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?

Surely the point (even if it’s perhaps not expressed in the best way) is that aside from people who literally cannot spare a single penny to pay into a pension, there is a much larger swathe of people who prioritise differently? And tbh that often is foolish.

I work in education - probably about the best pension scheme going- yet I have a small number of colleagues who have opted out of the scheme which I think is bonkers. And a fairly large number of colleagues who only work part time and then express surprise when they realise their pensions are tiny. And that latter group is 100% female! I’m not talking about mums with young children as you can totally understand why someone returning from maternity leave may not want to launch straight back to full time. I’m talking women my age - 50 and older. Now that is foolish imo because judging by their shock when they look at their pension forecast they didn’t plan ahead.

There will always be variation in how people in similar situations will behave but it’s a well established fact that as a group, women have far less financial security in their older age than men which is a fact definitely worth discussing

YANBU - I had a pension, but my DH was made redundant, couldn't get a job for a long time and so I cashed it in to pay the balance off our home (we had two very small children at the time, and I was sick with worry at the thought of being made homeless).

I utterly regret it now, as I have only a small state pension. (But I do still have a house as an asset, I suppose).

I'm hard working and sensible. But there have been times in my life when I simply haven't had enough money to contribute to a pension scheme. As a single parent who received no maintenance, there was just enough to pay the bills.

If you can afford to pay into your pension great, if you can't, that's a really difficult situation to be in and I understand.

Detailing how hard you've worked OP doesn't make other, poorer people any richer. It does highlight though a lack of insight into the struggles people face in their everyday lives.

Detailing how hard you've worked OP doesn't make other, poorer people any richer. It does highlight though a lack of insight into the struggles people face in their everyday lives. Or is the response of someone trying to explain themselves and fialing because 'words'... which is why I suggest nobody ever tries! It will aways be used to berate you - here and in real life!

Absolutely! And I’m not talking about people who are living hand to mouth, I’m thinking of people who have the
money but prioritise other things (phones, holidays etc). I don’t get anything extra until after I’ve put into my pension and in fact going to add to it more shortly sacrificing other ‘luxuries’. I want a comfortable retirement!

Hi OP. I agree with the premise of your post. Yes, a large amount of people don't take retirement planning seriously enough. If you opt out of your pension yet have Sky, anything beyond a basic phone contract, foreign holidays etc. you probably have your priorities skewed to a degree.

However as some folk have said, some people are not in a position to contribute due to low incomes and living pretty close to the bread line.

I think that there is a real lack of education out there on pensions.

Someone up thread implied pensions were bad because her projected income had fell. People don't always understand the extremely generous tax treatment of pensions, both at accumulation and benefit withdrawal and misunderstand the old 'Gordon Brown raided my pension' narrative.

Yes OP, the state pension is unlikely to support many peoples lifestyle in retirement. Yes, people don't save anywhere near enough. But the population needs to be educated. Myths and half truths need debunking and a large chunk of the population need to get their head out of the sand and wake up and smell the coffee. But don't forget there are a few that struggle to keep food on the table, and labeling them stupid is not fair,

I contributed to a NHS pension. However, when I got ill and could no longer work full time I needed the extra money to pay for work place adjustments (yes I was forced to pay as the what they did for free were useless). I had a lot of sarcastic comments about my future when I stopped and I'm sure entire trees were wasted by the pension services kept writing telling me I must contribute.

The fact is, I needed the adjustments as well as having other things I needed to pay for from my dwindling salary as thanks to agenda for change chaos my salary was halved by the NHS and I was forced to reapply which my trust did to basically save money - not official line of course and my DLA was required for other medical needs.

I wasted a lot of money on a pension I'll never see. I'm in a lot of debt as a result of my disabilties and benefit changes and I could really use the money I put away but cannot access it and never will (I won't live to see retirement).

Being forced to reduce working hours due to illness yet still needing to meet essentials plus extra expenses and no PIP/DLA doesn't cover all of them is common enough and then you're forced to make decisions about paying essentials now or pension.

OP, some people worked at BHS their whole careers paying into a pension scheme... look how that turned out.

Working hard is not unique to the nhs, although, if you'd like a pat on the back, I'm sure you deserve it. But not everyone has access to secure, reasonable-terms state run pension schemes. And not everyone can afford them. People who had no parental help to eg. go to university, get on the property ladder, etc etc will face very high living costs for a long time.

So on balance YABU. Some may be foolish. But many aren't.

YANBU BUT not everyone can afford a private or workplace pension. I have only gone into my workplace one in recent years under pressure from my DP but to be honest I could really do with that couple of hundred quid a month now whilst I am young, alive and able to use it.

Instead we need to look more widely at a system that allows people to work bloody hard all their lives, to always live hand-to-mouth, and to never be able to afford to retire.

Well exactly, @DeathStare.

PP's gushing upthread about actually knowing people who don't expect to even receive an inheritance is particularly galling. Wow - living on the edge there, poverty-tourist!

I wonder if some people worry as much about other people's zero hours contracts, erosion of employee rights, or the cost of self-improving further education, as they do about their lack of pensions?

So much fucking stealth boasting here. Or depressing, patronising guff that entirely misses the main issue.

SeeWhoRustsFirst this is scaremongering. If they have a DC scheme it is likely to be in their own name. If employees were in the DB scheme the absolute worst case scenario is that they'll end up being compensated favorably from the Pension Protection Fund.

@Everanewbie excellent post. I too would like to see more investment in educating people from a youngish age about how pensions work and the importance of them.

I work with intelligent people yet I’ve been shocked at some of the basic misunderstanding about pensions... women blindly assuming that if their husband dies first then the whole of his company pension will start being paid to them! People not understanding how a pension accumulates. People on good index linked pensions taking most of it as a lump sum rather than a monthly benefit.

The discussion needs to focus on helping people to start planning and supporting them to be able to make contributions however small.

Pensions are for the rich OP.

It is a disgrace that there are people in this country who do not have anything left at the end of the month or are having to feed themselves and their families with foodbank help. That is a much broader issue than pensions. I certainly wouldn't criticise any people in that situation for not saving for a pension.

However, there is a conversation to be had about pensions. I don't think there is enough education about pension. I certainly didn't take it as seriously as I could have done when I was younger, and there are many things I didn't realise would make a difference.

I think there are young people who could afford to start a pension before having a mortgage/children etc., and because of compound interest, that money will be worth so much more at retirement than the same sum invested in 30s/40s. That was certainly my case.

I don't know if I have false impression, but I do see threads on MN where someone is SAHP and saying that it is not worth going back to work. I hope that they are factoring in the cost to their pension, and including their voluntary NI contributions, but I'm not sure that's always the case. So this can give a false idea of "I'm better off at home financially", but it hasn't taken into account long-term financial consequences. Of course, there are other factors and it may still be the right decision for the family to stay-at-home, I just think the calculations need to look at pensions too.

I also have a couple of friends who have said to me "Oh, I'm in my fifties now, it's too late". I'm no expert but it seems to me that they could well be working another 20 years, and making contributions for that time would make a real difference. I've just said that I think a visit to a financial advisor would be a really good idea - there might also be options better than a pension.

The thing about saving/pensions is that you can lose or earn thousands by making small changes, so if you find yourself able to contribute something, it is worth looking on money advice websites or with a financial advisor to help make a choice.

I think if Boris gets in again then there will be no point unless you can contribute mega bucks.

My reason for this is that I receive an occupational pension for ill health, I also receive contribution based ESA, which is reduced because of my pension.

So I paid into a pension and I also payed NI (I have a full 30 year record) but because of that I am worse off.

I'm fairly sure they will do the same with the old age pension.

So it won't be £129.20 + private pension, it will be the difference between a PP and £129.20 unless you have a big pension pot and don't need the state pension.

My mum and dad both contributed as much as they could to their public (dad) and private (mum) pension schemes, so much so they went without in order to ‘ensure’ their futures. Dad died in his fifties so never benefited from his. Mum got a small lump sum and a minute pension from it but not enough to make a difference to day to day life. Her own private pension was with Equitable Life so she did not eventually get the pension she had paid for. She may get a small payout soon but that won’t make up from living to 77 on a much smaller income than she had paid for.
So no, I haven’t paid into into a pension since I stopped full time work 30 years ago. I have invested my money in bricks and mortar that will give me a rental income if I need it and will also be a substantial asset to my husband and children if I die.

There is nothing wrong with OP saying she is hard working and sensible.

These threads are really useful. I didn’t start a pension until 30 because I wasn’t educated about them.

And then it was due to a recent thread that made me look at the pension calculator online and realise that if I want a reasonable pension then I need to increase the amount I pay into my pension.

At the moment I’ve just been paying the maximum amount that my company matches (e.g. I pay in 6% and my company pays in 9%). I’m going to increase my payments.

Yes reading about people with final salary pension schemes is depressing but everyone should take what they can from a thread like this and do the best for themselves that they can.

It is always sensible to save up money when you can but most people do not have spare funds to do so (and they need to realise if employed they are allowed to opt out of those auto enrolment pensions by the way). If you don't have a pension other than state then you will get housing benefit and pension credit in old age. If you do you don't get that (this applies to the less well off). At the other end of the scale annuities are so low it is not always straight forward that you will be better off with a pension. I cashed mine in at 55 to give to the children and HMRC because I will work until I die so will never have a time when I pay no tax thus making the pension really worth while.

I have never had an employer pay into a pension either.

@GiveHerHellFromUs, so they will claim Housing benefits and live off the state pension.

My Mum paid into a pension and until the minimum income guarantee came in, was worse off than if she had been on just State Benefits.

Unless you have a certain amount, which is a lot more than most people pay in, you won't be better off.

Do we actually think that we'll have pensioners, living on the streets in the future?

My children’s fathers flatly refused to contribute towards any pension for me, made sure they had what they needed, made it very difficult for me to work, one of my children was SEN, provision was awful, ended up home ed - but yes, I’m simply foolish and stupid. Cheers.

You are not being unreasonable for those who work but How do you expect a sahm to contribute to a pension? Im just about to become one, i have 10 years of a pension behind me, and will sign back up when im in work again, but im not going to be able to save when ive got no money?

Also, for the majority of working people, unless they can provide a VERY good pension, all that having a personal pension will do is remove mean tested benefits - this is the case for most WPP.

Not everyone can afford to.

I did, from the ages 22-38. I joined a pension scheme immediately I got my first full time pay check, but my circumstances changed. I was once a high earner, now I'm a full time carer for a disabled child and I also have my own disabilites/mh issues..

YABU and also speaking from a place of privilege.

There is nothing wrong with OP saying she is hard working and sensible

No but there is something wrong with letting the myth exist that all you need to be is hard-working and sensible and you will be able to afford to pay into a pension. Many, many, many hard-working and sensible people would love to be able to afford to pay into a pension but simply cannot afford to do so. We are not "stupid" or "foolish". We are terrifyingly aware of the future we face - just powerless to do anything about it.

Exactly @Deathraystare