work pension advice

[Leen]

hello good day guys back again....been working for 3 weeks now and it's been good....my company is offering a work pension scheme but im hesitant to join coz we just plan to live here for 10 years,my question is,is it worth getting one for that short period of time or save the money in the ISA account?the company and me will put 2% each of my salary for that pension...thanx again for all the help:xxgrinning--00xx3::smile:

[lastlid]

hello good day guys back again....been working for 3 weeks now and it's been good....my company is offering a work pension scheme but im hesitant to join coz we just plan to live here for 10 years,my question is,is it worth getting one for that short period of time or save the money in the ISA account?the company and me will put 2% each of my salary for that pension...thanx again for all the help:xxgrinning--00xx3::smile:

I would say yes as your company are contributing. Unless they agree to put it into an ISA - have they agreed to do that as an alternative?. Also you should benefit for tax relief on the contributions, as I recall. I am not certain if you would get the tax relief on the ISA.

I have just started a new pension plan myself. :xxgrinning--00xx3:

When the pension plan pays out you can have it paid into any account of your choosing so you don't have to be in the UK to collect it.

Also its a good way, if the wife is incorporated into it, for the hubby to leave the wife an income when he eventually passes away.

When I started my new plan I discussed the plan and its suitability, with the prospective pension provider, to find out if it was indeed suitable for me.

[Terpe]

It's quite difficult to give any meaningful advice based on the information you give.

If you're lucky you'll reach a point in your life when you either can't or don't want to work. That's the time you'll need some savings.
Even in todays economic climate a good pension scheme is still one of the most efficient and secure ways to build up those 'savings'

If your employer matches your personal contributions to a pension scheme and it's a final salary scheme then chances are you will earn a far higher return on money invested this way than you can possibly hope to earn elsewhere (including an ISA)
The contributions are taken from pay before tax so in principle that's already a tax break on the total amount.

But...given you're thinking about a 10 year membership it really depends on the detailed benefits of the specific final salary scheme, your current age and the normal retirementment age of the scheme.

That's the positive side.

Now for the not so good.
If it's not a final salary scheme you really need to delve much deeper into the specific benefits and restrictions of the individual scheme.

Contributions of 2% from employee and 2% from employer are quite low for short membership and the total pension fund that would be accrued may not be sufficient without good inflation proof indexing.

Don't expect to be able to get any money before reaching 65 (or normal retiring age)
Minimum age for withdrawal has been raised before and will probably get raised again

I suggest you do some research on the scheme details before making a decision

[lastlid]

The minimum age for receiving an annuity pension from a personal pension plan in the UK is 55. Or at least it was 2 years ago. I think it still is that.

I have 3 of these, my employer contributes / contributed. I also contribute.

Personal Pension Plans

"A personal pension plan (PPP) is a type of defined contribution arrangement.

It is essentially an investment policy that provides an income in retirement. It is available to any UK resident who is under 75 years of age and can be bought from insurance companies, high street banks, investment organisations and some retailers (i.e. supermarkets and high street shops).

The policyholder contributes to the plan, the money is invested and a fund is built up. The amount of pension payable when the policyholder retires is dependent upon:

the amount of money paid into the scheme;
how well the investment funds perform; and
the 'annuity rate' at the date of retirement. An annuity rate is the factor used to convert the 'pot of money' into a pension.

The policyholder can retire at any age after 55 (subject to plan restrictions). When the policyholder does retire, they can generally take up to 25% of the value of their fund as a tax-free lump sum. The remainder of the fund can be used to buy an annuity with an insurance company."

http://www.pensionsadvisoryservice.org.uk/personal-and-stakeholder-pensions/personal-pension-plans

[stevewool]

yes, yes , yes, as the others have said before me, its tax free and what you pay in the company pays in too, but think of this too,you have plans to leave this country in 10 years time, what would happen if something happened to those plans you then could say i am stopping here for longer and before you know it you are at the age where you can draw a good pension for yourself,just a thought

[bigmarco]

It's quite difficult to give any meaningful advice based on the information you give.

If you're lucky you'll reach a point in your life when you either can't or don't want to work. That's the time you'll need some savings.
Even in todays economic climate a good pension scheme is still one of the most efficient and secure ways to build up those 'savings'

If your employer matches your personal contributions to a pension scheme and it's a final salary scheme then chances are you will earn a far higher return on money invested this way than you can possibly hope to earn elsewhere (including an ISA)
The contributions are taken from pay before tax so in principle that's already a tax break on the total amount.

But...given you're thinking about a 10 year membership it really depends on the detailed benefits of the specific final salary scheme, your current age and the normal retirementment age of the scheme.

That's the positive side.

Now for the not so good.
If it's not a final salary scheme you really need to delve much deeper into the specific benefits and restrictions of the individual scheme.

Contributions of 2% from employee and 2% from employer are quite low for short membership and the total pension fund that would be accrued may not be sufficient without good inflation proof indexing.

Don't expect to be able to get any money before reaching 65 (or normal retiring age)
Minimum age for withdrawal has been raised before and will probably get raised again

I suggest you do some research on the scheme details before making a decision

Excellent post Terpe. I agree with your concerns about 2% contributions from both employee and employer for a relatively short term membership.

[stevewool]

5% em pays in to her pension the company pays in 13% cant go wrong with that

[lastlid]

5% em pays in to her pension the company pays in 13% cant go wrong with that

That's quite a nice chunk. I was speaking to a pension adviser the other week and he was saying that company contributions were so often a lot lower than 10%.

Of course it does depend on the salary and not just the percentage as to how much goes into the pot.

[stevewool]

indeed it is a nice chunk, that is why i told Ems to go for it, plus just in case anything does happen to me before our plans, she then has the choice to stay here and work then claim her pension which should be a nice pot to help towards her own future

[lastlid]

indeed it is a nice chunk, that is why i told Ems to go for it, plus just in case anything does happen to me before our plans, she then has the choice to stay here and work then claim her pension which should be a nice pot to help towards her own future

Mr Sensible eh! :xxgrinning--00xx3:

[bigmarco]

5% em pays in to her pension the company pays in 13% cant go wrong with that

That's about the same as mine Steve. Good schemes.

[stevewool]

That's about the same as mine Steve. Good schemes.

with those figures i think you are a fool not paying into the scheme, i wish i had something like that with my pension

[Leen]

hi again guys,the pension plan will be managed by Standard life and i have 4 choices or if i dont want they can put it in default mode for "10 years lifestyle profile".i know 2% is not that much but i can voluntary pay more if i wanted to but im hesitant to pay more when our intention to live here is for a short term only....

[Michael Parnham]

Steves right, never refuse to join a work pension scheme, it's the best thing you can do. I only wish that i had took out a private pension when I was working!!