put pension hold?

D

dram75

Guest
Hi there,
I know very little about pensions so excuse my ignorance. I signed up to our company pension just over 3 years ago, i was putting in 5% and my company was putting in 5%. Since then my salary has been cut by 30%, bonus's are gone and the 5% contribution from my employer is gone. I am 34. I earn 60k per annum.

I would like to keep my pension going but allot of my colleagues have put there’s on hold. Is it worth paying into at the moment? Will I benefit any more by paying in now than someone who took a break if the markets shoot back? I am leaning towards putting it on hold as i could do with extra disposable income, but i am afraid i will miss out.

Thanks
D
 
You are asking when and if the markets will rebound which is something no one really knows for sure. They have already rebounded quite a lot and there is currently a lot of uncertainty as you know and different people will have different opinions on what will happen over the next few years. If the markets shoot back in say 12 months time you will be in a better position by having kept paying your contributions as you would have been buying more and more units at a lower price up to that point.

If you can afford to keep paying the pension then you probably should as you are getting the top rate of tax relief on your contributions. There has been speculation that that tax relief will be reduced, so you should make use of it if you believe that speculation. If its reduced to say 30% then obviously thats a bit less attractive.

As you have about 30 years left to retirement then don't even bother trying to figure out the markets, just make your contributions if you can afford.

If you would prefer to stop and maybe build up some more cash for a year or so then thats ok too. But only do it if you really need to.
 
How's your overall financial position? Are you going to need that 5% for a house or other important purchases?
 
Thanks for the replies.
Yes i could really do with the extra cash at the moment. I was planning on taking a break for maybe a year or two, hopefully things might have improved by then.

"If the markets shoot back in say 12 months time you will be in a better position by having kept paying your contributions as you would have been buying more and more units at a lower price up to that point."

How significant could these gains be? based on a reasonable recovery.

Thanks
 
Its impossible to say as its a pure guess and it depends on where your pension company has invested your funds.

"Significant" might mean 10% increase, its not like you are going to double you money or anyting.
 
As an example, my fund went down to 18k last year. I kept up contributions, so another 4.5k (including employer contributions) on top for the year, giving 22.5k. My fund is now worth 27.5k according to last pension statement.
 
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