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?

I don't know. I'm so divided between the YOLO mindset and the wanting to be sensible mindset.

My mum paid into her pension her entire working life. She passed away before retirement age.

Dad paid into his pension his entire life and made many, many extra payments. He and mum got divorced a few years before she passed away, she got more than half of his pension in the divorce settlement.

Mum remarried a few months before passing away making will (where she wanted to leave everything to her children) invalid.

Personally I have a very small pension but have two properties which husband and I plan to live off during retirement - should we be fortunate enough to get there.

I can see why people cannot afford to pay into a pension though so I do think YABU by saying they're either foolish or stupid, when in fact they have no other option...

I am also completely ignorant of finance and terrified to make a mistake with any savings.

@Deathstare nails it.

Huge numbers of low paid workers, including those in the gig economy for whom there is little or no alternative, have enough trouble living in the here and now, let alone making provision for their future.

Not surprisingly, many of those in that position lie awake at night terrified at the prospect of an even more miserable existence in their old age than the one they 'enjoy' now. Just to add to the perpetual and current stress of trying to make ends meet.

They are certainly not oblivious to the issue, nor are they irresponsible but they are utterly stuck. Maybe their landlord will be understanding when they offer 50% of the rent going forward. And similarly, I expect the local authority will happily accept half the usual council tax. After all, the money saved would be going to a worthy cause if put into a pension. Or maybe not. Funny that.

Sure, by law of averages, there are people frittering money away. People who are ill informed about pensions. People who've got the wrong end of the stick entirely. But in reality I think you'll find that most without adequate retirement provision fall into the 'can't' camp rather than the 'won't'.

It's a very sorry state of affairs when people are actually giving serious consideration to ending their own life as a preferable alternative to living in abject poverty for an undefined period when your situation is statistically likely to be compounded further by age related health issues but I understand and sympathise with them.

Sneery threads like this really don't help. Do you honestly imagine that scolding those without a pension will suddenly make them see the error of their ways and instantly enable them to find several hundred extra pounds each month? Of course it won't. Perhaps some empathy or sympathy with those whose futures are appallingly bleak wouldn't go amiss.

@BHouse19 - your questions weren't directed at me, but they apply so I'll answer them anyway...

have you been saving over the last 30 years?
No. i cannot afford to. There are literally no pennies left at the end of the month. In fact most months getting to the end of the month is a struggle. In a good month all the bills will have been paid. I work (and always have done) and live quite frugally.

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?
I am hoping that when my children can afford to leave home I will be able to save a small amount. the reality is that I could easily be at least 60 before they could afford to leave though, quite possibly much older, so the time left for me to save will be minimal. If I ever end up not earning before that I will be up shit-creek. This isn't something that I'm happy about - in fact it fills me with fear - but I don't have the privilege to be able to do something about it. I wish I did.

Are you worried about retirement?
Of course. Though the reality is I will probably never be able to retire. I am not privileged enough to be able to afford not to work no matter how old I get. If i ever get too ill to work I'm screwed.

I am not sure any pension scheme is worth starting in your mid 50's anway/

In Australia your pension is taken out of your salary, it's mandatory and has been for about 20 years.

I have a pension in Aus and the UK because I didn't understand why I wouldn't take the 'free' money in the UK (in Aus it's a package, so they'll quote you $80k but that includes the 9.5% pension contribution)

I agree with the comments regarding the NHS pension being inflexible but if contributing into this scheme doesn't work for you, it's quite easy to seek advice and contribute to your own private pension where you can decide to contribute what is a manageable amount for you

It really depends on circumstances. If you can afford it and don’t do it then it is a bit foolish.

But there are certainly so many people out there for whom saving for retirement is a luxury. My mum was a single Mum and we were pretty much hand to mouth, she didn’t have regular well paid full or part time employment and didn’t save for a pension. Thankfully she is eligible for a state pension. As she is approaching retirement age I have no doubt she wished she had more of a pension pot but very very luckily for me her priority was feeding and clothing her child. That is a decision and sacrifice many people have to face.

On the other hand there is also a huge lack of financial awareness about the importance of pensions (and I mean for those who can afford it). I was in this boat and prioritised paying my student loan off and didn’t pay into a pension. I probably would have been better doing half and half but at 21 I honestly didn’t have a clue.

In general I agree with you. However, one of the main benefits of a pension plan currently is the tax relief on contributions. For non taxpayers (e.g. SAHMs) the attractiveness of a pension compared to other investment vehicles is much less attractive than it is for taxpayers, especially those on higher bands.

Not all NHS workers get a pension, I didnt.

Sorry there is a bit I should have added to the final answer...

Are you worried about retirement?
The fact that I will almost certainly never be able to retire means that I am forced now (in my mid 40s) to think about what my career will look like when I am 75 or 85 or even older. I have to think NOW about what kind of work I might be able to do at that point in my life both in terms of what my physical abilities might be then and what skills I might need to be able to still be "current" and employable when I am an octogenarian. This means trying to skill myself now for what roles I may need to take at that point. Again this is scary. And it is a position that many people are in. Being in a position where you can afford to invest money to plan for a period of not working at the end of your life rather than having to plan how you will continue to work really is a privilege. And one that many many people don't have - despite being hard-working and sensible.

I honestly can't afford to right now, with rent and bills and childcare being covered there isn't a lot left over to have the the spare 80 quid or whatever to put into a pension.

I do worry about it but my main concern now is clothing, feeding and keeping a roof of our head.

it's quite easy to seek advice and contribute to your own private pension where you can decide to contribute what is a manageable amount for you

Not if zero is a manageable amount for you. Not if you are already choosing between putting the heating on in the middle of winter and feeding your kids.

I am not sure any pension scheme is worth starting in your mid 50's anway Ah! But if you are that age and have fewer constraints on your finances it is worth talking to a FA and working out what your options are. They are usually free for a first consultation, often right up to the bit when they want you to sign... by which time you'll have a lot of info to work on.

We did that and were both horrified to see how little we had in place and grateful to be in a position to do something about it. Which we are doing, each and every day now!

I can see, really clearly, how different our position would be if I hadn't started saving pennies in a jingle jar, way back in the 80s. I still have one, we both empty coppers into it whenver we pass it.

On one side people get sneered at for not having a pension (it's dangerous and some people will have a very nasty surprise...) but on the other hand you get abused if you dare talking about buying second properties and holiday let.

For many people, they are their pension fund.

My company match our contributions up to 10% so I put 10% in, we’re overdrawn every month but that should change when dd gets the 30 hours free childcare next year and I think it’s worth being a bit short for a couple of years.

I’ve started a pension for DD, just £20 a month but I hope she will have a chance to retire before she’s 70!

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

Arggghhh, I hate this sort of comment! Yes, you made sensible choices - but with some good fortune along the way. For example a promotion opportunity became available at the right time for you - I've worked in places where you get a chance at promotion if someone retires or dies, and in others where no one who left was replaced because of 'efficiency savings'. Those of us left were just expected to absorb their workload. You had an employer that would pay you for additional hours worked - many places don't offer paid overtime or extra paid shifts. But your sensible choices still don't mean that people who can't afford to pay into a pension are all lazy and feckless. People coping with redundancy, ill health/disability (their own or their children), people in NMW jobs where the route out may take more time or educational attainment than they have.

Yes, if you can afford to make financial provision for your retirement - whatever form that takes - and choose not to, then you are foolish. But don't overlook the fact that in today's more-for-less, gig economy, race-to-the-bottom society, to be in a position to be able to afford do does mean you have a certain level of privilege over a growing number of people.

the spare 80 quid or whatever to put into a pension. Forget tens of pounds. Forget a regular saving scheme for now. Just put whatever pennies you have away at the end of every week/month. Don't count it, don't look at it. Just put any money you have left in your purse in it just before you get paid.

Get that habit ingrained. Then, as and when you can, increase the amount, set up a saving account, ISA, whatever you can.

It took me TEN YEARS to get from jingle jar and a £10/month ISA and another TWENTY YEARS to get to a 'proper' saving fund.

Trite as it most definitely sounds, every little bit really does help!

Can't afford to pay into a pension at the moment, haven't paid into one in around10 years. (Might be something in that...how long have the Tories been in power?). If I pay into a pension now, something else has to give and I'd rather be fed and warm - and my kids too.

Of course it concerns me but what will be will be. I am resigned to the fact I'll be working into my 70s and then I'll probably croak anyhow at retirement age. I've got a fair amount of equity in my house, small mortgage will be paid off, and I can downsize to a much smaller place when the kids have gone. That's my plan.

My mum paid into her pension her entire working life. She passed away before retirement age

A few people have commented about passing away before getting to their retirement age as though saving for a pension is potentially a waste. However, the money in your pension will be paid out to your estate or some schemes it will be used to provide an income for your dependants. I know you personally don't benefit from the pension if you die before retirement, but it could be reassuring to know there is a lump sum to help your children or spouse and that the money doesn't just disappear.

I think the biggest issue with pension is that people find them confusing or feel its not worthwhile. We need to break down these barriers and make pension schemes as flexible as possible to allow more people to contribute, especially when younger.

www.pensionsadvisoryservice.org.uk/about-pensions/when-things-change/bereavement-what-to-do/what-happens-when-i-die

Protection arrangements come before pension contributions,which come before investments and savings. I say this as a qualified Financial Adviser.

Some people are not able to contribute towards a personal pension, and I would suggest that they are covered in some way by their national insurance contributions (which they will get credit for if caring for children full time).

Your post comes across as quite mean and judgemental.

I've worked in places where you get a chance at promotion if someone retires or dies, and in others where no one who left was replaced because of 'efficiency savings'.

I never understand that kind of comment. Yes, it happens, and a lot of us have been in crap companies, but YOU make the choice of staying whilst others work hard to work somewhere else. It's not good fortune not to settle and not stop until you find a decent job.

if you're not contributing, how are you planning to survive during your retirement?
I have no plan. But I don’t have enough money to pay into a pension and there’s nothing I can do about it so there’s no point worrying.

It’s not like I didn’t try. I have two degrees. I worked hard but for a long time I only got offered zero hour temp contracts by greedy employers who wanted to shirk their responsibilities. I had no spare cash and they offered no pension scheme. Eventually I got a permanent public sector job but my salary was cut repeatedly because they couldn’t afford to pay salaries due to government budget cuts, so again I couldn’t afford a pension. When I got pregnant they found an excuse to terminate my employment; off the record they admitted it was because they couldn’t afford the expense of my maternity leave. So I got no maternity pay. This is with two degrees and over a decade of working 50 hours a week - I don’t see what more I could have done to get myself into a good position for motherhood and retirement. It just didn’t work because of recession and austerity.

It’s great that you worked hard and succeeded in getting yourself into a good position to prepare for the future. But other people have worked equally hard and just weren’t as lucky.

The pension age is rapidly approaching 70 and I have a younger DH so he’ll be working and earning until I’m about 75. After that we’ll have his pension and we could downsize our house and live off the proceeds for maybe ten years. By then I’ll be 85 so basically dead anyway.

You're going to have to explain 'protection arrangements' @Foxinsocks90 and then defend the idea (if it means what I think it might)

YANBU - the reason I went back to work full time when my youngest started secondary school was to start building up a pension. We were fine financially day to day with me in a local part time job, but girding my loins for the full time career/commute in my mid 40s means I have started to claw back some decent pension provision - I overpay into my work scheme every month.

Obviously I could drop dead before I claim it - that is how pensions work - but this way I should be able to scale back work considerably at 60 (back to a local part time job) and collect my full state pension at 67 without financial hardship. I could have chosen to just puddle along for these years between mid 40s and 60 - the reason I didn't was because I want to ensure a confortable old age.