Should I not bother with a pension?

[riae]

Is a local authority pension actually worth it when you're 40, working very pt and probably won't be working at the local authority for the next 30 years.

Am I better just not having a pension and maybe invest the money in shares or something instead. I'm thinking is there no point in a pension when you work so part time and in your 40s. It won't be worth much will it? Need to decide by end of month so can opt out.

You need to see a financial advisor OP!

Generally pensions are tax efficient so they are absolutely the best option for most people.

The only thing that's going to happen if you buy shares yourself instead of putting money into pension (where it will be invested in... Shares) is that you'll miss out on both employer contributions and 20% tax relief. Which would be stupid.

Take the pension.

Why does she need to see a financial advisor? Whoever she sees will give her the same advice she has had here: join the pension scheme, and will charge her for the privilege.

The only reason for her not joining would be if her lifetime pension savings were approaching £1.1m, and it doesn’t sound as if that is the case!

I've just done the maths on my local government pension.
I'm term time only, but FT for those 38 weeks, earning not much above NMW.
If I survive for 3 years after retirement, I will have got back all my contribuitions. Everything after that is free money.
Turning it down is like turning down a (big) payrise. Yes, it might not produce big sums in retirement, but it is literally free cash. Why wouldnt you want it if you can possibly afford the contribution.

If they're offering the pension it's free money. If you go separately and do a private pension, then you're only getting the money you put in. If you do nothing at all then you'll be forced to survive on the state pension. If you put money in the pension then your employer adds more money (and it's tax efficient).

Even though final salary public sector schemes are long closed, the public sector contribution is still usually pretty good.

There will be death benefits too.

And even a small amount in the future to top up your state pension is better than nothing!

Agree with PP who said sign up sooner rather than later - the schemes are always being tightened, and never in the employee's favour. Given the messaging coming from Treasury about return to austerity, I can foresee a lot of belt tightening in the future. It's harder for them to change terms retrospectively, so get in now while it's still available.

You're also only 40! You've got 25+ years of career still, and whether you increase your hours once kids (if you have them) are older, or you end up retiring through ill-health, you will still benefit.

@Iamthewombat

Why does she need to see a financial advisor? Whoever she sees will give her the same advice she has had here: join the pension scheme, and will charge her for the privilege.

The only reason for her not joining would be if her lifetime pension savings were approaching £1.1m, and it doesn’t sound as if that is the case!

Mumsnet is obsessed with financial advisors. I often wonder if half the posters here are underworked IFAs trying to increase their business the number of times they get recommended when 95% of the time the answer can be found for free from spending 5 minutes reading Moneysavingexpert or similar.

All the above. And get out of your head that you’re only 40. That’s young, and you can expect to be working for another 25 years. Longer if you don’t have a pension.

MN really need to do a webchat about pensions. It is really worrying that anyone even needs to ask the question. It is so, so important to sort this out early. My dc are in their 20s and we are having these conversations now. Life insurance is another important one if you have children.

Your employer is basically giving you money by way of pension contributions? Why wouldn’t you?

You would be mad to opt out. There is literally no good reason to, the benefits stack up really quickly and there’s the death in service payment to consider for your family.

I have some LGPS pension (and some USS) both are excellent. I joined LGPS in late 30’s and am part time now. I will still get a good pension from it, even if I don’t stay in it until retirement.

Definitely pension. I am younger than you but have only been paying in for 8 years my pension is already worth £7k a year when I reach retirement age. I will thank my future self!

I started part time in the NHS at 40yrs and debated whether it was worth it to join the pension. I'm so glad i did.
Over the years my circumstances changed, kids got older, marriage fell apart and I increased hours. Recently taken my pension lump sum and it was in excess of £50 grand. I would never have 'saved' that amount over the years.
Another colleague joined same time as me and opted out and she really regrets it now.

I suppose the only reason to opt out would be if you were on the breadline and needed the money to buy food or get to work.

Even then, you'd be better trying to increase your hours or cut all your other expenses to the bone, because the tax relief and employer contribution makes the priority right up there with the roof over your head and basic sustenance.

FREE MONEY

Yes pay into the pension

Yes pay into the pension. I'm in the current career average scheme which pays in 1/80th salary per year. That plus state pension and I'm looking at no drop in income for retirement.

I may have to go PAYE & my financial advisor told me to join for the free money & tax break - and I'm nearly 20 years older than you!

You don't need a formal pension, but you need to work out what income you want for your retirement and then work backwards as to how to get there.

It's likely the state pension will be 70-75 by the time you get there, and the triple lock will be removed by then (they are just waiting for the boomer generation to die off, then they will start lowering the real value of the pension for future generations).

How do people need to ask this question? You’re being offered one of the best possible pension schemes, with very low contributions. There is no possible reason not to join, unless you’re worried about future access to pension credit?!

Omg. Ok I think that's a resounding yes.

Im just not clued up on pensions. I don't bloody understand them. I was told that you need to have a million pounds to actually live off it decently! Don't ask me where I got that from!

I only pay in around £50 a month! If I am only there say 3 years how much would I get when I'm 67 and retired. Even paying into it for a few years because I've had to move on, is still worth it?

I don't understand it at all. There really needs to be an idiot's guide to this.

I'll be honest all these people who rerire with no drop in income I think they must have worked FT for 30 years in a good job to get to that stage.

In contrast I'm pt and low paid - my hourly pay is around £10.

www.vice.com/en/article/4xwkap/an-idiots-guide-to-pensions

@riae once you join you will get information sent to you and it’s likely this will include a log in to a member portal so you can do various calculations of what you might get in different circumstances.

And yes it’s definitely worth it for all the reasons already given on this thread! Lots of people would give their eye teeth to have the opportunity to join a public sector scheme. Grab it while you can!

I want to thank you for the thread.
I have a pension and have even got a small amount of additional voluntary contributions, have attended a few talks about pension in my job over the years and yet I have learned things on this thread. I am easily confused by pensions and how they work but this thread has given me a clear perspective. When I started earning I guess just saw pension as another necessary deduction along with NI, student loan etc. I will see them differently now. So thank you!
I would definitely attend a Mumsnet web chat on pensions (and no matter how clear it was at the time, five minutes later I would be pressed to have to remember or explain a thing.. mental block!)

I spent 15 years paying £250 a month into a private pension in my first job.

I then moved to a new job with a government pension. I pay £180 a month and was on track to get the same amount as from the private pension after 4 years.

Providing you don’t need the money to eat, opting out of a government pension is the equivalent of them saying ‘I’d like to give you a large pay rise’ and you going ‘no, I don’t think so’.

The only reasons to opt out would be if you either desperately needed the money now or if you think it might affect your entitlement to pension credit.

Also, very, very few people don’t have a drop in income on retirement. It’s just that a much larger percentage will have got the kids off their hands and paid off the mortgage so they don’t need nearly as much money.