Is this ok instead of saving into a pension?

[avslp11]

Inspired by the thread on pensions that I read just now, I have no pension that i save into despite working on 45k and have been on around that since I was 26, I’m now 33.

My family own four homes and gift money every year around 10k. I save this and so far have 80k in savings and 220k left on my mortgage.

I know it’s not ideal to rely on inheritance but I have always thought that I would PROBABLY be fine. Is this wildly idiotic?

It’s not wildly idiotic, but what if the worst happened and those propertied had to be sold to pay for care?

That 10k a year, in the meantime, would go towards a good nest egg. Pop it in low cost index tracker funds so that you can maximise growth, and assuming that money keeps coming your way for a while, it will continue to compound and grow over time.

33 is not too old to start a pension at all!

if also be putting the £10k a year in a LISA

Your employer will usually contribute significantly to your pension, which is 'free' money you're missing out on

Well you're missing out on a lot of free money, so a bit idiotic for that.

Pensions savings are diversified (that is - there’s lots of different sorts of assets in them, such as shares from around the world, uk property, government bonds…). That makes them safer. If, say, a new government put a massive tax on second home ownership or capped rent you’d be screwed.

Plus tax relief and employer contributions on pensions savings is FREE MONEY. Really rich people try to mail their pensions allowances for this reason.

So you will probably be OK, but a pension is sensible.

I'll preface this by saying I have no experience in pensions other than my own. I'm currently getting divorced and in the future I'll create a pension pot by downsizing my house. I've recently taken on a financial advisor who has advised me to keep the house for as long as possible as house price increases tend to outperform low-risk investments in the long term. So as long as you're confident you'll inherit these properties, you should be fine - however, it would be worth looking at the worst-case scenarios such as if your parents need expensive care in older age.

Speak to a financial advisor for such a big decision.

I thought it was a legal requirement for all employers to pay into a staff pension. Why haven't you got one through work?

It’s lovely your family can financially help you but i would def be in the work pension scheme as employer will contribute too. Also family assets may have to be sold for care or hopefully not but those family members you may end up leaving their whole estate to someone else.

It’s a legal requirement for most employers to offer one to most staff, but you can opt out.

Yes I opted out as my salary wasn’t that high initially. Thanks I’m going to look into it a bit more! I’m single and likely to always be (terrible luck with men!) so it will likely just be me on my own in future.

Do you mean you don’t have a workplace pension at all? Yes frankly that is wildly idiotic if so - you’re missing out on the tax benefits and the employer contributions. Start one, tomorrow!

How old are the people involved? I suspect I may want to retire before I receive any inheritance! What if the people involved marry a gambler, or suddenly need expensive care, etc etc. Do not put all your eggs in that basket.

If you actually mean you have one, but you don’t pay any extra in, that’s a bit different. I think it’s a good idea to have some diversity in your income/savings.

I don’t know to be honest but I don’t have much of a pension at 47 but we are becoming landlords to a small property that we won’t have a mortgage on and are planning to use the rental income as our pension in the future. Hopefully we will be ok.

‘I am relying on people who rent my parents properties to subsidise my lifestyle now and in my old age’. I think your picture should be in the dictionary under ‘entitled’ and exemplifies one of the things wrong with our society and economy.

@jm9138 thanks for your input

What’s wrong with that? Jealous much?

Definitely look into joining your workplace pension, as the bit the employer pays in is basically free money. I'd also play around with a salary calculator for different % contributions from yourself too as often increasing your contribution doesn't decrease your take home as much as you expect (due to tax savings, etc)

I think it's always worth it to get the free employer contributions and the tax relief. Even if you pay in a small amount it's worth it to diversify. I'm keen never to have all my eggs in one basket.

Technically it would be ‘envious’ and no. Suspect it is a perspective the OP had not considered. That £10k a year she gets is from (potentially) hard working people. She does not lift a finger to get this. I imagine if instead of saying she gets £10k from her parents rentals each year so did not want to save for her pension she instead said she received £10k in benefits allowing her to do the same you would vilify her. Sure the arguments will now come ‘but that is not the same’ they would both be unearned income for the OP.

So if that was your parents properties, what would you do? Refuse the money? Give the houses to charity when you come to inherit them? Hardly. It’s pure jealousy. You would do exactly the same as the OP, as would I.

Well, you’re missing out on your employer’s contributions. Pensions are also tax efficient so it’s strange not to pay into your work pension.

I wouldn’t rely on inheritance. You never know what will happen-care needs, family fall out etc.

It might surprise you to know that not everyone is the same. I wouldn’t take the money no. I didn’t earn it and it’s not mine. I would tell my parents if they really don’t need the money then they should sell the houses to people who can own them and invest properly and not rent seek. Or put the money in trust to actually help people who need it.

if you want one reason why my children - like many others - will struggle to get on the property ladder look no further than the OPs four homes they own. Still, my children can rent one of those homes to enable the OP to not have to worry about saving for a pension - that my children will still have to do - so so long as she is ok all is well.

Sorry but the employer contributions are the least of what you're missing out on with this set-up. You need to put the £10k each year into a Self-Invested Pension (SIPP) and invested in index tracked funds. Sounds scary I know but it's actually really easy if you do it using Hargreaves Lansdown or similar. I just did a quick compound interest calculation and if you started at only £10k (it sounds like you must have more than this) and continued at that rate for 35 years, at an estimated interest rate of 5% (which is very conservative, you'd have a pension fund of around £700k. Which is far more than enough to live on. And that's not even taking into account the tax you'd get back on the savings.

But you don’t take into account that if those properties were sold it means there’s less rental properties for people who really want them. Not everyone wants to own. Not everyone can own. What if your children aren’t in a position to own and NEED to rent and there are no landlords left?

i also really don’t believe that you wouldn’t take the money - maybe you would for your children if you don’t need it. Perhaps for a deposit for them for the future!

@Jk987 your post is so contradictory, can’t you see that? You want your children to have a home, then they need a house deposit. But in your hypothetical world you’d reject money offered from you own parents which would then help your own children? And you’ll remain bitter that they can’t get on the property ladder.

Let me know if you want some salt with that chip.