take advice

What if the advice is bad?

*poor investment choices are bad what if you are lied to? How is that a bad choice?

Of course these are the people who won't and don't take advice

What if the advice is bad?*

That's easy to answer, you make a complaint. If an adviser lies or gives incorrect advice, you have every right to make a complaint. The ombudsman will investigate as appropriate and if the claim is upheld you will be compensated,

Incidentally this is not restricted to pension advice and the "pensions" are dodgy scaremongering on this thread. It's all investment advice and presumably you'd be just as angry if your ISA was poorly invested in the same way?

Who lied to you echt? You do realise you can raise a complaint and have it investigated if a FA has lied to you?

Who lied to you echt

I have not suggested anyone has done this to me.

I replied to spingly's post of 9. 33. 34 which said that consumers made bad choices.

@echt consumers do make bad choices. If they use a FA they have protection against bad advice, do it themselves and they have much less protection.

FA are much less likely to give bad advice, it's actually their job to give good advice. Of course like any profession you get bad advisers but the tightening up of the industry with RDR has really reduced those.

Again as stated before it's not restricted to pensions. It's all investments.

echt

poor investment choices are bad what if you are lied to? How is that a bad choice?

So who exactly are you referring to?

The recurring theme here is that people need to be better informed about finances.

Some people do make bad decisions - fact, eg people who invest in unprotected bonds etc

Quite frankly I’d run a mile if a such a savings scheme was predicting interest rates way above what you’d get in FSCS protected schemes. But some people are greedy and just see £££ signs and make risky choices. You can’t then complain if you lose out.

If you are actually lied to as you are suggesting echt then You can complain. But I imagine that most of this hyperbole about being ‘lied to’ is in reality poor decision making by the consumer (perhaps driven by greed and thinking they can make a fast buck out of investments) and then not wanting to own their decision

Tbh if a scheme is predicting returns way above every other FCSC protected savings scheme then it’s probably too good to be true!

@Acciocats ,@spingly
Who said I wanted a pension in retirement. I wanted to make a personal investment in property which provide better returns than a measly pension. I wanted to take 100% of my own money and invest it myself rather than get 'know nothing' financial advisors grabbing at your money from fees. As from having you sacking me, I wouldn't trust your advice because you have nothing credible to say. I've looked after my own finances all of my life since an FA lied to me just to enhance his commission. My investments work, my portfolio is excellent and I can realise my assets when I want. Property never fails to show growth and premium bonds pay a good rate of interest in the winnings you receive. Use them as a piggy bank and watch the returns grow.

@Ated do you not see that it is really unhelpful to come into a thread about pensions, and give INCORRECT information that pensions are taxed at 40%?

Well lucky for you, being a HRT payer in your retirement. We should all be so lucky.

Please do not spread misinformation, putting off people who will have a much lower income (which frankly is nearly everyone) by posting your unusual example as a fact for everyone.

Threads like this are a great place to help people out, in an important area that isn’t well understood. People like you do a lot of bad.

@Ated I understand your frustration that you can’t access the full amount without being taxed on some of it at 40%. But this is not new news. Nobody forced you to use a pension - and nobody forced you into accepting the tax relief on the way in.
It is really important that people understand concepts like:

• a tax free lump sum exists
• the same personal allowances exist after retirement as before
• a Pension is taxable income
• you can’t just take the whole pot of money in one go without tax implications

Share that info, help people.

But don’t put people off pensions by misleading them that pension income is taxed at 40%.