Workplace pensions


#1

I’m wondering if anyone has any experience in this area. I have a workplace pension but want to use the personal pension provider I have chosen.

From what I know you can wait until you leave the job then transfer the pension pot to your own provider or do a partial transfer every so often.

I could obviously opt out but then I’d lose employer contributions.

Has anyone managed to switch from their employers choice to their own?


(Dan Mullen) #2

Not whilst in employment. Best bet is like you say, move the pot once you leave that job.


#3

That’s what I thought, thanks!

The whole pensions system is awful, especially when you have to make a transfer.


#4

I’m in a position where my employment is fairly fluid. I change jobs fairly frequently. I have a Government final salary scheme pension and since I retired from that and auto opt in actually applied to me, it’s been a PITA to be honest. I don’t actually need or want a Government sponsored Workplace Pension, I’m taken care of, a regular monthly pension and I’ve actually qualified for the 35 years NICs for the State Pension, though I was opted out of SERPS, so in order to actually qualify for the ‘full State Pension’, I have to contribute at least another 6 years so I’m not 20 quid a week short.

Anyway, every time I change jobs, I choose to ‘Opt out’ of the Workplace Pension. Yes, I know about all the tax relief stuff, but there’s also this thing about Lifetime Allowance and this is why I opt out.

I agree though, that the whole pension thing can seem to come across as a nightmare and I wish I could just permanently opt out of any future Government sponsored schemes without having to go through the ball ache of being automatically re-enrolled ever 3 years, but sadly I cannot despite the fact my financial future is secured from a pension perspective.


#5

I would love to just manage it all by myself but if you don’t use the workplace pension you don’t get employer contributions.


#6

My work isn’t signed up to this so I guess it doesn’t matter for me :joy: not that I’m worrying about pensions yet at the ripe age of 18


#7

It only applies if you’re over 22 so don’t worry yet!


#8

I was just planning on having a large amount of assets rather than having to have a pension anyways, tbh

Although I still plan on getting a private pension :thinking: at some point. Can’t be bothered with one linked to a workplace since I’m planning to run my own business at some point


(Dan Mullen) #9

@Recchan, the one piece of advice I would give to my eighteen year old self is to start paying into a pension as early as possible. If you ever have the opportunity to get contributions from an employer, take it - it’s free money. Also, due to the magic that is compound interest, you’ll be amazed at how much you can save by the time you retire. It gets much harder the older you get, start now!


#10

A question I’d like to ask you as someone with life experience, how do pensions even work?

If I opt into a private one now such as PensionBee, how do I know if my workplace ever gives me one or not? I’m not interested in state pension since I’ll probbaly have to work until I’m 75-80 to be eligible for it, nor am I planning to stick around in the UK for that long.

However I intend to maintain my UK citizenship and a residence, so I’m fine with having a UK one in pounds to make payments to.


#11

As soon as you start paying tax, start paying in to a pension.


(Dan Mullen) #12

Basically, it’s a savings account you can’t touch until you’re at least 55.

You get tax relief on your pension contributions, so the amount you pay into your pension is deducted from your pay before tax is calculated. For example, a basic rate tax payer putting £100 into their pension will effectively receive £68 less pay but £100 goes into the pot. Your employer will also pay in.

The earlier you start paying into a pension, the longer it has to grow. Traditionally, the pot of money you’ve accumulated when you retire is used to buy an annuity - a guaranteed monthly payment for the rest of your life. It is common to take 25% of the pot as a tax-free lump sum. The remainder is used to buy the annuity. The downside is that if you die, the pension (usually) stops and does not go to your beneficiary. The upside is that you have the peace of mind that you have a guaranteed income.

The government changed the rules a few years ago to give people more control over what happens with their pension pot. A popular option these days is to draw down from your pension fund rather than take an annuity. The pros are that your fund continues to be invested and your pot can continue to grow. You simply withdraw from your pension whenever you like. If you die, the full value of your pension pot goes to your nominated beneficiary. The downside is that it is possible to run out of money, particularly if you live for a long time after retiring. With this option, you also get 25% of the pot tax free.