2009 Omlet cube and run for sale

[Chickendoodle]

I have been a good girl all my working life (34 years) and have always paid into a pension. My first 10 years were spent working for a big company so I have a company pension sitting there which is good.

 

I have paid a good amount every month without fail for 24 years into a private pension and I can't work out if I am just throwing money down the drain keeping on paying in during this economic climate. I know I get tax relief on the payments which boosts the amount and I have it in a very low risk scheme. Looking at the likely pension I will get the amount seems paltry - much less than the company pension which I only built up over 10 years (I know it is based on their final salary scheme which is why it is better but still!)

 

What are others out there in Omlet land doing? We have small amount owing on our mortgage and I am wondering if I would be better stopping my pension contributions and reducing the mortgage by the pension amount?

 

Alternativey it would give me pleasure increasing my shoe collection

[Willow]

I hate the whole pension thing. My main pension was going to be my company one but the company went under and turned out they had been allowed to make no contributions for years so it is dreadfully underfunded. Over 18mths later still no closer to understanding what I'll get if anything.

 

I have a few years in another company pension, some in the Equitable and a little in a private pension and we've opted for paying off mortgage quicker rather than increase pension payments as paying into pensions seems to have terrible odds. (OH has more than me in Equitable and less than me in the company pension fund that went bust), we both did Equitable through schemes at different companies.

[Olly]

It's a bit of a minefield, and I would strongly recommend getting independent financial advice if you're considering a major step. A lot depends on what your pension is worth, when you're going to draw it etc, no two cases are alike.

[Space Chick]

I used to be a financial adviser specialising in pensions but have been out of that "game" for a number of years.

 

The tax relief is a big boost to your payments... And advisers would always say it is worth it. However, there are number of other things that need considering when you take it:

 

1. You need to be 55 under current rules (although this could change in the future, it used to be 50)

2. You can only take 25% as a lump sum.. The rest has to be used for income

3. The income you are at the mercy of annuity rates, which in times of low interest rates are pants.

 

I know a number of people have looked at other options... Isas for example, as there are not restrictions on taking the cash, you can do it as and when you like, but your fund is still tax free.

 

I have recently bought solar panels, and the money I make from the governments feed in tariff will be going into an ISA for me to boost my retirement savings.

 

Whilst I was always an advocate and firm believer in pensions when I was advising... I have become more cynical as I have got older, and so with personal pensions (less so with companies as you get the benefit of the company payment too) does the risk of the governments changing goalposts on how you can take it outweigh the benefits of the tax relief.... My personal opinion is, I'm not sure they are such a good thing anymore.

 

Hope this has helped

[sadietoo]

Just wanted to add if you are a higher rate taxpayer you will probably get 40% tax relief on your contributions but as Space Chick rightly pointed out the government keeps moving the goalposts with regard to relief so you need to check. and do consult an IFA who will check out your tax position and not just sell you a policy......also don't forget that pensions are taxable income when they are drawn, and so you will pay 20/40% /(or even 50% if you are lucky !) tax on anything you draw from your pension depending on your tax bracket and other income at the time

[Chickendoodle]

Unfortunately I am not a higher rate taxpayer

 

It's so difficult to know what to do. I am 52 so have some years to go before I can take anything anyway. I know that we can't predict the future of the economy but the world doesn't seem over stable financially to say the least. I am thinking that maybe I will freeze what I have (assuming I can do that) because paying in for the next 8 years might not increase the pension by very much at all. It feels like I might pay in another £10,000 for an extra £10 a month on my pension!

 

I am very very lucky in that my OH was given early retirement on a final salary pension. Goodness knows how much worry it would be if we were both paying into a private pension.

 

Thanks for your thoughts