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?

YANBU my mum never paid into a pension as she thought my dads would be enough for both of them (high up in the police) until he left her for another woman and started a new family. She has been left with nothing and now will be working until she can no longer work. It breaks my heart.

It won't matter what you have if Jeremy Corben gets in.

His determination to trash the "big Greedy Companies" sounds great until you realise that the majority of their shares are held by our pension companies.

I wouldn't want to be imminently retiring if he gets in. Their pensions will be worth fuck all. His extra tax and re-nationalising schemes will literally wipe billions from the share values/ pensions - and will affect us all, but those retiring in the next 10 years will be screwed no matter what they have paid over the years.

Hedge funds are already dumping anything that is at risk just in case he gets in.

I'm guessing the people who don't have pensions won't care about that, though.

The problem is that when you're young you don't want to worry about pensions. Add to that wanting to live a little, saving for a property, then dc come along and women often sah or go back part time.
I was lucky I had a close relative in finance who made me realise early enough that saving for the very distant future was important.
Me and my dp are in our early 50's, have 4 mortgage free houses between us and savings and pension and we still have to keep working part time atm if we want to continue our current lifestyle. Yes we'll retire a bit early but not quite yet if we don't want to start scrimping forever. Even with spare money and lots of long term plans there is still only so much you can do. If you can, balance living now with saving for later.

I don't expect to retire before state pension age
I think that's the concensus position for those under 40. It certainly was despite having always worked ft and raise two children solely.

Then menopause hit me with all what this means in terms of fatigue and other health issues. I now really can't see how I could possibly make it to 67.

Thankfully, I did always pay toward a pension even when I was left at times without a penny but thankfully never consider the extra money I'd get if I didn't contribute towards it. I am now in a position to be able to retire before 60 and still be comfortable and I'm so grateful that I made the choice I did then.

@SciFiScream do you mind if I ask what pension provider that is. I want to look into possibly starting something for DCs in new year (they are older than yours) and don't really know where to look.

I think for some people it’s very difficult to afford even a tiny amount so I wouldn’t make a blanket statement that everyone who doesn’t pay into a pension is stupid.

But having said that I do agree with the OP that there are very many people who could improve their long term financial security but bury their heads in the sand.

I’m in my 50s now. One of my main reasons for returning to full time work when my youngest child was 4 (I’d dropped to part time when I had pre schoolers) was because I knew that part time work = part time pension. We could have continued to live easily day for day on my part time salary (indeed after paying nursery fees for 3 children we’d have felt like we were rolling in it with just wraparound care now!) But I knew that there’s no way I’d ever be able to accrue a decent pension by just working 3 days.

Looking around me now I see loads of (female) colleagues of my age who have never returned to full time work even though their kids are now adults. They’re realising now they’re in their 50s that their pensions are paltry. And even they are not as badly off as people who don’t pay in at all.

The statistics show that women are massively under prepared financially for their retirement so this is very much a gender issue too. And there’s a lot of misinformation around... wives thinking they will be ok because their husband has a good company pension and not realising they will only get the spousal proportion if he dies first.

So broadly I agree OP. It’s hard to be paying huge amounts in to a pension when you could really do with the money in your pocket in the here and now (I pay in nearly 12% of my income) but it really does make sense. I can understand if people are absolutely strapped for cash that they might not pay in for a while but I despair when I see women whose children are older and who no longer have full on caring responsibilities just burying their heads in the sand and not thinking about what they’ll live on when they’re older. I see the state pension as a top up but nothing more than that- it’s pretty rubbish and I wouldn’t want to be living on that alone

I didn't feel particularly privileged when I had little to no money and was paying for the privilege of waking up at 5am to drive across the country to various nursing placements to work 37.5 free hours for the NHS for 3 years. Or all of the times I've been working 14 hour days only to go home and spend the next 12 hours on call and being disturbed multiple times through the night. Or when I was pregnant and working an additional 12 hour shift most weeks to cover the shortfall in salary over my maternity leave

I suppose what I'm saying is that you can call me privileged and use that in part as justification as to why I'm taking responsible steps towards my future and you (presumably) are not but that misguided mentality won't keep a roof over your head or food on the table come retirement

I think this shows a very blinkered view. Privilege is all relative. Nobody is saying you are Richard Branson or Alan Sugar.

I work in what is a very similar job to you. In fact I work 4 jobs because as well as that job (my main job) I also take on part-time work as and when I can. I have NEVER been out of work having started work part-time when I was 13 years old.

However I am a single parent - not by choice or by plan. Sometimes life works out in a way you cannot predict. As such I am solely responsible for the financial upkeep of myself and my children, and I am solely responsible for physically being there for them. I have some very limited family support (because of death and illness) and because of the limited family support I do have I am tied to working in an expensive-to-live part of the country. However because the support is limited, it has also limited my promotion opportunities. Having a partner who can contribute, having the ability to take up promotion, or the ability to move geographically are all forms of privilege - privilege that some people (myself included) simply do not have no matter how hard-working and sensible we are.

I live frugally. I don't have holidays. I don't but myself new clothes (not even primark). We don't have the latest phones or electronics. We don't have netflix or Prime or any other such luxuries. I shop at budget supermarkets. I am very lucky in that I am in no real debt but every month is very very tight. We cannot afford to put the heating on every time it gets cold. My kids cannot afford to buy presents for their friends' birthdays. This is the reality of our lives. There is no money left at the end of the month. None. On a good moth we make it to the end of the month without having to make really difficult choices. On a bad month we don't.

That is the reality of my life. Of many people's lives. I have no savings, no life insurance, and no pension. I wish I did. I wish I could afford it. But even putting ten pounds a month into a pension would mean we do not eat for two to three days. I cannot do that to my children. I doubt you could either.

Telling me that my misguided mentality won't keep a roof over your head or food on the table come retirement isn't helpful or kind. What exactly is it you would like me to do? Say "Sorry kids no food this weekend. Mummy has retirement to think about" once a month (every month)?

I'm glad you are taking reasonable steps towards your retirement. And I have no doubt that you are sensible and hard-working. But you are also privileged. You are privileged that your life has worked out in a way that means you have that money available every month without starving your children. Accept your privilege, be grateful for it - I'm certainly glad for you that your life has worked out that way - but don't judge those of us who haven't been so fortunate.

Unfortunately retirement is now a luxury that many of will not be able to afford. The same as home-ownership. It shouldn't be that way but it is. And for the most part the fact that is it is that way is not the fault of those of us going through it.

Do you not think I would love to be able to put £10 aside for my old age and to think that maybe one day I could afford to retire, rather than trying to plan now how I will be able to continue to earn when I'm 80? Of course I would, but that's not the position I am in. Be grateful that you are rather than calling those of us who aren't "stupid". We are just as sensible and just as hard-working, just with less privilege.

@OnlyTheTitOfTheIceberg I meant in both directions. Those appearing to sneer down at people and those decrying those better off!

I have been piss poor. I am not any more. I made very different decisions than most of my peer group. I get the sneers. I get the perjoratives because I have some disposable income. Just as I did when I had none. Mainly from the same people, those who YOLOd and are now tapping 60 and panicking. They have been unpleasant and unreasonable, seeing my/our choices as a personal affront for the whole of our adult lives.

What's the difference between foolish and utterly stupid? Confused.

Anyway, nice way to kick people when they're down OP. You do realise don't you, that there are people who have all manner of challenges that you'll never be aware of, like health, DA, MH problems, that means they can't afford a pension, but don't let that stop you insulting people. Well done you for being such a good planner and getting yourself organised, nice one.

By all means invest in your future and for your retirement but it doesn't have to be a pension.

If you use other investment vehicles you don't get the benefit of tax free status which only applies to pension savings. It has to have government approved pension status for it to apply. You could invest in property or tech stock and increase savings that way, but let's face it the average person won't have money to buy 1+ properties to be "a pension" when they have to choose between saving and feeding their children.

I am in the NHS pension scheme but I don't work very regularly (temp). However I had forgotten I had put some money away in the Co-op, now managed by The Royal London. If I had remembered this I may have contributed more. At the time I thought I would retire at 60, but of course that is not to be - I will be retiring at 67 but I could take it out now. I am going over the details now.

Still very worried though about how much I will eventually get in total.

I froze my pension payments when on mat leave and have increased them year on year with salary increase so it's had no real effect on my take home. DH has a final salary scheme. I fully expect there to be no state pension when I retire and I have no inheritance coming my way.

My sister is 35 and has never ever paid into a pension, neither has her husband and they are both relatively high earners. I cannot understand their naivety.

There is a big difference between those who can't afford it and those who just don't bother.

I pay into my pension scheme. Don't know why I bother though, the state will probably support those who didn't bother anyway, essentially penalising those who thought about their future.

Is it possible State Pension will be means tested in future?

I think anyone that can afford to put in to a work based pension but doesn't is foolish (tax and company contributions make it worth while). I understand how it would come low down the priority list if you have little money. It is really hard especially when you are young to put in to a pension as you have so much else to be saving towards. Similar for families, it is hard to afford. I put into a pension from around 28 (started work around 17), it was initially tough but I got used to the deduction. I agree it isn't all about pension, other savings and trying to afford your own house are really important too. Very scary and very hard to start out these days.

Whilst I get the sentiment behind the question, it’s poorly phrased as are quite a few of the replies. As a post I’m not sure it adds anything to the debate. This should centre around whether paying into a pension or making provision for your retirement should be

• A first priority spend equivalent to rent, bills or food, or
• A luxury spend

We all pay into the state pension, one way or another. But it is inflexible and offers poor value for money for many. I think our NI system is a deeply flawed one. As is the way governments have run public sector pensions.

Occupational pensions provide more flexibility and of course employer contributions add to the value. It’s free money to save. With decent protections we could all have plans that suit our needs and add flexibility to when and how we retire.

Personally I think minimum pension saving should be made compulsory. If it was workable, and i know it isn’t, I would scrape the state pension.

I only defended my own position by saying that I'm hard working and sensible because someone called me privileged, which I have not been. That is not the same as me telling others that they're not hardworking and sensible

You can be hard working and sensible and still not be able to afford a pension. The 2 aren't mutually exclusive.

House19

You could have worded the thread title different. You did make yourself come across rather smug.

Yes there are people who choose not to even when they can afford it but there a lot of people who just can't afford it.

I have a good friend in her 40's who can't work and they have to watch every penny. Her Husband works very hard.

i've been self employed for 20 years so I don't get any employer contributions - so the only benefit of a pension plan would be tax savings.

Personal pensions perform extremely poorly.

However:

1. I own one property outright currently value at 200K
2. I own my own home which is currently values at 300K (no mortgage)
3. My DH will retire with a 150K lump sum which we will invest and a pension of 32K a year.
4. If he dies before me - which is likely as he's 16 years older than me - I get a widows pension of 24K a year

So saving into a pension did not make sense.

They’ll just rely on benefits

I only defended my own position by saying that I'm hard working and sensible because someone called me privileged, which I have not been. That is not the same as me telling others that they're not hardworking and sensible

But you are the one who described not paying into a pension as foolish and utter stupidity. You were the one who described me being unable to pay into a pension as misguided mentality

The point is people can be sensible and hard-working but without an element of privilege they are simply unable to pay into a pension.

Acknowledge your own privilege. Be grateful you have that privilege. Rather than describing those who don't have that privilege as stupid, foolish or misguided.

@dahliaaa it's a Stakeholder Pension Plan with Standard Life. (Now known as Aberdeen Standard) I'm sure there's probably loads more.

Google "stakeholder pensions". I did. I see Royal London offer one and the Money Advice Service has a whole page on stakeholder pensions

www.moneyadviceservice.org.uk/en/articles/stakeholder-pensions

Key features are limited charges, charge free transfers, flexible contributions and low minimum contributions.

I've never trusted pension schemes. By the time I am elderly they will be almost worthless. Instead I put my money into slightly bigger properties in better places. Even though the market is levelling off now, as it should, I've earned way more through property than I would have from a pension.

@GirlRaisedInTheSouth May I ask why you wont be entitled to a State Pension? I think people need to understand that getting by each week is hard enough without putting very much needed money aside for the future.

YABU for shortsightedness in failing to realise that for millions of people, who would LOVE to have a pension & no doubt worry about not having one far more than you - oh so disingenuously - do on their behalf, it is neither a question of foolishness or utter stupity.

It is quite simple - they simply do not have enough spare cash to set aside.

As to how they will afford to retire - they won't.
Do you genuinely, condescendingly, imagine they don't KNOW this?
They will simply continue working until they are no longer able to.

I'd rather be poor than so breathtakingly ignorant, foolish & utterly stupid as to not understand that poverty is a real, immediate & terrible problem for a huge swathe of my fellow countrywomen.
And for their 4 million children, who live in actual food poverty, let alone having parents able to afford the luxury of a pension.

Does that help, @BHouse19?