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?

If you can’t afford it I get it. But there’s a difference being not being able to and not bothering.

But I know people who can afford it who haven’t paid in anything. And are coming up to 50 and only just now starting to think it.

Having seen how Gordon Brown screwed my parents' pension fund over no i don't think pensions are the be all and end all.

I actually havent had a pension since I left work to be a sahm, it's something I never gave a thought to until reading things on here. I've now discussed with my partner and I'm going to start paying into my former work place pension that I still get notifications from. Wont be as much as his because obviously his work contribute to it but when I get back to work it will go up. So, I guess some people dont really think about it, live in the moment and cant really afford it.

But you dont know what anyone's finances are do you? Unless they have specifically said to you: "I have lots of spare money but I'm choosing not to get a pension because I literally can't be bothered". A lot of people might not be able to afford it but are too embarrassed to say that they can't afford the outgoing each month. Plus, what about all the pension pots that have gone bust? I totally understand why people might be reticent to trust them.

For those people in pension poverty now (my term for people in their 30s, 40s, 50s and beyond who can't afford to save) there's nothing to be gained from such comments

What we can all do (and I actively do!) is to advise younger people to start the saving discipline early.

Before marriage, before kids, before childcare, before a mortgage.

I especially tell young women ages 16-25 to start a pension, even if it's a stakeholder pension. The one I've found with the lowest monthly contribution accepts £20 pcm.

We've started this pension for our children (13 and 9) so that they can benefit from compound interest and the money is locked away until they retire.

Not everyone will be able to afford £20 pcm but those that can should start the habit early.

I've only ever worked part time and was out of work for 6 years to be a sahm.
I was enrolled onto the new scheme where your employer has to put some in your pension. But I left that job after a year to be my dp full time carer. Between us we probably have less that £5000 in a pension.
Yes I'm terrified of what will happen once we get old but theres nothing we can do.

I think the importance of paying into a pension should be taught in schools. Not sure of the figures but if all those people who dont know/care about them wont teach their dc so it's a cycle that will continue.

I’ve always paid into a pension since I started my first graduate job after university. I never look at what my take home pay would be without paying it, I just consider it like tax that comes off before I work out how much I take home.

That said given that it’s been nearly 10 years there’s not a whole lot in there! For the first few years my employers didn’t contribute much, now it’s 5% each which is a piddling sum compared to some public sector pensions. I do keep an eye on it and have invested in different funds which are performing well etc. I suppose it has earned a lot more than the same money would have earned sat in the bank and compound interest etc but it still doesn’t seem like it will grow to a pot big enough for me to live comfortably off by the time I retire!

I think that’s why the government are suddenly pushing pensions hard - they can see (even more of a) benefits crisis in 30 years or so - when there are suddenly a whole load of pensioners whose State pension won’t cover their basics and will be reliant on benefits to top them up. Plus people will be forced to stay in work longer which will create an employment crisis as jobs won’t be freed up for younger people.

As PP have said, it’s difficult though when some people are working full time yet relying on food banks to feed their children; you can’t really even say to them “please put £10-20 aside for you to use in 40 years time”. The concept of saving themselves from poverty in old age means nothing when people are genuinely living in poverty now .

Agree that people who can afford it should definitely be putting aside money as early as possible, no matter how small the amount.

A lot depends on personal circumstances but I'm shocked by the number of people I know who are 'living their best lives' with expensive cars, holidays, nights out etc & generally conspicuous consumption (being seen in the 'right' places) who blithely tell you (a) they're only paying interest on their mortgages (or they're renting) &(b) they don't have any savings or pension or even life insurance when they have dependant children. They look down on me for saving & 'not enjoying life' but I'd rather be able to pay my bills & sleep at night without worrying. My childhood experiences have hardwired me to be responsible. It angers me that people who can provide for themselves think it's okay not to bother and always assume that the 'savers' will pick up the tab for them; imo those state resources should be for people who need them, not those who live the high life and then look for a handout & moan that it's not enough.

I had a pension when I was working. Now I am not, I can't afford to pay into one. I do have a small stash of 'secret savings' though, set up many years ago.

Low wage jobs mean people struggle to afford daily necessities, never mind paying into pensions. That’s the reality.

I've just logged into check out the details of my DC pension plan. We have been paying in for 25 months. We've paid in £500. There's tax relief of £125 and investment growth of £23.

Not brilliant, but not bad either. We wouldn't get a top up of £125 on any other saving vehicle!

Obviously the hope is that the DC will take the pension on once they are earning and be able to pay much more than £20 pcm into it.

@Booberella9

I'm not priveliged because I contribute towards a pension. I'm a senior nurse, currently on maternity leave. We delayed having our first baby for a couple of years to ensure we were financially prepared - I earned a promotion in preparation. I also worked a number of additional hours whilst pregnant to save for my maternity leave and to ensure that I had enough money to continue to contribute to my personal pension whilst not working.

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

YABU
I am self employed and pay into my NI pension but can't afford anything else at the moment.

And anyway, it;s too late for me as I am in my 50's.

@savethecat have you been saving over the last 30 years? If not and you haven't got any spare income currently whilst in employment, how are you going to survive when you're not earning? Are you worried about retirement?

I am a single parent, and have worked hard all my life, just mostly in the voluntary sector, and in not very-well-paid jobs. We get by fine, but there's not much spare, and there have been times where I haven't got by fine at all.

Most of my jobs never offered a workplace pension at all. When it became compulsory for workplaces to offer pensions, and I was offered one, I had to make a choice of "more money now", when I had a small child to support, or "more money later", when it would have been just me, post-retirement, and hopefully my child would be making their own way in the world. This was a really easy choice - of course I chose "more money now", when I could spend it on my child. It wasn't much more money, but it was enough to make a difference - and I was so low-paid at the time that this difference counted.

I am still working, and have a workplace pension now that might, just might, pay for a box of teabags every week, when retirement comes. Would I like to be able to look forward to a comfortable retirement and a decent pension? Yes, of course. But I don't regret my choice.

@CuriousaboutSamphire great post!

VioletCharlotte It’s really tricky. The problem is the Nhs scheme (and others like it) give such good benefits that really 12.5% for what you’d be getting is cheap but it probably seems like such a lot to come out now. I don’t know that they’d be able to easily cut the contributions as they must be paying out a fortune to baby boomers on the final salary scheme.

With a £100k pension pot in a private scheme, you’d be lucky to get an annuity for maybe £4K a year from
65 and that’s probably not inflation protected.

At a build up rate of 1/54 of a salary of say £30k that could be 8 years to get the guaranteed 4.4k that is inflation protected with contributions at 9.3% of 22.3k. Even allowing with growth that is a lot less than someone will have contributed in a private scheme.

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

I am also hard-working and sensible. I still can't afford to pay into a pension. Being hard-working and sensible doesn't make a pension affordable. Privilege does

I have a friend who is a "WASPI" woman .She has been in the same P/T work for some years ,but never actually joined the PP there,due to the fact that like many women of that age she expected to get her SP at 60!However she is now in the unenviable position of having to work until she is 66 so has a few more years left ,on top of looking after GC and doing all her normal H/W and so on .She couldnt afford the extra cash out of her job as she was working to help support her family at that time!

The NHS pension scheme needs to be reviewed urgently to give people a choice of what percentage they contribute. It's not flexible and based entirely on salary, it doesn't take account of people's individual circumstances

@violetcharlotte I was just coming on to say the same thing. Some people may still not be able to afford to pay in but it at least gives a chance to those who could afford a smaller percentage than the mandatory one, or as you say, adjust your contributions according to your circumstances.

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.

What projections tell us that? The state pension is tied to inflation.

:@BHouse19 Yes, I am terrified. I worry myself sick over it.

I worked in the employ of others for a while with no pension scheme and managed to support myself and to pay off my mortgage. I have no debt whatsover. I have been self employed for sometime so income comes in waves . There are very lean times and then better times but the pay off has been my mental health and being able to look after the kids.

Savings at such low-interest rates not ideal anyway. I have the state pension, which is just over £100 a week?