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Original poster

Workplace pension

13 replies

Coronacorona · 21/04/2020 19:21

Hi. I started a new job in late Feb and have been signed up to the workplace pension. My contribution is around £125 a month.

Am I obliged to do this? I’ve just had to take a 20% pay cut due to Covid-19, as have all staff, and right now, I’d rather have the money as things are pretty tight. I’m not bothered about my pension tbh as I have such a small pot it’s just not worth me adding to it - especially right now. Can I opt out? Everything goes through the company accountant and tbh I’m a bit embarrassed to say I want to pull out of the scheme - but clearly this is ridiculous blush

OP posts:
YappityYapYap · 21/04/2020 19:23

Yes you can opt out and don't be embarrassed about it. Just remember to ask to opt in again when money gets better

nannynick · 22/04/2020 00:20

If your contribution is £125, your employers contribution is likely to be around £75.
Your contribution once tax relief is added is around £156.
So by opting out you are losing £103 ish of free money.

However opting out may be the right thing to do for a short while so that you can:

  1. Build up an emergency fund.
  2. Pay off consumer debt.

With interest rates on bank overdrafts, credit cards and store accounts being around 40%, it is important to pay off debt as quickly as possible.

millymaple · 22/04/2020 01:36

If you’ve just been auto enrolled you may still be able to opt out but will need to hurry up and ask quickly for the opt out form.

Bear in mind though you won’t save £125 it will be less as you’ll be getting tax relief on it

Original poster
Coronacorona · 22/04/2020 07:19

Thanks for the replies. My contribution on my payslip is £125, so I was thinking I’d get around £100 if I opted out.

Long term, I’m not sure there’s any point in taking it up again to be honest. I’ve got virtually no pension pot to add to - tiny amounts in a couple of previous workplace schemes - as I’ve never earned enough. When I look at the projected payout amounts, even allowing for extra over the next ten years, it’s literally pennies!

If I’d started earlier, fair enough, but at my age, I’d rather not sink much needed funds into something that will be worthless. I’m 48 Shock

OP posts:
SciFiScream · 22/04/2020 07:29

It won't be worthless though, especially because the company adds free money to it. When you retire you'll be able to take the amount as a lump sum (if it's small and the rules don't change).

Also if you save for 20 years that would end up being a fairly good pension. Get onto a pension calculator and work it all out.

Fleetheart · 22/04/2020 07:30

If you can possibly keep it in I would do. You’re saying no to free money

Totallycluelessoverhere · 22/04/2020 15:29

At 48 you still have almost 20 years to build a pension pot. Investing £125 per month plus your employers contribution plus the tax relief is a lot of money and will add up to a significant amount until you reach state pension age. Opt out if you really can’t afford it right now but don’t opt out because you think it is a waste of money and won’t add y to much. A couple hundred pounds every month on top of your state pension will make a huge difference in retirement.

FlowerArranger · 22/04/2020 15:35

What are your plans for funding your retirement, if not through a pension? No point burying your head in the sand. You have 20 years to build up a decent fund. Once the current crisis is over, you can start making additional voluntary contributions to boost your pension.

Original poster
Coronacorona · 22/04/2020 20:14

Maybe I should rethink things. I fully admit I’m clueless with pensions and have always viewed them with suspicion tbh. None of my family have ever had pensions, they’ve all invested in property and done very well - but I missed the boat on this and lost through a divorce. No real inheritance to rely on.

I suppose my (loose) plan was to climb up one more rung on the property ladder in a couple of years time, and then get a lodger for extra income. Pay off the mortgage then downsize to release cash. I appreciate this wouldn’t give me the same return as a regular income later in life though.

OP posts:
titchy · 22/04/2020 20:20

20 years x 12 months x £200 (your contribution plus your employers contribution plus the Gov contribution) = £48,000.

Original poster
Coronacorona · 22/04/2020 20:24

Thanks titchy. Employer contribution is just 3% but yes, better than nothing.

OP posts:
titchy · 22/04/2020 20:47

3% of your salary's not too bad - better than nothing and it's free money! Keep the pension!

TiddleTaddleTat · 23/04/2020 22:56

Tempted to do the same and opt out of my pension(been in role since sept). I'm in my 30s but pension is virtually non existent.
But I think I'll hang on for now. If you're saving money elsewhere it doesn't make sense when you consider the employer contribution.

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