Should I start a Pension?

[TheWrathofNaan]

I am early forties and have no pension.

I have a child with Autism which means I haven't worked for a long time and am unlikely to for some time as his needs are great.

I have got savings and wonder if I should be putting this money into a pension instead?

I own a pensions journal and I still think for those at the lower end of the earnings spectrum they can be a bad deal. Also people are getting fooled over the new changes. The changes mean you can draw the pension out as a lump sum - ie ensure you have no pension which is not exactyl why you save up for one. Also if you draw it out it is taxed - in my case the state will confiscate 45% of my pension fund if I draw it out as a lump sum under the new rules. (Currently there is a 55% charge). if you have no other income though and are taking it out as a lump sum sayi n one year you take out £10k and have no other income including state pension then yes it is taken out tax free. (25% for everyone can be taken as a lump sum though tax free whether you are buying an annuity at state pension age or earlier but that does mean you have a much smaller pension).

THe basic point about pensions is that thereare two basic types

"defined benefit" : Mp's teachers, doctors, nurses, judges, civil servants, MOD
some of those are funded, some are not
BUT
whatever shit happens the pension will relate to the salary

"defined contribution" : what much of the private sector was moved to in the late 90's
and an utter rip off
scheme charges higher than returns and no recourse for 35 years
madness

yes, you get the tax break on investment, but its ONLY worth it if you earn over £100k
for the rest of the world its a con

hence why I use ISAs and planning and keep as much of my money away from the Red Braces Sharks as I can

We haven't done any pension schemes as not employed and the private ones I don't trust.
They say whatever they like but then can go bust or change goal posts.
We have made provision in other ways, but agree with those that suggest saving in an ISA, even if you can't afford a huge amount it soon adds up.

Talking Were on a transition scheme between DB and DC pension.
atm, if I contribute 5%, they contribute 18%. That will shift to 8% from me, and 12% from them. Given the hefty employer contribution, is it still a con? I earn less than half of 100k!

Sorry, Talkin

Pension schemes aren't necessarily a con these days but you should always seek financial advice as it may not be best advice to set up a pension and some investments are more tax efficient than others. An IFA needs to look at all your circumstances, earnings, savings etc. To advice you properly. Also nowadays pension providers have to be completely upfront about charges on taking out a pension and you will get an illustration and key facts. You also need to look at financial strength of the Company you invest in etc. All in all as I know I sound like a broken record you need to see an IFA.

I think anyone with a scheme which will be matched by an employer should enroll if they can afford to. On leaving the firm they sometimes give you the option to take a lump sum or you leave it paid up or you could transfer it, if that's best advice but getting a hefty employer contribution into a pension scheme is worth taking, if you can afford to also contribute.

huge employer contributions are all well and good
but if its into a DC scheme with high hidden charges and a flat market
and an investment over which you have no control till its too late
I'd still avoid if possible

there is no free money : your employer will pay you less because they are bunging that money to the sharks

If they use salary sacrifice that can be a good tax break. As well as tax relief on contributions. There shouldn't be hidden charges since pension simplification. It is all meant to be disclosed when you consider joining the scheme and usually with a DC scheme you can choose investment funds, DB in the past left you little control. Things have changed a lot.

A good corporate company will have many employee benefits not just a good pension scheme. Peace you cynic

When you say transitioning are they transferring the DB or leaving them frozen and you pay into a new DC pot? Did they have an IFA come in and talk to you about your options? Just interested.

Freezing the DB at current years service. Stepping down from whatever the current DC employeer rate was to their prefered 12% over a couple of years - hence transitioning. So the pay cut is in pension contributions rather than in pocket.
They had an apparent IFA come in, but since I corrected some of his statements in the group presentation, I didn't bother going for individual advice - he had state retirement ages wrong ffs, and wouldn't admit it. Has put me off IFA's - and I know thats wrong!

Interesting.
I am 41 never had a pension and never will.
I agree it's better to save in an isa unless you work and get employers contributions.