Changing pension % from default 3%

[IloveMYredTROLLEY!]

Today is my 1 year anniversary since starting at Royal Mail, but what threw me was that I was given my pay rise and had the default 3% pension deductions in today's wageslip...

Is it too late for me to send off the pension plan form and request the maximum % (7?) per week? As today's pay was for work I did last week, I thought I had another week to sort this out before I would get the pay rise or have pension plan deductions!

Given that this is my first ever pension at the rather late age of 36, I thought it would make most sense to go with the "intensive" plan, especially given I'm only going to get deductions based on my 22.5 hour contract and not the typical ~35 hour week I normally put in.

[Guevarista]

TBH... Personally, I wouldn't even bother (in fact I don't) with a part 'career average'/ part 'defined contribution' pension scheme. Historically, they provide very poor benefits at maturity, and current investment conditions give me no reason to believe that situation will change. (Especially as the whole RM scheme is very much in the melting pot at the mo). Once again, and I do talk on a personal level, I'd prefer to invest any spare cash in anywhere other than a non-final salary pension scheme. (I have to keep repeating all this 'in my opinion' stuff due to FSA regulations). First thing I would do, and have done, with any 'disposable' income is reduce high interest debts (credit/store cards). Then I'd overpay on mortgage (if you have one, look into it), up to the level acceptable to your lender. Then I'd look at safe ways to invest cash and maintain reasonable accessibility (eg ISAs, protected overseas accounts)... As I say, this is all just my opinion. But I'm quite happy with my own financial situation - having followed my own advice!

[Guevarista]

Oh yes, and perhaps more importantly.... In my opinion (!), anyone in RM at the moment, with fewer than 10 years service ought to be keeping an eye on the 'Situations Vacant' ads... Moya has got a history of 'adjusting headcount', so a recently opened pension pot wouldn't amount to a hill of D2Ds. Good luck!

[RobertT]

As the OP joined RM 1 year ago they are on the defined contribution scheme not final salary or average salary so their contribution levels are 3% + 5% from RM, 4% +6% or 5% + 7%. They can pay in more than 5% if they chose but won't get any more off RM.
More info here:
http://www.zurich.co.uk/royalmaildcplan ... faqs.htm#2" onclick="window.open(this.href);return false;

[RobertT]

TBH... Personally, I wouldn't even bother (in fact I don't) with a part 'career average'/ part 'defined contribution' pension scheme.

If that's the case then you're saying no to a lot of free money.

Historically, they provide very poor benefits at maturity

I have been with RM for over 20 years and in that time have put in about £10,000 into the pension once tax relief has been taken off. The current cash value if I was 60 today would be about £100,000. I'd say that was pretty good!

and current investment conditions give me no reason to believe that situation will change.

Equity markets go down aswell as up that's the nature of them. Infact over the last 18-20 months they have done rather well, I have a shares ISA and have a fund that's gone up over 60% in that time.

First thing I would do, and have done, with any 'disposable' income is reduce high interest debts (credit/store cards). Then I'd overpay on mortgage (if you have one, look into it), up to the level acceptable to your lender. Then I'd look at safe ways to invest cash and maintain reasonable accessibility (eg ISAs, protected overseas accounts)

All good advice but will your savings keep you ahead of inflation? And will you have enough savings to provide an income to last 20-30 or more years of retirement?

[Tman]

TBH... Personally, I wouldn't even bother (in fact I don't) with a part 'career average'/ part 'defined contribution' pension scheme.

If that's the case then you're saying no to a lot of free money.

Indeed, Guevarista is giving out very bad advice. Incredibly bad, in fact...

[Judgee]

All company pension schemes are better than having none at all. The old RM pension was very good, thats why they changed it. I am in the new scheme like yourself were the payout will be less than half the old scheme paid out. I didnt bother joining the RM pension when I initially started many years ago and I really regret it.

With the scheme we are in not only do RM put in a bigger chunk than you, your contributions are partly tax deductable and so what you pay in will also be greater than the amount you will miss at the end of the week.

If I were you I would raise it to 5%, RM will then pay in an additional 7% which will be the best bang for you buck!

By all means pay of debts, mortgages, etc if you have any spare cash asap. But the RM pension is about as safe an investment that you can make!

If you really want to invest, invest in some good wine, experts say that has increased in value over the years far greater than anything else. Or gold thats the next best thing. Of course being a postie, like me you can probably only afford a cheap bottle of Pinot grichio and drink it because of all the aggro RM causes you!