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18-05-2017, 11:29 AM
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works pension query

Talking to a 58 yr old working woman , works for large supermarket who's been opted into the works pension and doesn't know if it's worth staying in .

She is to put £35 a week in and they will pay 17% on top . She gets her state pension in 8 years which is probably only going to be a percentage of the full one as she works 4 days a week part time .

We wondered if it would be better to save in a long term ISA instead . The works pension says she will have accumulated a total amount of around £8000 at the completion of working life .

The lady has no savings , lives with her mum. They both rent a small flat . Mum is on guaranteed pension credit and gets help with her rent etc .

Do you think it's sometimes best to opt out . After all if she has a small state pension she would get some benefits and help when retired , yet if the small amount of working pension she receives takes her over the state pension she will get no help with rent etc .

Just wonder what you people think ?

Thankyou
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18-05-2017, 02:52 PM
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Re: works pension query

I really think she needs to speak to a proper financial adviser. Someone who would know the benefits or pitfalls of whatever she chooses to do.
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18-05-2017, 03:00 PM
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Re: works pension query

At 58 it personally seems pointless to me to give your hard earned money away to someone else to play the stock markets with. A pension with significant company contribution is usually worth looking at when you are younger but we are talking up to 100% not a lousy 17%. i.e for every £1 you put in, you want your employer to also put in £1 or as close to that as possible. 17p is pathetic imo.

There are tax implications of course but even pension money will eventually be taxed and you'll also have to pay for an "annuity" to get your money back out. Overall I see pensions as one of the greatest scams of the 20th century along with endowment mortgages and PPI.

Before I volunatrily gave up the 9 to 5 career I was in a company pension. I realised that given the world financial situation I was unlikely to ever see that money again and that whatever money I did see would be a paltry amount. Hence I pulled myself OUT of the company pension scheme some years before I left my career. I transferred the entirety of that pension into my own personal SIPP, which means it's like having a bank account. I can see the £000s in that account and I am free to use it to buy stocks and shares at any time I choose. So I am in control and any and all profits made from the shares go to me, not to some pension trustees.

Since your friend is 58, and since the employer is only offering 17%, I'd be inclined to put money into her own SIPP and to invest it in good safe stocks that will generate modest profits over time.
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18-05-2017, 03:01 PM
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Re: works pension query

Originally Posted by Jazzi ->
I really think she needs to speak to a proper financial adviser.
Unfortunately most FAs are far from independent and have vested interests in steering you toward specific financial products.
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18-05-2017, 03:03 PM
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Re: works pension query

How much is she likely to draw from this extra pension? Will it be sufficient to live on when combined with her state pension? I'm assuming that this pension will be paid for her lifetime so may be a better option than putting it into an ISA with their pathetic interest rates - that £35 pw (assuming it is paid in religiously) invested in an ISA won't accumulate that much and the temptation will be to draw it out in one lump sum.

Any more advice?
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18-05-2017, 03:05 PM
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Re: works pension query

Hi

To put it another way. your friend is earning 17% on every £, much better than any ISA.

Pension Rules have changed, you can now take a lot out tax free.
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18-05-2017, 03:55 PM
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Re: works pension query

Thankyou all , I'll pass on the advice to her . By the way i made a mistake the payment is £35 per month not a week . It's all she can afford .
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18-05-2017, 04:47 PM
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Re: works pension query

"By the way i made a mistake the payment is £35 per month not a week . It's all she can afford ."

Not really a lot in the scheme of things. When I got made redundant in 1994 and set up on my own as self employed I started putting away £40 into a pension scheme (contrary to what people think the self-employed aren't all millionaires). I got my pension forecast quite recently - how much I had paid in and how much I was likely to receive per month. Those payments when invested by the pension company are now worth £21000, bugger all in the scheme of things, and entitles me to a whopping £588 per year. Riches beyond the dream of avarice.

Sadly, the £8000 your friend is projected to get isn't a lot in the scheme of things.
 

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