There has been so much in the news recently about public sector pensions and how some workers feel aggrieved because new rules will potentially mean they have to work for a bit longer and pay more in contributions. Whilst I have sympathy for those who are struggling to make ends meet in such a difficult climate, knowledge is power.There are things you can do.
The rumblings from business owners in the private sector suggest that they feel public sector workers generally have better pensions and higher wages than average workers and now public sector workers being dragged into the real world kicking and screaming. As always, there was the typical scare mongering in the press that many will opt out of their pension schemes now, causing further chaos for future governments.
To Opt Out Or Not To Opt Out-That Is The Question
My own feeling is this; no one is holding a gun to your head, if you really are that worried about your future pension pot then you have the option to opt out in most cases. Whilst it’s true that some schemes are more difficult than others to get out of, nothing is set in stone.
So, if you follow that through and opt out, what then? Well firstly, there is no point opting out unless you are going to benefit hugely by doing so. For example, if you opted out and put the money into an investment which is earning more than any government scheme could, then that is a great way to handle your affairs. However if you just opt out and do nothing, then you may as well not bother.
Do You Know The Pension Rules?
I also wonder how many of those who contribute to pensions really understand what the rules are at the other end. Many people don’t realise that when it comes to using the pension they have saved for all their lives, there are restrictions on it’s use. Even worse, is the fact that what you don’t use – you lose! The government get to keep any unused portion. AND, they even tax your pension too! Not a very fair system eh?
Let me tell you a true story….A few years ago I used to know a chap who worked for a company for 30 years. He retired with a golden handshake and a big pension in his 50′s. Sadly, within a year of his retirement he died of a rare cancer. The majority of his pension money- in excess of £60k was lost to his family. What a waste of 30 years of contributions.
Keep Your Pension & Re-Invest It-Tax Free
However there is a way to keep all your pension, extract it as a lump sum so you can invest it AND pass it on to your beneficiaries-Tax Free!
If you are considering opting out of a state or public sector pension then you must get some specialist advice first from who can look at the whole of your own particular financial situation. If you are thinking of opting out you may be interested in our SIPPs investment page here.
If you would like to know more contact us for more information you can download a free pdf or you can watch our video here.
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About The Author
Our ethos is to help people to really understand property investing without all the guff and marketing hype and bias. We are proud to be wholly independent and ethical. No nonsense advice about tax, pensions, property investment and finance via our blogs and social media channels.
Janet Trowell Discountletting.co.uk Join me on Twitter LinkedIn
