Pensions - is it worth it? Questions

[no49]

So this is very much a genuine thread. I have found it you try to ask about this on MN there are lots of sarcastic responses and I’m not here to goad but I genuinely think there’s some things I’m missing or not fully understanding.

So from Googling I can see that the basic state pension is now £230 a week. I am 44, so I can claim this from 2048, when I am 68. I realise I may wish to stop working before this and I do have a pension I’ve paid into since I started work although this will have reduced as I’m part time now.

But, £230 seems reasonable to live on, especially working on the assumption that things like the mortgage is paid off. (I do understand that doesn’t apply to everyone.)

What I’m asking about is the advice on here about not forgetting your pension, to avoid part time work or make it as close to full time as you can for as short a time as you can because of your pension, pay extra into your pension.

To me that does seem risky because if you die before you can get it, or only a couple of years into retirement, it’s gone. Whereas if you invest your savings into ISAs or things of value like property or similar, it can go to your spouse or children if you do die.

I know that sounds very morbid but it isn’t just that; I suppose I don’t see the point of exhausting myself at 44 to be wealthy at 64, especially as for all I know I might never reach 64. But the advice here is the opposite of that so if anyone could say if I’m missing something to at would be good. Otherwise it might just be differences in opinions which is obviously fine too.

I agree with the PP who said the issue will be the gap between when you want to stop working and state retirement age.

I’m 7 years away from state pension and I really can’t see me working for that much longer. Or at least, working full time in my current job.

My main private pension will be much reduced if I take it early.

I’m going to gradually reduce my hours in my current job and if that is still too much I’ll look at changing jobs for something less stressful.

In DB schemes there is usually a death grant payable if you die within a few years of starting to draw the pension. A quick Google says it’s 5 years for the teachers pension scheme, so you would be guaranteed 5 years worth of the pension - they deduct what you may have already received and give the rest to your beneficiaries.

You really need to read up on this, check your current projected pension and see if you’re happy with that. If you are then great, don’t pay any extra in. But it feels from your posts that you don’t know enough about the scheme you are in.

But that’s where a private pension comes in - you can take that from age 55, whereas the state pension doesn’t start til late 60s. By the time my son retires the state pension age will be in the 80s. Private income is absolutely vital

The rules are not to be trusted in the long term. It’s madness to assume the rules governing access to private pensions will remain the same for the next 30/40/50 years. An individuals control over at least a generous portion of their retirement funds will be vital IMO.
I say this as someone who has set up a pension for her 4 year old. I’m not disputing the tax efficiency or value of a private pension fund. My argument is simply that it cannot be the be all and end all of retirement planning because human biology is what it is, and governments are what they are.

So if you have a teacher pension this is a defined benefit pension . In other words when you retire you will get that amount of money, index linked to inflation for the rest of your life. If you die within, I think, five years of retirement there is something paid to beneficiaries if I understand correctly. But there is not a pension pot to leave to them as they would be with a defined contribution pension.

Have you been on the teacher pension website to look at your projection? Depending on your service history, you will probably be in the career average scheme which isn't as good as the final salary scheme that teachers used to be in but it's still a good scheme.

There is an incredibly useful page on Facebook called Teachers Pension – a teacher to teacher UK. I have learnt a lot about the Teachers Pension scheme through being on there. If you look on YouTube for videos by somebody called David Fountain, they are also really good at explaining the teacher pension scheme.

@Snowdropsarelovely thank you so much for a really informative and helpful reply. I really do appreciate the time it took you to reply to me.