Throwing money into a hole in pensions pot

Boat ownership has been described as a hole in the ocean into which one throws money. Unfortunately, it’s not the only place we seem to throw money without any apparent benefit. I am, of course, referring to saving in a pension scheme, particularly in a private pension scheme.

Most of us who work in the big, bad world outside of the public sector are lucky to have any pension, and when we do, it’s likely to be a defined contribution one. We know what we put in but once it’s in, it is subject to the ups and downs of the market. We may be lucky and get what we expected, but more than likely, unless we have been saving enormous amounts into a pension pot, we will be left disappointed.

There are those of us who have a defined benefits pension. This means, or at least the theory goes, that the employee puts in a certain percentage every month, as does the employer. At the end of the period, the worker gets the agreed percentage.