Consumer rights: 'How much of a priority is paying into a pension?'

Despite other commitments on a first pay packet, this graduate should still consider planning for retirement
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The Independent Online

Q: I graduated last year and, after hundreds of applications, I've got a job in a small research lab. I'll start on the basic wage but I'm pleased to finally have a job in my area of expertise. I won't earn enough to start paying off my student loan for a while but I have the chance to join the company pension scheme. The employer will make contributions, as well as me paying in 3 per cent of my salary. I know it makes sense to save for the future but I have so many other priorities like my debts, finding a place to live and paying the bills. My dad wants me to join and says "you're never too young to save for retirement". I feel I'm too young to worry about it for a while yet. What should I do?

ST

A: You are both right. If you can make the figures add up you'll be grateful to your dad in 50 years' time as you will have a decent income on which to live after you stop working.

The state pension is small and difficult to live on for current pensioners and it's not likely to improve over the years as people live longer. The bigger the pension fund you build up for yourself the more comfortable you will be in retirement.

Having said all that, I see your dilemma. You have other, more immediate priorities such as paying your rent and saving for a house deposit. For now, work out a realistic budget based on your income and outgoings. If the figures show that you really can't afford 3 per cent of your starting salary see if you can put something aside.

No matter how small the figure is it gets you into the habit of saving every month. Explain to your employer the reason you can't afford to sign up to the pension scheme. He or she might even be willing to match the figure you can put into savings. When you get salary increases try to put some of the extra money aside too and eventually you'll reach the 3 per cent target at which it can go into the pension scheme. And as your wages go up throughout your working life add a bit more to the pension pot to make up for lost time.

Q: At the end of last year my husband-to-be and I booked our wedding for August 2012 and we also booked up our honeymoon through Virgin Holidays. We were asked for a deposit of £350 but we also paid another £650 off the total bill at the same time.

A few weeks later we got the terrible news that my mother has terminal cancer. We were advised by her doctors to bring our wedding forward to April so that we could be sure she would be there. The wedding has been rebooked for 28 April. I have written to Virgin and told them what's happened.

I asked for a refund of the money we had paid and explained that we want to take the holiday at a later date but not this year due to the circumstances. As you will see from the letters I've sent you, we have been offered vouchers to the value of the £350 compulsory deposit.

But they have not made any reference in the letters to the remaining £650 of the £1,000 we paid upfront – although they have told us they will not return this money as it is needed to pay for non-Virgin internal flights included in the holiday.

We have every intention of rebooking the exact same holiday in the future, but we won't book with Virgin again if we can't get this money back.

I know we haven't got a legal leg to stand on, we signed a contract and they are holding us to it. But it's so ironic because every single small supplier (who probably really needed our business) that we paid for the original wedding date – such as the venue and caterer – gave us all our money back without question when we explained our situation. Is there anything we can do?

KB

A: I am glad to say that all of this got sorted out in time for your wedding. When I contacted Virgin Holidays it immediately took action and I know you had a call two days before your big day offering you vouchers to the full value of the amount you paid against your holiday that you can use at any time over the next four years.

I know this was a great relief to you both, that you are very happy with the outcome and happy to rebook with Virgin when the time comes.

Virgin has been very helpful in this situation. As you said, you'd signed a contract. By cancelling your holiday you are in breach of it and under the terms and conditions of the booking you weren't entitled to that money back.

When you rebook your holiday – which will cost quite a lot more than you've already paid as a deposit – check the circumstances in which you would be entitled to cancel without losing your money and think about an additional insurance policy to cover you in the event that something else goes wrong. Then you will have some peace of mind in which to enjoy the trip.

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