Pensions

[redcard]

My company will pay in double my contribution. Apart from the obvious 'investments can go down as well as up' is there any reason not to have one?

I can't see any downside, particularly as my company is basically giving me a second pay rise, but my previous boss (an FD) was dead against them.

 

[JoeyB]

What percentage will they match up to for monthly contributions?

Whats the annual fee percentage?

 

[redcard]

What percentage will they match up to for monthly contributions?

Whats the annual fee percentage?

Think they contribute up to 5% of annual salary. This starts at 1% and rises each year.

Not sure about management fee - didn't see mention of it

 

[Paulus]

Normally the answer would be yes. If your company is going to pay in double your contributions then I think you would be silly not to take them up on the offer. Would your contribution be taken from your salary before income tax is paid, therefore making it even more of a benefit. Pay as much as you can afford is my advice.

 

[Lee_M]

If you can afford it, put as much as you can in - you get it all tax free anyway - if its taken after tax you can claim it back in your tax return.

Only downside is you have to buy an annuity in the end (you never know, that 'might' change), but other than that it is a tax free savings plan where someone gives you 5% for nothing

Dont stint

 

[redcard]

Normally the answer would be yes. If your company is going to pay in double your contributions then I think you would be silly not to take them up on the offer. Would your contribution be taken from your salary before income tax is paid, therefore making it even more of a benefit. Pay as much as you can afford is my advice.

Yes, I believe it's salary sacrifice, but need to confirm

 

[yello]

Normally the answer would be yes. If your company is going to pay in double your contributions then I think you would be silly not to take them up on the offer. Would your contribution be taken from your salary before income tax is paid, therefore making it even more of a benefit. Pay as much as you can afford is my advice.

Agreed, my gut reaction would be to bite their hands off. It's a darned good benefit, if it's a decent and well managed plan.

Do a bit of research first. Who manages the fund? Are they a reputable company? Talk to colleagues, suss out their opinion, see how many have or haven't joined the plan. My assumption and default position would be to join but check it out for any reasons not to.

 

[threebikesmcginty]

My bunch do this, match up to 6%, seems OK to me - when ever a pension bod talks to me about it though my eyes glaze over and I fall asleep within 30 seconds so I never know exactly what the benefits are.

 

[accountantpete]

If you are paying higher rate tax and are getting Child Benefit with earnings over £50k you would be mad not to.

Otherwise - these days the returns (after charges) seem to approximate what you put in so it's a glorified savings scheme.

 

[Pat "5mph"]

If you are paying higher rate tax and are getting Child Benefit with earnings over £50k you would be mad not to.

Otherwise - these days the returns (after charges) seem to approximate what you put in so it's a glorified savings scheme.

Also, I understand that if you die before retirement you can't leave all of your pension pot in heredity?

 

[Poacher]

As advised above, read the small print. However, on the face of it I can't see any good reason not to put in as much as you can possibly afford.

 

[ASC1951]

Also, I understand that if you die before retirement you can't leave all of your pension pot in heredity?

I'm not sure what you mean by "leave all of your pension pot in heredity".

If you die before retirement you can leave your pension pot by Will (or according to the intestacy rules, if you haven't made a Will) in the normal way and it will be liable to inheritance tax in the normal way.

However, you can write your pension policy 'in trust' and it is usual to do so. If you have done that:-
a) it is no longer part of your estate, so it is free from inheritance tax, but
b) because it is in trust it is no longer your property to give away by Will but will be transferred by the fund trustees according to your previous written wishes. [Writing a pension in trust is just a matter of filling in the pension fund's form and usually free.]
NB The rules about what happens to the undrawn part of your pension if you die after starting to draw it are not the same.

It's a pity that people's eyes glaze over about pensions, because it really is important stuff. And if they did give it the attention it deserves, the industry would never be able to get away with the outrageous charges and miserable performance that generally applies.

 

[Oxo]

My company will pay in double my contribution. Apart from the obvious 'investments can go down as well as up' is there any reason not to have one?

I can't see any downside, particularly as my company is basically giving me a second pay rise, but my previous boss (an FD) was dead against them.

Look carefully at your options, what the benefits are, what you can afford etc. but whatever you do don't ignore the whole pension issue and hope it will go away. As someone now living on a pension I can only say that what you decide now will greatly affect the quality of life you and your family will enjoy in the future.

 

[400bhp]

If you are paying higher rate tax and are getting Child Benefit with earnings over £50k you would be mad not to.

Otherwise - these days the returns (after charges) seem to approximate what you put in so it's a glorified savings scheme.

Sorry Pete, but if you're an accountant, that's pretty poor advice.

 

[ASC1951]

Sorry Pete, but if you're an accountant, that's pretty poor advice.

Why, specifically?

About a third of UK private pension funds have returned worse than inflation over the last ten years, and nearly as many have only beaten it by a percent or so. For the standard rate taxpayer, the average such fund is a pretty unimpressive investment; albeit better than no savings - which is pretty much what Pete is saying.