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28th March 2006, 10:51 AM
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28th March 2006, 11:10 AM
Quote:quote:Originally posted by TobyNow I am not a pensions specialist, but I thought every company with 6 or more staff had to provide a stakeholder pension?
Whilst a company must provide employees with access to a stakeholder pensions scheme;
1) There is no compulsion for employees to join that or any other stakeholder scheme
2) There is no requirement for the employer to make contributions on behalf of their employees.
'Providing access' to a scheme in most cases is little more than supplying the address of a pension supplier.
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28th March 2006, 12:47 PM
The contract I had with my last employer stated they could offer a stakeholder pension scheme but that it was the responsbility of the employee to notify that they wished to join. Seems fair enough but they didn't mention whether or not they will be making contributions, but somehow I doubt it.
Pensions are really only worth paying in to if you intend to keep going with the same pension scheme for a long period or if your pension is flexible and can be 'moved' around. It also depens on whether or not you can afford to make decent amounts of personal contributions. This is the same whether you pay into an employer's stakeholder pension or a personal stakeholder pension or other private pension plan.
You need to be careful about your decisions even if your employer is offering a pension plan. Staying in the Second State Pension (formely SERPS), rather than contracting out, may be a much better option for many people, particularly if you can't afford to contribute very much to any of the private schemes. Also, although you don't get tax relief on your contributions, paying into savings schemes they may offer a better return (and lower risk) in the long run and are usually more flexible for people who are in and out of work or change employers frequently.
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28th March 2006, 05:55 PM
Stakeholder pensions are nothing more than a get-out clause for the govt. It means private pension, and is no more secure than any other private pension.
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28th March 2006, 07:05 PM
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28th March 2006, 07:07 PM
It is a legal requirement of companies to provide a stakeholder pension.
However, there are many ways out of it... One archaeology company I know of (verging into the midlands and mentioned on BAJR before) extradited themselves from the pension debate by issuing a memo to all staff stating that a stakeholder pension was available, giving a number for staff to call - in their own time - but also suggesting that it wasn't really worth it! The memo also suggested 'buying property' as a true alternative to a pension....
Probably very good advice....
But hey, as archaeologists we are all used to living in poverty
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28th March 2006, 07:34 PM
Well Toby, in answer to your question my company does provide a pension, but does not contribute any portion to it. You are indeed lucky to have an employer who does. But, in light of the often short tenure that archaeologists have at each company (even established staff like ourselves) it isn't any more useful than any other savings plan. Employment for life that used to help a pension reach a useful size rarely happens any more, certainly not in our industry. By the way, do all the staff at your company have access to this pension plan that your employer contributes to, or just the 'permanent' staff?
The last time I put money into a pension, with a local authority unit a few years back, it came out exactly the same size as it went in because it hadn't been in long enough. I could have got a better return on a current account. Then again with the pensions scandals that seem to have been rife in the recent past maybe I did pretty well.
And anyway I used it up during the brief spell of unemployment and for my moving expences. Why on earth would I want to put money into something arranged by my employer, when I can do that by myself from the whole range of options?
My own personal view is that private pensions are an incredible rip off. My father disagrees, but he is an IFA!
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28th March 2006, 08:35 PM
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28th March 2006, 08:36 PM
Quote:quote:My own personal view is that private pensions are an incredible rip off.
Blimey, Merc. Something we can
almost agree on ! [:0]
Some private pensions are good, but it really depends on how much you can get in there and for how long, and how they perform (ie. if the pension company invests your money wisely or not). A lot of company pensions have gone bust recently or been raided by the parent company but they are still worth having a look at but being 'buyer aware'.
I accrued a civil service pension over nearly 20 years, which I opted to have 'preserved' when I left. I do at least know that I will have a [u]little</u> something to look forward too when I retire. I emphasise 'little' because I've have received a forecast from the administrator .....
As I don't really know what my employment position will be in the next couple of years I am holding off taking out a new private pension of any sort, particulary as many of them are just not worth it for the small amount I can afford to pay in. If I got a good permanent job somewhere where the employer was contributing I wouldn't be jumping in with both feet and would take advice. I'd rather have the option of being paid more and being able to invest that money in other ways.
But in the meantime I'll be putting my money (when I get a job that is) 'under the mattress'
, aiming to pay off my mortgage before I'm 45 (in 6 years time), then saving like crazy or investing in property !
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28th March 2006, 10:10 PM
Can I suggest that people get proper advice about penions and investments rather than listen to statements such as
"My own personal view is that private pensions are an incredible rip off".
Advice should come from a MIFA - a member of the Institute of Financial Advisors.
Pensions offer advantages over other forms of investments in the form of tax relief when the money is paid in and they are free of capital gains tax. Money taken out of the scheme is subsequently taxed.
It is a common myth that a private pension will pay out say 50% of the salary - a final salary scheme- only 16% of none government workers have one of these. A private pension scheme is more like a saving fund and an annual amount is paid out an "annuity". This is about 4% of the fund at the moment.
As Toby pointed out an independent source of advice is
http://www.thepensionservice.gov.uk
is very useful.
There is a pensions crisis in the UK at present and it is best to be informed about your future.
I would also look at ISAs tax free savings accounts.
Peter Wardle
(Whatever next! archaeologists discussing pensions and investments).
