Employer pension contributions

[Adultdcs]

Hi all,

This is a bit of a random/personal question. I would like to gain others opinions please.

Regarding the pension, I am full time employed & been with the same company for almost 10yrs.

Due to life changes/seperation etc, I have not felt in a position to personally contribute to my pension for quite a long period of time, including previous employment,

i have approx 15+ years till I reach retirement but due to the fact I I can’t afford the deduction it’s also cheaper for my employer…….

So, question is because I can’t afford the pension deduction, am I being unreasonable that the company should still pay their share given it is personal circumstances?

Treat your pension as a tax _ which could havd happened in the budget so hpw would you have managed?

Use a salary calculator to work out what the impact would be. It's mad not to contribute as you are turning down money. I have a friend who says similar about her pension however she could afford it but chooses to spend elsewhere.

I understand your point OP. Your employer would pay their part of the contributions if you did, so why not pay it anyway?

Most employers want you to join their pension scheme and contribute. There is no maximum working age in the UK, so you can't be forced to retire. Employees who haven't built up sufficient savings don't retire and remain in job that they don't want to do and may no longer be capable of doing to the same standard.

But if employers just paid in their contributions, even at a relatively generous 8%, the pot at the end wouldn't be enough to retire on. This is one of the reasons why auto enrolment insists that employees also pay in - so the pots at retirement have a better chance of being sufficient and providing enough for people to live on when they stop working.

If you don't pay in, and don't have enough to retire, you will stay in your job and your employer will have effectively "wasted" their investment in your pension.

Also check whether death in service insurance is linked to being in the pension scheme.
Most mortgages require death insurance.
Company death in service can cover that, but in my corporate employment experience it's been linked to being in the pension scheme. So joining the pension scheme is even better value.

But also something to be aware of if you are made redundant or quit.

Op I'm sorry life has dealt you a poor hand but you still have choices. You choose to support your child in Uni, you have said what this looks like. If you have chosen to pay your childn't fees and all their living costs that is entirely on you. If you are on a low wage your child should be able to take max loans for fees and living costs - sure you can top this up to make their lives more comfortable but to do this to sacrifice your future is not a wise move. Your dc needs to get a part time job - lots of uni kids do it - there are other solutions and if I was your child I would not expect you to sacrifice your future.

On the employer contribution - your point is that the employer should pay the 3% regardless? Or is it that the employer should pay the full 8%?
3% towards pensions is not enough, 8% is not enough either but relying on a 3% pension for your future is not going to last you very long - better than nothing might be your point. But the idea was to encourage people to take responsibility for their own future - it's not the employers responsibility to look after you in old age - it's yours. (Or the state's if you don't save). Asking employers to contribute 8% would be the final nail in the coffin for many businesses - unemployment is not better for anyone.

My feeling is that it time to stop allowing opt out, I know the gov are trying to bring in the pension obligation slowly to allow people to get their heads around it but we have an aging population and we are paying enormous amounts of tax to support them - the country can't afford it - it's time people were mandated to save.

It is absolutely crazy to not be paying anything into a pension. You should tighten your belt in every other sense to be able to do this.

@Adultdcscheck with your HR team and find out what the actual impact on your salary would be if you make the minimum contribution necessary to get the employer contribution. Then post it here we may be able to help you see how to make it affordable.

Honestly you are insane not to join auto enrollment, it is free money. Surviving on the state pension alone won't be easy.

Your daughter would surely prefer to help you afford pension contributions now than be lumbered with supporting an OAP parent living in poverty when she has a job and a family in 15-20 years time. If you won't make financial provision for the future for your own benefit do it to reduce the burden on her.

OP, what do you mean why you say that you support your child at University? Does that mean that they haven't applied for Student Loans? If you have low earnings, they would receive the maximum amount of tuition fee and maintenance loans. Can your child get a part-time job and full-time work during University vacations?

Have you checked to see whether you are entitled to any Universal Credit? Could you apply for promotion or a better paid job elsewhere?

If you don't make any pension contributions, this removes your employer's responsibility to make contributions to your pension. You really need to look at other ways to cut down on your expenditure or to increase your income so that you can make your own pension contributions which will mean that your employer will be required to make their contributions to your pension.

The employer has to opt you in but you have to opt yourself out, normally within one month of it starting.

I get your point, OP. If you were to contribute your employer has to, so why shouldn't they pay in anyway?

Unfortunately, that's not how the system works. I would, as others have said, work out exactly how much you would actually lose out of your pay if you do contribute the bare minimum and see if you can find a way to make it work. For instance, for someone on 20k contributing 3% you are only giving up around £30 take home, for around £100 total going into your pension. It's not huge, but the earlier you start the more it will eventually be worth.

You’re looking for free money which is never going to happen.

just like where my company offer extra annual leave for a price. You need to ‘buy’ your benefit (be it pension or annual leave or health insurance, etc) but that doesn’t make it unfair… different people have different priorities.

Have you calculated what it will actually cost you in lost net pay vs what you gain going into pension?

Itll be less than the 5%.

yes YABU.

You are being treated equally because the same rules apply to everyone. You either remain in the scheme and pay contributions and the employer also pays a contribution, or you opt out of that arrangement.

You have opted out (or chose not to join if this was pre-auto enrolment.)

The reason you aren’t in the pension scheme is irrelevant. It’s like someone telling their employer ‘I’m not a parent but I want you to give me maternity/ paternity leave because some other employees have it’ !!!!

😅😅😅

It's easy to say "I can't afford it" but I think there are choices you're making. You are prioritising other expenses such as supporting an adult dc and your own living costs. I'm not saying that's the wrong choice, but it is a choice. I personally think it's a mistake for a working adult not to make pension contributions, and I would (I'm afraid) put that ahead of giving money to an adult at uni, who can work to support themselves.

Does everyone at your work get paid the same?

An issue is that if you are struggling to survive now, how will your retirement look? Even worse, I guess. Pay that 5% (before tax) now and have a slightly less poor retirement.

Because the UK doesn't have a superannuation scheme like Australia, where one isn't allowed to 'opt out'.

Very few UK companies (large or small) offer non contributory pension schemes now and, if that benefit is more important to you than the base salary and benefits you currently have, the only option is to research companies and look for a job in one that offers a non-contributory scheme.

If you can't afford the minimum contributions of your workplace pension, there is nothing to stop you opening a personal pension and making the level of contribution you can afford. Although you would miss out on employer contributions, at least you would be saving something (it's worth checking that this is the most financially effective method for your circumstances though).

@Adultdcsif employee A can only afford one child but employee B can afford three, should the employer give A two more maternity leaves? And what about employee C who might wish they could have a child but doesn’t have the option?

Does that make things a little clearer for you?

They are your employers, not your parents.

It's not down to them what your budgeting skills are like, they are running a business.
Or do you think they should ask your financial status at interview and weed out the broke people 🙄

So you've opted out?
Can't you put in a miniscule % so they still have to pay something?

Sorry but YABU. Employers don’t generally contribute if employees don’t. I presume that if you request to start contributing your employers will start to contribute also.

deleted as I realised I was wasting my time responding!

In Australia it's compulsory for employers to pay 12% into your superannuation fund (basically employee savings for pension). The compulsory rate was much lower when I first started work. Some employers then have a matching scheme to contribute more. Where I work it's 17.5% total with me putting in 3% and employer topping up the difference from 12%. Over the years there has been times where putting in the extra has been hard but once you opt out you can't opt back in. Persevering with the payments has me in a good position for retirement.

I would recommend trying to start your contributions as soon as you can. The earlier you start you'll get the benefits of compounding earnings.

Yes, that was the point I was making.

As far as I am aware, the employer contributions isn't there for equity. It is there as an incentive for everyone to take responsibility for their retirement because there are many warnings the Gvmt pension cannot sustain the growing older generation.

You are taking the view it is a free salary built into the business model. It isn't. It is a legislative incentive for individuals pension planning. That is completely different.