ETS:
Isn’t that taxable @20% though? (on any lump sum you take out) which is 40% of the ‘‘free’’ money you got from employer contributions back into the void. Currently I pay 4% in vs 2.5% from the company so if I were to pay tax on a lump sum that would only leave me with .5% of the employers’ contributed money and the all the rest would be my own money that I’ve put in.
ETS, depending on how far you are from retirement, normally a pension pot would be expected to grow over time, with a compound interest effect.
Over 20 years a £10,000 pension pot growing at 5%, will be worth around £26.5k, without paying anything more in.
If you pay in £3000 a year yourself over that time it may be worth £126k.
If you pay in £5000, consisting of the £3000, plus another £2000 from your employer, a year, it would be worth £192k.
Anything you pay in yourself is not taxed, so that is another pay rise, albeit you need to think long-term because you aren’t going to see the money for some time.
So, say the extra £2000 is offered to you by your employer and if you opt-out, you don’t get any of it, you would be reducing your eventual pension by £66k. That would mean a lower lump sum and a lower annuity. If and when it comes to your time to retire, if you were offered a take it or leave it £66k, would you take it?
Noremac:
So, say the extra £2000 is offered to you by your employer and if you opt-out, you don’t get any of it, you would be reducing your eventual pension by £66k. That would mean a lower lump sum and a lower annuity. If and when it comes to your time to retire, if you were offered a take it or leave it £66k, would you take it?
Seeing how inflation has been in the last 2 years (worst in 40+ years?) and no intention of slowing down I wonder the people who take out a small (private) pension today say £200 per month how much is that 200 going to buy 5 or 10 years from now since it’s fixed once you start receiving it and no further indexation or increase (right?)
ETS:
Seeing how inflation has been in the last 2 years (worst in 40+ years?) and no intention of slowing down I wonder the people who take out a small (private) pension today say £200 per month how much is that 200 going to buy 5 or 10 years from now since it’s fixed once you start receiving it and no further indexation or increase (right?)
ETS, if you elect to retain your income, ie the £200, it would only be £160 in your pocket as a basic rate tax payer or £120 as a higher rate tax payer. If you have a salary sacrifice scheme, you can also save a bit of National Insurance I believe (as long as after the deduction, you meet national minimum wage). If that is £35 a month or whatever, I’ll take it thank you very much.
Over the piece, investments can go up and down, but a medium risk fund is likely to beat inflation over a long enough period of time. If you are close to retirement the advice is to take less risky investments to avoid losses I believe.
In terms of annuities, there will be a multitude to choose from, some where your payment will stay the same and others that increase either by a set amount or with inflation.
Many may have overlooked the obvious, that it is many people who work for agencies do so in the short term. So any pension contributions for most people will be minimal.
peirre:
Many may have overlooked the obvious, that it is many people who work for agencies do so in the short term. So any pension contributions for most people will be minimal.
Agree. Not just agencies though. I tend to flit about between permanent employers - ie once I get bored I’ll move on and try something else but then I live in an area where choice is plentiful and understand its not like that in other areas.
The key then is to allows transfer your pensions into the active one. In all of my jobs previously with all the little pension pots I’ve accumulated I’ve actually onky got one pot and I just keep rolling it. Obviously thing to check there is transfer fees but I’ve not come across any as yet and my only exception is the final salary pension I built up at Royal Mail which is not worth transferring as I’d lose so much.
Almost brings a case for an individual having a pension account that stays with you for life and can be assimilated with workplace pensions so that everything is in one place.
Also Winseer if you take your tinfoil hat off you might have seen several articles these past few days suggesting that energy prices are due to drop when the next price cap is announced at the end of the month and also that it’s likely some competition between suppliers will start to return allowing customers to switch again etc etc.
But the real kicker is the standing charge as that’s the cost that can’t be avoided but has gone up loads. Anyone can curb gas and electricity usage but you can avoid the standing charge.
As for inflation again you don’t need a sniff of it coming down, it’s going to come down regardless - its simple maths. People will of course be simple and ask “why aren’t prices falling if inflation is dropping” but they forget its price growth versus prices last year so the difference won’t be as big. This equals lower inflation (but still means prices are rising, just not as fast). Deflation is where prices drop.
The issue there is that our current government are in the process of gaslighting the simpletons by claiming theyre going to halve inflation when the reality is that even if we had big bird from sesame Street in charge the inflation rate would fall anyway wiymthout doing much at all.
peirre:
Many may have overlooked the obvious, that it is many people who work for agencies do so in the short term. So any pension contributions for most people will be minimal.
Most agencies use either Peoples Pension or NEST, they’re the two most common workplace pension schemes that companies use in the UK. So when you change agency and the agency register your details with those providers they will automatically be paid into the existing pension account you have at Peoples Pension or NEST.