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Taking a break from pension...

Discussion in 'Personal' started by scoggins1992, Oct 2, 2016.

  1. scoggins1992

    scoggins1992 New commenter

    Bit of a personal question here...

    I'm currently in a bit of debt, nothing major, but I hate having it hang over my head. I want to clear this and start saving for a deposit as soon as I can because I know we'll be in a much better position paying into our own mortgage than someone else's (we're renting). My partner isn't in a position to save at the moment so it rests on my shoulders.

    I'm considering stopping my pension temporarily until the debt is cleared and then restarting it. Hopefully I'll be out for less than a year. I'm thinking this will be more beneficial financially short term and hopefully have little effect long term but I don't full understand the pension scheme.

    Any thoughts or advice?

    Thanks in advance! :)
  2. ilovesooty

    ilovesooty Star commenter

    I think it's an awful idea - sorry. Perhaps you should speak to a FA.
  3. nomad

    nomad Star commenter

    I am not sure it is possible. If you are in pensionable service, you must be either opted in or out. If you opt out you will lose employer's contributions.
  4. wanet

    wanet Star commenter

    The difference won't be as much as you think, as well as loosing employer contribution you will lose tax relief.
  5. wordsworth

    wordsworth Senior commenter

    I am terrible with understanding money stuff, but even I think you mustn't stop paying into your pension, OP.
    ValentinoRossi and Shedman like this.
  6. scoggins1992

    scoggins1992 New commenter

    Thanks all for your honest views, much appreciated.
    Shedman and emerald52 like this.
  7. lindenlea

    lindenlea Star commenter

    Shedman and Lara mfl 05 like this.
  8. GLsghost

    GLsghost Star commenter

    Pension contributions are paid from your gross earnings, before tax is deducted. Notwithstanding the advice that you cannot just stop paying unless you opt out - DONT!!!!!!!! - all that will happen is that the tax you have to pay will nircase correspondingly. Instead of the money going into your retirement pot you'll just give it to the Chancellor instead!

    DO go and see Citizens Advice or ring StepChange for confidential, free and good debt advice and help.
    Shedman, nomad, Yoda- and 1 other person like this.
  9. emilystrange

    emilystrange Star commenter

    don't. you will never get those months back unless you spend a big lump sum later. not a good idea.
    Yoda-, emerald52 and Lara mfl 05 like this.
  10. Duke of York

    Duke of York Star commenter

    Those of a certain age will remember the newspaper adverts depicting a man at various decades of his life, pondering about pensions. At 20, it was "what's the point of a pension?" At 30, it was "Nah, too many other things to do." At 40, it was "Maybe I ought to think about taking out a pension." At 50, it was "I wonder if it's too late to take out a pension?" At 60, it was "I wish I had taken a pension out."

    They could well have been describing me. Thankfully, the choice was made for me, so I'm not destitute, but I might easily have been without my pension.

    I would urge everyone to regard their pension seriously. You can never tell how valuable it may become to you when you've had enough of working.
    Shedman, Yoda-, Lara mfl 05 and 2 others like this.
  11. frangipani123

    frangipani123 Lead commenter

    I can only re-iterate what others have said - don't do it. One year could turn into several, you will lose out on the employer contribution etc etc. Sixteen years ago when I returned from overseas I scraped together a deposit to buy my house and so I opted out of the pension for 3 years. I was very strapped for cash and it seemed the best option. Fast forward and I'm now semi-retired and I really wish I hadn't done that. All those years ago, I did eventually take a second job and then was better able to cope. I suggest you go through all of your spending, renegotiate all your bills, cut back everywhere, sell items if you can, take a second job if you can. Good luck.
    Shedman, nomad, Yoda- and 4 others like this.
  12. Shedman

    Shedman Star commenter

    Pension should be your top priority. Once you stop paying it you may never go back to making contributions. If your debt is manageable stick with it, it will eventually go. Better to make economies elsewhere first. Start shopping at discount supermarkets - they save us about £40 per week on what we were spending at the big name supermarkets and the stuff is just as good but you don't have the big ranges.
    nomad, Yoda-, Lara mfl 05 and 2 others like this.
  13. Shedman

    Shedman Star commenter

    I'll be retiring next July and I have always paid the teachers pension. I've also acquired a tidy sum in AVCs and I will get a state pension at 66. My wife worked for BT for 20 years and has a very nice little pension to come from their schemes, she currently works for the NHS and contributed to their scheme and with her state pension we will have 6 pensions coming in between us! Let's just hope we keep our health and strength to enjoy them!
  14. Didactylos4

    Didactylos4 Star commenter

    Yoda- and Lara mfl 05 like this.
  15. Yoda-

    Yoda- Lead commenter

    A bad idea. Look at other options. You will regret this profoundly in the long term.
    emerald52 and wanet like this.
  16. snail_friendly

    snail_friendly Occasional commenter

    At the beginning of my teaching career I accidentally opted out of my pension for a period of time! Ticked the wrong bloody box!

    I don't think it's made much difference! I hope not at least!
  17. Shedman

    Shedman Star commenter

    Let's just say I live in hope - only 4 years to go.
  18. Shedman

    Shedman Star commenter

    Look into buying back the years if you can afford to.
  19. bombaysapphire

    bombaysapphire Star commenter

    As others have said this will cost you a lot more than you will save due to tax relief and employer contributions. My Mum always says that getting old is bad enough, being poor as well is something to avoid if you can.
  20. snail_friendly

    snail_friendly Occasional commenter

    @Shedman - That's something I intend to look into in a few years time after I've bought a house and have some 'spare' savings!

    On the other hand I've been teaching since I was 21 and my accidental opt out was for 2 years at the beginning of my career when my salary was much lower so by the time I retire (at goodness knows what age) will it really have that much of an impact?

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