Workplace Pension

[Bazile]

Under the new Government initiative , all eligible employees will be enrolled into a workplace pension scheme .

Would it make any sense for a lady age 55 to stay enrolled into a scheme or would it be better to opt out ?

I'm thinking she does not have enough years left until retirement for it be of any appreciable benefit

[boxtops]

Worth it, worth it. This happened to me when I joined the NHS. Bear in mind she'll have a good 10 years before she reaches the new scaled State retirement age, and she may have the opportunity (as I did) to pay to buy extra years on the workplace pension. The employer contributes a sizeable chunk to the pension pot too. I'd go for it.

[Jeza]

The way I see it is more National Insurance via the back door.

[Buenchico]

A woman who is 55 years old now won't qualify for her state pension until the age of 66
https://www.gov.uk/calculate-state-pension
so that means that there would be be 10 (and a bit) years of contributions. So that's far from negligible!

However the Money Advice Service has a tool designed to show whether it's worth someone staying in a workplace pension scheme:
https://www.moneyadviceservice.org.uk/en/tools/workplace-pension-advice-tool

[Old_Geezer]

Surely it is only those many years of contribution if she opts not to retire before the State tells her she should ? If she has other pensions from the past, she may opt to leave early whilst she still has health & mind to enjoy them: in which case does the same advise still hold ?

[factor-fiction]

Each person's circumstances differ so it's always worth checking on the online calculator. Two advantages are that the contributions reduce your tax liability and the employer makes a contribution too. But any scheme that involves employee contributions of around only 2% (plus employer's contribution) for around 10 years is not going to give much of pension- although of course it's better of course than no pension. My worry is people will not realise how low the pension will be.

[Psybbo]

But, Factor couldn't she opt to take the full amount instead of a pension?

[factor-fiction]

Evening Psybbo. Yes, you can opt out but would lose the benefit of tax relief and the employer's contribution. By opting out she'd be no better or worse off than she is now, but by making a modest contribution she'd get tax relief and the employer's supplementary contribution so would be building up some extra pension for later years. The calculator is designed to help people decide but it also depends on current finances and other retirement provisions. In general terms I'd say if you can afford it then it's probably better to contribute than not

[pixie373]

Factor, how about self-employed? Sorry, bazille.

[Psybbo]

No Factor I meant opt in and at the end of the 11 years choose to take out the full amount. Sorry, I should have said choose instead of opt in my previous post.

[Peter Pedant]

|Go for the pension -

being an NHS pensioner, like Bx, the pension scheme Bazile's fren' would join would be less beneficial but there is still the employers contribution which is worth netting.


I agree that it is possible that the fren' contributes and the upshot is that - if she hadnt, she would have got pension credit
and she loses the pension credit up to the amount of her own pension

that is there is no ADDED pension accrued as the gain in one is taken off the credit in the other.

and the draw back is that it is a benefit ( would be a benefit )
and if someone like Farage is in charge it wouldbe better to have some financial independence.

I would go for the pension...

[237SJ]

Factor - I think Psybbo meant could she take the money as a lump sum instead of buying an annuity.

[factor-fiction]

Thanks 237SJ- yes, you're probably right about what Pysbbo meant. Yes, the money could be taken as a lump sum rather than an annuity under the new arrangements.
PP- yes, pension credit was a good reason not to have a small private/company pension, but I understand the new universal pension that's coming in will get rid of that anomoly well before a current 55 year old retires

[factor-fiction]

^anomaly

[Peter Pedant]

Thx FF
*** there are still a few people relying on it !

[wolf63]

I retired and took my workplace pension and lump sum when I was 40. I am glad that I did as it seems to be getting much too complicated.

[Bazile]

Can this new universal pension be transferred from one employer to another ?

i.e . if you lost your job or voluntary resigned from your employer and got a job with a different employer .

[Sipowicz]

I thought the minimum age for drawing a pension was 50? Unless on medical grounds.

[Sipowicz]

Baz, the "universal pension" is the new state pension.

[New Judge]

The normal minimum pension age increased from 50 to 55 from 6 April 2010. Since then, people are normally only allowed to start receiving their pension payments from a registered pension scheme when they are aged 55 or older. There are exceptions on health grounds.

[Sipowicz]

Thanks New Judge, if someone draws a pension at 40, it must be a very low one!