Consumer Rights: 'I signed up to my firm's pension scheme, but can I really afford it?'

A reader is advised to think carefully before opting out of automatic enrolment – the state doesn't offer a great deal when retirement comes round

Q: The firm I work for added me to its pension scheme. I was worried about the difference it would make to my pay but now that I've had my first pay packet, it's worse than I thought. Basically, I've had a pay cut and I was short of money at the end of the month. Everyone says I should be saving into a pension but I really don't think I can afford it. Am I right in thinking I can say no thanks?

PJ, via email

A: Yes, you are right, but think carefully before making your decision. The new pension arrangement began in October, and eventually all employees will automatically become members of their employer's pension scheme. Employees of the UK's biggest firms are affected first, and the same rules will be applied to smaller firms over the next few years. Instead of deciding whether to join a pension scheme and start saving, workers have to decide whether they want to stay in a scheme or actively opt out.

You may have made it clear you didn't want to join up, but employers have no choice but to sign everyone up in the first instance. If you decide to opt out, your employer will have to try again in three years by automatically re-enrolling you. Again, you will have to decide if to stay in or opt out. So it's important to do the calculations now and each time you find yourself auto-enrolled. To begin with the minimum that has to be paid into a scheme is 2 per cent of your salary. Half comes from you and the rest from your employer, and the Government in the form of tax relief.

From 2018, the minimum that will be paid in is 8 per cent with 3 per cent from your employer. In reality, you've had a pay rise but because you can't get your hands on the additional amount until you retire, and you have less to spend, it feels like a cut. If you opt out, you won't get the benefit in the long term of the extra that your employer is now paying in. It is important to save for retirement because the amount of money pensioners get from the state is small. Many people get a nasty shock when they realise just how little they have to live on if that is their only source of income.

If you want to have a reasonable standard of living in retirement, you have to save. You may feel you can't afford to do that on your current salary. Will you be able to do so if and when your salary goes up? Are you young enough to put off saving into a pension for a few years? The younger you are when you start, the better off you will be in retirement. It's very easy to keep finding reasons not afford to do it now such as getting married, having children, buying a house.

Before making the decision to opt out, go through your spending to see if there is anything else you could cut down on that would allow you to save into your pension. It's also worth going through all the figures with the person at work responsible for auto-enrolment so you know what you'll be losing if you do say no thanks.

***

Q: I have been badly treated by the NHS, and want to claim compensation. I've been ill for years, and my treatment has been good in the past, but my most recent bout of illness wasn't diagnosed for months, and I had to have much more invasive surgery than would otherwise have been necessary. I lost a lot more income through time off work. There must be some way of getting justice. I can't afford a solicitor.

GB, Tyneside

A: Cases like this are difficult to win. Even if your treatment has gone wrong somewhere, it may be no one's fault. You have to prove someone in the chain of people involved has been negligent. That can be difficult and emotionally demanding.

Start by going through the NHS complaints system. Ask your doctor for details. If the hospital accepts your arguments, you may be offered compensation and an acceptable settlement could be reached. If you don't get a settlement in your favour, you have to choose between dropping the claim or taking a case to court.

You need to discuss this with a solicitor with expertise in such cases. Many will give you a first appointment free. Check with the Law Society lawsociety.org , ask your local advice agency or talk to the charity Action Against Medical Accidents avma.org.uk

www.moneyagonyaunt.com

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Sport
Adnan Januzaj and Gareth Bale
footballManchester United set to loan out Januzaj to make room for Bale - if a move for the Welshman firms up
News
Young Winstone: His ‘tough-guy’ image is a misconception
people
Arts and Entertainment
Ellie Levenson’s The Election book demystifies politics for children
bookNew children's book primes the next generation for politics
News
Outspoken: Alexander Fury, John Rentoul, Ellen E Jones and Katy Guest
newsFrom the Scottish referendum to the Ice Bucket Challenge, our writers voice their opinions
PROMOTED VIDEO
Arts and Entertainment
Pharrell Williams' “Happy” was the most searched-for song lyric of 2014
musicThe power of song never greater, according to our internet searches
News
i100
Sport
Tim Sherwood raises his hand after the 1-0 victory over Stoke
footballFormer Tottenham boss leads list of candidates to replace Neil Warnock
Arts and Entertainment
L to R: Hawkeye (Jeremy Renner), Captain America (Chris Evans) & Black Widow (Scarlett Johansson) in Avengers Assemble
film
News
Nigel Farage celebrates with a pint after early local election results in the Hoy and Helmet pub in South Benfleet in Essex
peopleHe has shaped British politics 'for good or ill'
Arts and Entertainment
Sink the Pink's 2013 New Year's Eve party
musicFour of Britain's top DJs give their verdict on how to party into 2015
Sport
Yaya Sanogo, Mats Hummels, Troy Deeney and Adnan Januzaj
footballMost Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
News
Nigel Farage: 'I don't know anybody in politics as poor as we are'
i100
Voices
Strictly Come Dancing was watched by 6.9m viewers
voicesIt has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Arts and Entertainment
Roffey says: 'All of us carry shame and taboo around about our sexuality. But I was determined not to let shame stop me writing my memoir.'
books
News
i100
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

    Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

    Selby Jennings: Quantitative Research | Equity | New York

    Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

    Selby Jennings: SVP Model Validation

    Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

    Selby Jennings: Oil Operations

    Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

    Day In a Page

    War with Isis: The West needs more than a White Knight

    The West needs more than a White Knight

    Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
    Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

    'The day I was shot by the Taliban'

    Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
    Revealed: the best and worst airlines for delays

    Revealed: the best and worst airlines for delays

    Many flyers are failing to claim compensation to which they are entitled, a new survey has found
    The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

    The stories that defined 2014

    From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
    Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

    Disaster looming? Now you know where to head...

    Which British city has become the first to be awarded special 'resilience' status by the UN?
    Finally, a diet that works: Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced

    Finally, a diet that works

    Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced
    Say it with... lyrics: The power of song was never greater, according to our internet searches

    Say it with... lyrics

    The power of song was never greater, according to our internet searches
    Professor Danielle George: On a mission to bring back the art of 'thinkering'

    The joys of 'thinkering'

    Professor Danielle George on why we have to nurture tomorrow's scientists today
    Introducing my anti-heroes of 2014

    Introducing my anti-heroes of 2014

    Their outrageousness and originality makes the world a bit more interesting, says Ellen E Jones
    DJ Taylor: Good taste? It's all a matter of timing...

    Good taste? It's all a matter of timing...

    It has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
    Bill Granger recipes: Our chef's breakfasts will revitalise you in time for the New Year

    Bill Granger's healthy breakfasts

    Our chef's healthy recipes are perfect if you've overindulged during the festive season
    Transfer guide: From Arsenal to West Ham - what does your club need in the January transfer window?

    Who does your club need in the transfer window?

    Most Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
    The Last Word: From aliens at FA to yak’s milk in the Tour, here’s to 2015

    Michael Calvin's Last Word

    From aliens at FA to yak’s milk in the Tour, here’s to 2015