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?

@Ellisandra: You sound as clueless as some of the other so-called experts on here. I don't need to keep running or checking on things and my investments have done we well over the years. Referring to 1987 and the engineered property falls, it affected me so much that I only made 100% on my investment. One can try and assert their knowledge about property, deposits, CGT and all the other things but I started with a 100% mortgage and in a short time turned it into a 30k profit which went on to fund other property which still increases in value. My pension was nothing to do with me but was undertaken by the company that I worked for and they placed the monies. I just want the remaining 100k to spend and invest to get greater returns than it makes now. I know about the relative amounts of tax and other costs and although 'commissions' may have ceased there are still review fees, monitoring fees, handling fees and other names allocated to screwing your pension pot.I've been inundated with FA experts trying to move my cash for me but when it gets to the nitty-gritty they are about as clueless those here spouting their 'amazing knowledge'. I still would not advise anyone to have a pension if they intend to want to withdraw it all at once in later years. If you want to drawdown within your allowances then that is up to you, but I don't need to or want to.

I have friends who opted out just so they can have an extra £80 each month in their wages.

@Ated you've not got much attention to detail, yet you criticise others for not reading things correctly?

Ipsos of the 1987 property crash, the commissions, the taxation etc.

You can take your £100k subject to income tax or out of a property subject to capital gains tax, you can invest in a whole lot of things within your pension for "better" returns, why not change your investment within that?

@Ated how are you going to "extract" money from your properties all at one go without tax? You never seem to want to answer that very simple question..... because you can't!

FA are advisers not there to get your money out avoiding tax, thats HMRC that decide the tax. How can you possibly blame the FA because you have to pay tax. You should've read the documents that said income is subject to income tax, you are a total and complete and utter fool to mould have known that....

ipsos - I spoke

OP, some of us have no choice as we need to live for now, so just can't afford it? It's quite rude to infer that we are stupid when we don't all have the money to pay into a pension?

I worked in the same job for 20 years, I was only able to join the pension scheme when I reached manager level, and then 2 years later I went on ML and went back part time, so barely anything was paid into it. I went self employed to be able to be around for my child more.

I was going to start paying into it again but then XH left me and our 4yo. So I then had to build up my part time self employed work, to a full time business. I had to remortgage my home for 25 years to be able to keep it, so I will be repaying that until my SRP starts.

As I am self employed now, there is no employer to pay into my pension. XH had no pension to speak of and I was happy for him to keep what little he did have, as I was keeping my house. The pittance of maintenance that he pays, and the lack of regular contact with his child, means that I have 98% of the childcare and the costs to deal with on my own.

I had to make decisions in order to live and survive now, and not worry about the future. My house is my pension, if I need to I will sell it, downsize, or rent and live off the proceeds. My main concern is to keep a roof over our heads now. Any spare money I have is paid off the mortgage, not that there is much with a school age child to bring up.

That doesn't make me stupid or foolish. But sure, feel free to carry on insulting anyone who is not as fortunate as you.

@Ated clueless? 🤣

So tell me, with all of your wonderful knowledge, which of us is actually correct?

You: saying that pension income is taxed at 40%

Me: saying that pension income is only taxed at 40% for the portion of it that you draw is (a) not tax free as a 25% TFLS and (b) not taxed at 20%?

Nowhere have I said that a pension is the only retirement funding option. And nowhere have I said that it is even the best one, for everyone.

All I have said, is that it is wrong to post statements that are incorrect as it is unhelpful scaremongering for those who don’t know about pensions yet.

Why are you unable to woman up and say “yeah - fair point, at 22:18 yesterday I said something that was wrong and misleading”?

Your experiences are actually helpful to share - but only if you put them in context - instead of trotting them out as widely applied fact.

Fact: no, pension income is not just taxed at 40%

*(a) tax fee as part of 25% TFLS

@Ellisandra the problem with @Ated is this,

They've got lots on income in retirement because they're letting property and the rent is taxed as income.

They've then got pension income which is taxed as income,

They've not taken advantage of the other allowances, such as dividend, cgt (to provide income) or savings because FAs take "commission" and are not able to get the pension fund out without income tax is their fault.

They're a really unsophisticated investor who has made all their income subject to income tax and is throwing their toys out of the pram because FAs can't put their stupidity right and use all their allowances.

Had they used an FA they would be in a better position now, utilising allowances, getting more net income.

They've done a sterling job at going look my property was worth £30,000:now worth a £100,000 but I can't sell it without a massive tax bill, can't get income without tax, it's messed up my pension income which means I now pay 40% but I'll blame the pension income and not the fact that the rental income contributes to the overall income tax bill.

So ridiculous that they can't see their own stupidity to get income tax efficiently.

Leaving aside the rights and wrongs, I think that has been a very useful thread to get women to start thinking about and looking into how best to provide for their retirement.

So many have started from the viewpoint of: 'My husband says this ' Or, 'My husband said his pension is enough for both of us so I've never bothered'.

If just a few women decide to look into their own finances and options and think of their long term future instead of assuming their husband is the expert and will always look after them, then it is a thread well worth starting. Women need to get smarter about money to protect themselves long term.

I voted YANBU. You never know what the future holds. I started paying into my pension (teacher) at 22, didn't really give it any thought..... fast forward 20 years and this week I have been awarded my full pension due to ill health. I wasn't disabled until 6 years ago. If I'd not paid into my pension my family would be totally stuffed. I was the main wage earner meaning my pension, whilst still a big drop, still equals my DH's wage so we will be ok.
I'm so grateful that I started to pay in all those years ago x

@TheNavigator hear hear

Women as a group are far less financially prepared for their older age than men. Fact.
And you see time and time again on MN women who say it’s ‘not worth their working’ when they’re paying childcare. Or women with older children or even adult children working in part time jobs, not thinking ahead to how that will impact on their pensions.

That’s why the erroneous stuff spouted here makes me angry... it could potentially put women off making provision for themselves.

I strongly suspect with one poster (who was clueless though trying to look financially knowledgable) that’s its sour grapes. She obviously hasn’t got a decent pension and is determined to try to minimise what a good deal a pension actually is.

Indeed. Still waiting for @PapayaCoconut to return and tell us why her banker husband thinks pensions are a scam

Absolutely fine to get your information from a spouse who has more knowledge than you. If someone was asking about dovetail joints I’d happily post “my joiner husband say...”

But if you don’t actually say why then you just look like a dick who thinks The Man Has Spoken.

Do come back and share your husband’s great wisdom, @PapayaCoconut

When the pension provider visited my company, it was not ' cool or sexy' to be discussing pensions in your 20s. Nevertheless I signed up & I'm glad that I did
My company also offered a share save scheme, which I also joined (sold my shares at a profit)

Large companies now offer auto enrollment for their employees into their company pension schemes. It's supposed to make people think about their future

If in UK you can look up your predicted state pension age & payment on www.gov.uk

I think you’re being very unreasonable! As others have said it’s all down to circumstance. I’m not currently paying in, I opted out when I started current role.

I’m PT went back after 18 months off with DC, comp new PT unfortunately in those circumstances wages are on average 15k less per annum than the equivalent role FT so the wage is shit to put it bluntly. It’s just about worth it with 3 days of childminder fees - JUST. My minimum contribution is £100 PCM that would simply mean it isn’t worth me working, it’s quite a large role despite being PT and the few hundred quid I would come out with after bills inc childcare just isn’t worth the stress and not seeing my DC.

Would you suggest I didn’t put in or didn’t work.

I previously contributed (in my late 30’s now) but have had periods when I’ve opted out - when I was saving for a house deposit and when I was trying to pay my student t loan off (which I did in the end). I’ll opt back in when I get my 30 free hours.

I’m joint owner on a house currently worth £575,000 so I’m not too worried.

*Sorry that should have said ‘comp new PT role and.....’

Perhaps someone could explain the numbers better

My Example

Person puts £100 per month into a personal ISA, rates are currently poor say 1 percent. The money would grow with compound interest, tax free over time

Versus

Person puts £100 per month into an employee pension. The company also puts in X amount, which grows with compound interest
In theory, you should receive more money back in the future from pension

However, you can access your ISA money at any time
A pension is locked away until a certain time

YANBU. Personally, I think pension contributions should be deducted at source, in the same way as PAYE and NI are.

There needs to be some major reform of the system for pension saving. I've been astonished by the numbers of people who misunderstand the state pension, for example. Many seem to confuse state and private pensions and believe that their NI contributions are paying into a fund for their own pension, to be paid out when they retire.

So, what if there could be a sort of half and half system for pension savings, whereby the contributions would be compulsory and deducted at source but the government would top up the fund (up to a predetermined maximum monthly or annual amount)?

Each person would have their own fund, which they could make extra contributions into if they wished and they would have online access to see their fund and watch it grow. It would be invested in special government-backed investment products and funds and would be protected and underwritten by the government - so nobody would experience the situation that we have now, where a person's entire pension fund could be wiped out or drastically reduced by the vagaries of the stock market.

The £100 going into an ISA is money you've already paid tax on. £100 into a pension is worth £120 (or £140 if you are a higher rate tax payer), plus all the contributions your employer makes, which could be double that again. Compound that up for maybe 40 years, that's a huge difference.

Yes, you can't get at till your old enough to (early?) retire. But that's a advantage in most people's cases; there's always something that would be a temptation to cash it in for.

DontPaint - I assume that you won't be working PT forever
So you would have the choice to contribute to a personal pension in the future

I've already said that I have friends that don't have personal pensions, due to various circumstances

I also know some people that have been retired 30+ years

I have started saving into a pension and I’m in my 20s but I don’t like to save too much each month. I know too many people/friends family members who have gotten to 60 or less and died who saved there whole lives for retirement and didn’t see any of it. I’d rather live for now plus I can’t afford to save much with paying for childcare at the moment which is extortionate

I am just wondering; when you hear those cases of companies that stole workers pensions, what happens there? Like I rent understand how that happens? I have a pension btw and from I can tell it seems pretty decent. I have opted out in the past but that was when I was struggling for money and the pension i had was rubbish employer contributions anyway. Planning to stay in one now so hopefully not too late (I'm 32).

In reality, I don't expect to make it to pension age. I didn't have a pension for the first 20 years of working, as I preferred to be able to pay the rent and council tax/not be made homeless there and then.

However, since I got a job that actually pays enough to cover the essential bills and food, I started and I still contribute, as DP (will be DH eventually) might make it past 60 even if I don't.

The other thing to consider, is that everything goes up in cost over time due to inflation

Food, petrol, bills, accommodation etc

I've just looked up the average price of some food from 30 years ago & it's doubled