Pension Scheme

[Octavius]

I am 33 in f/t employment but I don't have a pension.  My company (a plc) has a company pension but it is reported as being very poor.  To have an income of �10,000 per year in 32 years time I am told I need to put at least �500/month into a fund.  This is obviously pointless as 1) �10k will be relatively worthless in 2036 and 2)  �500 a month now is too much at the moment anyway!  What should I do?  

[ewand]

I'd like to help out, but would need more information? For example..... How is the pension being held? Is it a fund? An ISA etc.? Is the contribution taken out of your taxable allowance? Are there any other benefits, because the way you describe it, it doesn't seem like a pension at all!!

[Octavius]

I believe (not knowing too much about these things) that they make a % contribution which I have to match (or increase to build up fund) from my own salary.  I also believe that the only benefit is that it is portable.

[ewand]

Generally, the pension fund of a large PLC will be decent, though some have been hit by difficulties over the last few years due to slow growth by a number of unit fund portfolios, in which a lot of pension savings are held. I would always recommend contributing towards a pension, but an alternative you could try, if you have found out all of the relevant pension information and still not convinced, is to contribute as much as you can to an ISA yourself. However, this won't receive the company portion that your pension will. If your pension is taken out of your taxable allowance, it is likely you wouldn't be paying any way near �500 in overall contributions, so check this out too. Sorry if this is a bit vague, but I hope it helps you out a bit......

[Octavius]

Thanks ewand, I have an ISA already, just peer pressure to have a pension fund started getting me worried.

[ewand]

No probs.....also, think about rejigging your savings so you might be able to incorporate it.....but only if it seems worth it. Get all the documents you can and then go to your bank and discuss with a financial advisor.....if you can't get free advice, then change banks, or try another!

[Hammer]

All other things being equal, it is always worthwhile joining your company scheme if the company are going to contribute as well. Think long and hard before passing up their offer to contribute. Get every penny you can out of them, because they don't offer it often!

[Miss Zippy]

Generally speaking, joining an occupational pension where your employer contributes is the preferred pension savings option. Don't forget too that your contributions attract tax relief so for every �1 you put in, the govt puts in 40p if you're a higher rate tax payer or 22p if basic rate tax payer.  The �500 you mention would include the tax relief and your employer contributions so you may only actually need to pay in yourself around, say, �200 yourself (if you're higher rate anyway)? I sympathise, me and my friends are in the same position - we want to spend our money on fast cars and shoes, not pensions :0)  

[Bangkok]

Firstly, you need something (although anything is not the answer).  See an Independant Financial advisor first.  If they are no use, report them to the governing body and try another.  The contributions made by your employer make a huge difference compared to a private pension, but the delights of compound interest mean that you should assess just how bad is the company scheme.  Was it a disgruntled collegue or a professional advisor that reported the poorness of the scheme?  Bottom line, start something soon, pay as much as you can afford (gas bills when you are 70, or that ninth pint on a Friday?), and accept that the state will not (and can not) keep you in the style to which you have become accustomed. 

[Peter Pedant]

Octavius

and also Miss Zippy

You need a pension. The advice you ahve been given in this thread is good. Remember that the occ pension, the employer will contribure and if you take a pension out elsewhere he wont.

so it looks like the company pension.

Under �30 000 I think you can also start a stakeholder pension (limit is i think 31 000)

You definitely need advice - and Miss Zippy it sounds as though you need your feet tying together, because if you dont get pensions NOW when you are 60, you will both STARVE!

[Miss Zippy]

Peter Pedant - don't worry I have a pension!!  What I said was tongue in cheek :0)  You're right though, tying my feet together might help with the shoe problem!