@sapiens I doubt very much that it will be any thing other than a SIPP (ie not a defined benefits pension in any way) and hence it is 21.6% free money, into his pension.
@fromtheearth I opted out in the exact same situation and regretted it. Just like you, I thought I’d leave the UK soon and needed the money to live in London. 12 years later, I’m still here and I’m kicking myself over 5 years of missing contributions.
@fromtheearth Also (I may be wrong as I was on USS a while ago and know that there were changes), USS pension is defined benefit so it’s a guaranteed income every year.
@fromtheearth Honestly in this situation taking a purely fiancial view that everyone here gives is not the full picture.
The purpose in life isn't to live like a hermit in your youth so that you can retire in luxury and go on cruises to banish the memories of those early years.
If you're struggling to get by and enjoy life and the 10% will make a real difference to that the I'd opt out. At least for while.
On the other hand you say you have savings. If so and it's enough to get by OK for the next few years then sure stay in.
@fromtheearth Along with other comments, perhaps consider it this way.
You’re getting a 2x return on your savings. You spend 10% points of salary worth of savings for a 20% point of salary in return. That’s not a bad investment, is it?
@fromtheearth How many hours of teaching is it? 18k is very low even for unis, so I am assuming this is not full time. How long do you expect to write up? Could you get other sources of income (especially once you have submitted)? Could you do an hour or two of tutoring, for example? Or get another job in the uni.
As other people have said, I would stick with it because it is so much better than most pension schemes. But obviously I can't speak to your financial situation so...
@anonymouswarrior It’s extremely low.. I teach 80hours and this is maximum I can given my visa unfortunately :/ the contract is really exploiting the PhD students in this in-between situation, but that’s a post for another subReddit..
@fromtheearth Ah yes, that makes sense, I'm sorry you're in that position. Does your university or field have any scholarships you could apply for to help with costs while you're writing up?
@fromtheearth Stay in. I work at a University too. I started as a placement student and wasn’t planning on staying beyond the placement but 18 years later I’m still there. Being in a good pension so early on in life puts you in a good position for later life (if you stay of course).
I'd think of it like this. Spending your savings instead of spending the pension investment can be thought of as equivalent to moving money from your savings to the pension. That is, you have the opportunity to "move" your savings into a longer term savings option which nets you an immediate top-up of 200%. To give a sense of how astonishing that is, people go crazy for the 25% top-ups on LISAs.
@fromtheearth Seriously, 21.6% free? And it goes in without tax. I don’t know what your salary is, but if I assume you’re getting enough to pay 20% tax and 12% NI the that 9.8% is really ~6.7% take home. And the 9.8% is also tax free into the pension.
So, assuming the average PhD salary in London of about £23k (according to Google) you’re getting £7222 per year into pension for the princely sum of ~£1500 (after tax) per year. Future you will very much appreciate this. I would say it’s not logical to opt out - it’s a great deal.
Although granted I can understand (particularly at that age and in London) why the extra £120 or so a month would be nice, you’re binning off a lot (~£600 per month!!) for it.
@rich4u2 Its not a defined contribution pension, its a defined benefit. Or at least, as far as OP is concerned it is. It only becomes a defined contribution pension for earnings over an amount that escapes me right now, but which is much higher than OP will be earning.
@fromtheearth Because it's a defined benefit scheme and you're so young you might actually be better off opting out and putting the 9.8% into a SIPP instead.
But, as you have to many other replies telling you, you'd be a mug to opt out otherwise.
