Sister not paying into pension

[LololaLo2012]

I found out today that my younger sister opted out of her work pension.

I questioned her as did my dad - think that half the problem. She was super shitty with me and told me to F off. I tried not to be like I’m telling you this… my dad actually wanted me to speak to her on a sibling level to get her to understand. It actually a fairly important, yet really boring fact of life.

I get that she young (25) first job proper job after uni and all that but I just can’t seem to get through to her the importance (well in my mind anyway!)

Her salary is a decent one and she lives up north house share renting (slightly cheaper) parents are supportive when needed so it’s not like that extra £00 would make so much difference.

I guess she has plenty of time to start paying in, just seems kind of pointless not too.
How do you get through to a 25 year old these days (I’m only 35, but I’m stuck!) or maybe I just leave her to get on with it!

I'm surprised you are getting so much flack. If anyone is in the wrong, it's your dad, for asking you to talk to her when he didn't manage to convince her. Maybe don't play that game again. But I think she will likely be glad you raised it later on. I am very conscious my pension pot isn't wonderful (because I spent ages studying, not because I ever opted out), and I do wish someone had sat me down and explained some of it to me earlier. Obviously, all the information is out there, but you can't know what you don't know.

I wouldn't say anything else now, but I think a family culture of being open about money is actually really healthy.

Yeah I’m wish someone had told me when I was in my 20s, how important a pension was. Or getting on the property ladder. I may not have listened / afforded either but at least I would have had some awareness.

Glad you and your sister haven’t fallen out OP!

I think it is good you have raised it. She might have reacted badly in the moment, but in future, once her situation has changed, she might quietly opt back in.

She probably reacted badly because deep down she knows you are right.

That said, you don't need to bring it up again.

well I think she’s being a bit of an idiot- especially as 25 is pretty old to be having a first job. Even with a 4 year degree I was in a grad scheme at 22 (paying into a pension). The early payments will be some of the most valuable as they have time to compound. And… if she feels shecan’t afford it now, it won’t get any easier to start.

but, now she’s told you to fuck off, you have t step away even if she’s doing something she may later regret.

Tell her that even £20 a month is better than nothing

I'm now retired; at 21 I was paying into the local government scheme. I had no choice, it was a requirement of the job. Later on Mrs Thatcher ( I think!) decided that the requirement should be scrapped. Some of my colleagues opted out because it seemed like a huge sum when finances were tight.I now have a reasonable pension because I paid in all my working life. They now regret not joining .You have done your bit, given good advice and I would suggest leaving it now. If she asks in future show her this comment. When we are young we can't always can't imagine being old and how decisions impact on life, sometimes biting the bullet and being sensible is the only way.

You haven’t said what kind of scheme it is.
If it’s a DB CARE scheme, then she’s likely to be making a bad decision. If it is, did you check she understands it or did you and your dad just throw some unconvincing “pension good” blanket statements around?

If it’s DC, well - who is to say you’re right? I’m very pro pension saving (company DB, AVCs, 2 separate private DCs…) but - other priorities aren’t always wrong. Saving for a house for example. And even just spending your money having fun. There’s a balance to be struck. Using all your spare cash for fun in your 20s, and then saving huge amounts when you’re higher paid and no longer paying nursery fees in your 40s is still a valid model!

Pensions are an absolute scam - I’ve opted out because the amount they take per month is worth something useful, whereas the amount I’ll get back after I retire (by their calculations) will be a pittance.

Honestly, unless you’re able to put in thousands a month they simply aren’t worth it in the long term.

Oh, and you can’t withdraw before 55, and due to inflation and fees they’ll be worth f*ck all anyway.

“Using all your spare cash for fun in your 20s, and then saving huge amounts when you’re higher paid and no longer paying nursery fees in your 40s is still a valid model!”

except you’re potentially missing out on 20 years of investment growth and compounding Which means you’d have to pay far more at 40 than you’d have otherwise needed to.

@Tukmgru it sounds like you might have access to a defined benefit scheme. I’d really think very carefully about abandoning that if that’s the case. Why do you think it’s a scam?

Sooner or later your sister will get caught out with her lies and or her partner someone will suss this out,
Somewhere down the line

COL increases have been fucking brutal so I'm taking a break from paying into my pension this year. I'll start back up again next year. I wish it wasn't a choice I had to make, but that's where I'm at.

Old post I know but heyho.

Some people really have no idea.
We all get old (happens quicker than we expect) and before you know it you are relying on that pension that you said isn't worth anything or saving for.

Luckily I was enrolled automatically into a pension when I was 19 but would have anyway as my (wise) old dad advised me to enroll as soon as I had the chance. Private company (no Gov backed scheme for me) but I saved (minimum at first but increased my contributions as the years went by) and now at 57 I am (early) retired and thanking my (late) dad for that sage advice.

It's never too late to start paying into a scheme but equally, it is never too early as you never know what the future will bring. It is your future and no-one is going to help you more than yourself

Your intentions were good. When I was 25 I would have said exactly the same. However, of course, we learn as we get older. If someone had said to me at 25 (I am pulling figures out of the air here):

You can start putting away a small amount into a pension which your employer will have to double and when you retire your disposable income after bills will be £1,500 a month

OR

You can not bother and have a state pension and live off £500 a month when you get to 67.

I would have done the right thing if confronted with some shocking numbers.

Or, I would've just carried on partying and doing what I wanted. It's hard to say.

Either way, I would've taken it far more seriously than 'you really ought to be paying into a private pension for four decades down the line', it's not something that bothers you much at that age.

I hope this somewhat helps. Maybe leave it a few years to have that conversation with her again.