Workplace pension. Opt out or not that’s the question?

[Londoner90]

So I have been paying workplace pension but I have been thinking about opting out and just have the cash now...
Any opinions on do it or not? I have always paid it, I believe I have been paying the minimum only but I’m thinking that what if I don’t make it to retirement 😂 yes a bit morbid but what if I am saving for something that will never come ...
I guess I can always opt back in, or can I ?

Can anyone help with this please?

True but how can you prove it’s gone wrong? If I transfer my final salary pension out to a dc pot when I’m 50 will I have done better financially when I reach 65 say than if I’d stayed in the final salary scheme?

You can only transfer a DB scheme under the advice and signed off by a pension transfer specialist adviser and then mostly likely, you'd be advised not to. FCA regulation is very tight on this now, for good reason.

Wow, a row about pensions.

OP, as others have said, you should stay in your pension. Assuming it's DC (most are these days), the first point is that your contributions will earn returns from now until your retirement in 40 years time. You know all those exponential growth graphs we're seeing so much of re covid? Compound interest works in the same way. If you invest £100 today and it earns 3% each year over the 40 years until you retire, it will have grown to £326 on your retirement.

Even more importantly, you get free money through your employer's contributions and tax relief. Which is then invested and earns interest in the same way as your own contributions. It is vanishingly unlikely you could do something with your own contributions that would earn enough to replace this free money you would lose from withdrawing.

There are circumstances in which it's wise to opt out of a pension, but these are rare and involve things like struggling to put food on the table or earning millions and already having a large pot.

On another point, DC pensions aren't reduced if you draw them early (but within the age range allowed by legislation, likely from at least 58 for OP by the time she gets there). But you do have to make the pot last longer, which obviously translates to a lower income.

In DB schemes an early retirement factor is applied which similarly adjusts the pension for being paid for a longer period of time.

If you die before your pension is drawn it doesn't disappear it can be paid to your dependants.

@TiddyTid

True but how can you prove it’s gone wrong? If I transfer my final salary pension out to a dc pot when I’m 50 will I have done better financially when I reach 65 say than if I’d stayed in the final salary scheme?

You can only transfer a DB scheme under the advice and signed off by a pension transfer specialist adviser and then mostly likely, you'd be advised not to. FCA regulation is very tight on this now, for good reason.

That rule only applies if the pot is valued at over £30k. I transferred one that was £9k with no advice.

@bruffin

Years ago in the 80s i left a job after a year of starting to pay into my pension . I had paid in about £500 and was entitled to the money back.They wrote saying they would send the money back, but i noticed that it was worth a few thousand if i left it in the fund. When i got to 55 they wrote to me about taking my pension, this fund was worth over 40K!!!! I have moved it to another pension fund for now

That must have been a defined benefit scheme where it was the cash transfer value of the fund they were taking about, rather than any sort of investment growth.