Can't afford the opt in price..... options?

A question about : Can't afford the opt in price..... options?

Hi All,

Despite my understanding that the minimum pension contribution was 2% (then going up to 5% & 8% eventually), my current employer has elected to offer only 8.8% to start off with.

Which is too much for me at the moment.

Can I set up another pension with the 2% option, or not?

Not entirely sure what my options are tbh. Bit of a bombshell as the price was only indicated this week, and I've got 1 week to opt out. But I would like to know how I can proceed.

FWIW, I did have a private pension that was frozen due to some poor advice. Is it worth setting this back up?

Thanks in advance for any info.

Best answers:

• have you made a typo? 8.8% is more than 2%. Do you mean 0.8 or 1.8?
  Quote:
• Thanks for the quick reply
  not a typo - they've set the employee contribution as 8.8% straight away (effective from this month).
  Thanks for the clarification with my personal private pension.
  The situation is that I'm in Education (usually seen as a "swear word" ).
  I had a private pension a few years ago with Allied Dunbar (!), but was told that due to the better Teachers Pension Scheme, I would be better to jump into this and freeze my personal pension.
  The hiccup was that I wasn't told how significantly higher the contributions would be, and couldn't afford to do it.
  So I found myself in a situation where my old pension was frozen, with no ability to get into the "better" TPS.
  Until now. The Government option seemed the ideal opportunity to get back in to it. Sadly, I got hit with this notification of a quite high contribution, and I find myself back in the same situation as before.
  I'm guessing that there's not much I can do at the moment, until I can afford to join the workplace pension.
• Are you sure the whole 8.8% is the employee portion, with the employer and tax relief portions on top of that?
  Is this a final or average salary or some other defined benefit pension? That type would explain the relatively high employee portion, since the employer would be likely to be paying twice that on top of it.
  If you can't do the whole amount, you could ask about doing it for a few months a year so on average it's what you can afford.
• "thrown away" about 5 yrs. But I didn't think I would be in teaching as long as this.
  Anyway, it's a fruitless exercise with the "shoulda woulda coulda". My point being that whilst it was apparently good financial advise, it would have been prudent to check if it was feasible at the time. However, the fact is, at present, joining the TPS isn't an option, regardless of how appealing it may be.
  So I need to find a plan b, until I can get into the programme.
  Do I have any options, or should I continue to read comments about what I should have done before?
  Is there an alternative, or just wait until I can get into the scheme (although it seems terrible to do nothing rather than something).
• Will have to see what I can do.
  Thanks.
• Perhaps say more about why it's not affordable right now? If it's due to a DMP, say, it's normal for DMP payments to be adjusted to allow for pension contributions.
  If you can afford 2% it seems that you could afford to be in the scheme for about three months of each year. Beats nothing.
• In general it is a mandatory requirement to allow opting out at any time and to allow opting in on request at least once a year. I don't know whether TPS has somehow got around those auto-enrolment requirements, though.
• You can afford to join the TPS since it is unaffordable not to. Make savings elsewhere otherwise you will be working until you are 75, or in poverty, or worse. It's not only a cracking pension but life cover and incapacity pension built in. You are giving up circa 18% of pay by not being in it!!!!
• Basically, whatever you have to do, do it- but you can't afford to let the TPS pass another day w/o you in it.
  JOIN NOW