Gloomy pension prospects on average salary?
Discussion
Sheepshanks said:
rossub said:
All these digs at public sector pensions and yet there are plenty of vacancies available 
I'll wager not many at "reasonably senior" level.My advice would be enjoy the benefits your salary offers you now and not get too fixated on growing a pension pot at the expense of everything else. Nobody can predict what will happen to you in the next 10,20,30yrs, job security, starting a family, inheritance etc..
The Leaper said:
LHRFlightman said:
I've just checked my Government statement online and apparently 38 years ago I contracted out, and that part of my pension will pay me a pension of £64.91 a week. Not bad.
However, I've no recollection of who I contracted out to, and whether they even know I'm alive.
Any idea where to start?
Most likely it was a past employer that had a company sponsored pension plan that provided at least as good as SERPS so the employer decided its plan members would be contracted out of SERPS (a better deal financially). Note that the decision was not yours but the employer at the time. ( It could be that you had a personal pension plan and you were able to contract out because it provides at least as good as SERPS, but this is unlikely ). So, think about past employment and membership of the past employers' pension plans because that's where the pension of £64.92 will come from.However, I've no recollection of who I contracted out to, and whether they even know I'm alive.
Any idea where to start?
It is your responsibility to keep in contact with the ex employer and/or administrators about prior plan membership. It is not their responsibility to keep track of you...for example, how will they know that you changed address unless you tell them so? This is a critical point but so often overlooked by people, hence the number of unclaimed private pensions in UK.
R.
LHRFlightman said:
The Leaper said:
LHRFlightman said:
I've just checked my Government statement online and apparently 38 years ago I contracted out, and that part of my pension will pay me a pension of £64.91 a week. Not bad.
However, I've no recollection of who I contracted out to, and whether they even know I'm alive.
Any idea where to start?
Most likely it was a past employer that had a company sponsored pension plan that provided at least as good as SERPS so the employer decided its plan members would be contracted out of SERPS (a better deal financially). Note that the decision was not yours but the employer at the time. ( It could be that you had a personal pension plan and you were able to contract out because it provides at least as good as SERPS, but this is unlikely ). So, think about past employment and membership of the past employers' pension plans because that's where the pension of £64.92 will come from.However, I've no recollection of who I contracted out to, and whether they even know I'm alive.
Any idea where to start?
It is your responsibility to keep in contact with the ex employer and/or administrators about prior plan membership. It is not their responsibility to keep track of you...for example, how will they know that you changed address unless you tell them so? This is a critical point but so often overlooked by people, hence the number of unclaimed private pensions in UK.
R.
1. Do you have any paperwork, payslips, statements etc that could give you a start?
2. You could use the free government tracing service which is at :
https://www.gov.uk/find-pension-contact-details
Make sure that you use this link...there are many organisations out there offering their services but they are not free and usually nor very good. Also, note that this gov service is not always successful.
3. You could contact Money Service for help (it's free). Here's a link:
https://moneyandpensionsservice.org.uk/
Good luck.
R.
I'm 41 but a earn similar money to the OP and have done since I was about 35. I aim to pay half my age into my pension as a percentage. So 20.5% currently. To avoid higher rate tax all together I'd have to sacrifice even more as I get a car and also we get a bonus most years. So once my pay got way past £60k we stopped claiming child benefit.
I also lump £500 a month into an ISA and have nearly paid the mortgage off (that has more to do with selling up in London).
Currently I've only got about £130k in my pension pot but I think that it should grow to give an income of something like £30k in today's money. Add the state pension to that and you're at £40k with no children at home (we have two), no pension payments or ISA payments etc.
My other savings pot is £45k in a mixture of ISA and offset mortgage. But I see that as an emergency fund which if I never have to use it could see me retire a year or two early.
I also lump £500 a month into an ISA and have nearly paid the mortgage off (that has more to do with selling up in London).
Currently I've only got about £130k in my pension pot but I think that it should grow to give an income of something like £30k in today's money. Add the state pension to that and you're at £40k with no children at home (we have two), no pension payments or ISA payments etc.
My other savings pot is £45k in a mixture of ISA and offset mortgage. But I see that as an emergency fund which if I never have to use it could see me retire a year or two early.
PeteinSQ said:
I'm 41 but a earn similar money to the OP and have done since I was about 35. I aim to pay half my age into my pension as a percentage. So 20.5% currently. To avoid higher rate tax all together I'd have to sacrifice even more as I get a car and also we get a bonus most years. So once my pay got way past £60k we stopped claiming child benefit.
I also lump £500 a month into an ISA and have nearly paid the mortgage off (that has more to do with selling up in London).
Currently I've only got about £130k in my pension pot but I think that it should grow to give an income of something like £30k in today's money. Add the state pension to that and you're at £40k with no children at home (we have two), no pension payments or ISA payments etc.
My other savings pot is £45k in a mixture of ISA and offset mortgage. But I see that as an emergency fund which if I never have to use it could see me retire a year or two early.
Give or take a few k in your figures that's spot on my situation. Additional complication though that my wife is carer of one of our daughters, so her pension contributions are zero, just £200 into an ISA a month.I also lump £500 a month into an ISA and have nearly paid the mortgage off (that has more to do with selling up in London).
Currently I've only got about £130k in my pension pot but I think that it should grow to give an income of something like £30k in today's money. Add the state pension to that and you're at £40k with no children at home (we have two), no pension payments or ISA payments etc.
My other savings pot is £45k in a mixture of ISA and offset mortgage. But I see that as an emergency fund which if I never have to use it could see me retire a year or two early.
I’m putting 9% / 8% (employer), I’m fortunate to be on a decent wage and have 14 years in a DB pension, guessing £8k Pa in todays money. Will increase to 15% once I don’t have to commute / rent a second home for work.
My figures show a gap at 57 to my planned £35k pa plus lump sum.
Wife earns £30k and her pension is 3 / 3, so essentially next to nothing. Plan is to buy a property to rent in her name after our next house move.
Equally her mum went to hospital 4/5 weeks ago and was told she won’t see Christmas, so you have to enjoy the now (62).
We are 34/29.
Current plan is to retire at 55, savings to 57, then my pension to last until 75, after that state pension.
My figures show a gap at 57 to my planned £35k pa plus lump sum.
Wife earns £30k and her pension is 3 / 3, so essentially next to nothing. Plan is to buy a property to rent in her name after our next house move.
Equally her mum went to hospital 4/5 weeks ago and was told she won’t see Christmas, so you have to enjoy the now (62).
We are 34/29.
Current plan is to retire at 55, savings to 57, then my pension to last until 75, after that state pension.
Armitage.Shanks said:
My advice would be enjoy the benefits your salary offers you now and not get too fixated on growing a pension pot at the expense of everything else. Nobody can predict what will happen to you in the next 10,20,30yrs, job security, starting a family, inheritance etc..
I think this is good advice. Things are too unpredictable to worry too much. I once had a plan, which was great until a divorce blew that out of the water. After that I didn't bother with a plan, but got on with life. So until about 2 years ago I hadn't even thought about pensions. I just knew I had 2 from employers & a state pension. Had no idea what the value was. So about 2 yrs ago I checked where I was. i was somewhat surprised how with no real thought i had accrued a healthy pot, between company & state pensions.
I guess what it showed me was time is your friend. Despite being non-resident for a lot of years I'm on track to max out state pension.....mainly because I earned credits from the age of 16. Employer pensions started from when I was 21. A lot of smaller contributions spanning say 40 yrs is a lot better than, trying to catch up over a few years. Obvious really but no less true.
I'm also glad in many ways post divorce I didn't think about it earlier. I would probably have worried about it too much & not got on with doing things in the now.
I also earn just over £100k so put 20% of my salary into my pension to avoid the 60% tax, and my taxable income is therefore just under £100k. I don’t salary sacrifice though as I lose other benefits. I assume I don’t have to submit a SA?
The good new of this 60% tax is that it’s driven me to massively increase my pension contributions and it’s nice to see it going up fast
The good new of this 60% tax is that it’s driven me to massively increase my pension contributions and it’s nice to see it going up fast
Reading these posts has made me very grateful for remaining in the Armed forces until the immediate pension point after 22 years; enabling me to receive a DB index linked immediate pension from the age of 40 that I never made any contributions to.
It won't increase until I'm 55, but at that point all of the CPI rates from when I left until my 55th will be applied in one go, the first being 10.1%.
Kind of makes all the negative parts of the job very forgettable.
It won't increase until I'm 55, but at that point all of the CPI rates from when I left until my 55th will be applied in one go, the first being 10.1%.
Kind of makes all the negative parts of the job very forgettable.
GT03ROB said:
So until about 2 years ago I hadn't even thought about pensions. I just knew I had 2 from employers & a state pension. Had no idea what the value was. So about 2 yrs ago I checked where I was. i was somewhat surprised how with no real thought i had accrued a healthy pot, between company & state pensions.
I guess what it showed me was time is your friend.
This is the most important thing about a pension. Just start as soon as you can. Even £100 a month over 40 years can grow into a pot that at least is livable. I guess what it showed me was time is your friend.
As for the predictions, the pension for my job gives assumptions based on no growth, 2% and 4% growth. The actual growth has far exceeded those assumptions, and they are below the average annual stock market return. Althought my pot is not looking at all pretty at the moment! Gone backwards so far this year.
matt21 said:
I also earn just over £100k so put 20% of my salary into my pension to avoid the 60% tax, and my taxable income is therefore just under £100k. I don’t salary sacrifice though as I lose other benefits. I assume I don’t have to submit a SA?
I think you will need to submit a SA, as you'll want to claim the other 20% from your net pension contributions back if you don't SS.Miocene said:
Give or take a few k in your figures that's spot on my situation. Additional complication though that my wife is carer of one of our daughters, so her pension contributions are zero, just £200 into an ISA a month.
Until recently my wife was looking after the kids and had very little in the way of pension. But then I think the way to look at that is that as a couple you don't have an income coming in from that side of the relationship and when you eventually get your state pensions you'll hopefully get £10k from that source. So actually you'll be better off from that side of the equation than you are now. My wife has just got a job working in local government so even though she will only get 25 years of contributions she will actually get a half decent pension from that, especially when you then add the £10k from the state pension.
We're not going to retire as millionaires but we're not millionaires now, and I don't think we'll need that much in retirement either.
PeteinSQ said:
Miocene said:
Give or take a few k in your figures that's spot on my situation. Additional complication though that my wife is carer of one of our daughters, so her pension contributions are zero, just £200 into an ISA a month.
Until recently my wife was looking after the kids and had very little in the way of pension. But then I think the way to look at that is that as a couple you don't have an income coming in from that side of the relationship and when you eventually get your state pensions you'll hopefully get £10k from that source. So actually you'll be better off from that side of the equation than you are now. My wife has just got a job working in local government so even though she will only get 25 years of contributions she will actually get a half decent pension from that, especially when you then add the £10k from the state pension.
We're not going to retire as millionaires but we're not millionaires now, and I don't think we'll need that much in retirement either.
I've had to reduce my monthly pension contributions via Sal sac as wife doesn't work currently and my salary alone is covering our outgoings however still putting away just over 20% per month including employers contribution.
In my mind once the overall pension value reaches around 200k then hoping compounding will help to do more of the lifting but also aware we can't predict what the market will do at any given time so not much point stressing too much and as others have mentioned might as well do some 'living' too.
Nano2nd said:
I think you will need to submit a SA, as you'll want to claim the other 20% from your net pension contributions back if you don't SS.
Once you breach the 100k earnings they will trigger the process for you to complete a SA. I have started salary sacrifice now for 10% to try stay below 100k but this all based me trying to understand gauge what my bonus could be next year. Not complaining as blessed in comparison to so many who work so hard in lots of other sectors and far less income. I just do not want to hand money over to the tax man when it could be nestled away for when I am 57!PeteinSQ said:
We're not going to retire as millionaires but we're not millionaires now, and I don't think we'll need that much in retirement either.
Some people never grow out of materialism and consumerism even into their 70s.If you can, then the need for a huge pension is much reduced.
Mr Whippy said:
Some people never grow out of materialism and consumerism even into their 70s.
If you can, then the need for a huge pension is much reduced.
We're not very material right now. The only reason we spend any money at all is because we've got two kids that need clothes, holidays, school trips etc. If you can, then the need for a huge pension is much reduced.
Nano2nd said:
I think you will need to submit a SA, as you'll want to claim the other 20% from your net pension contributions back if you don't SS.
You can just call HMRC and give them the details.5minute conversation, but you'll likely hold 30mins to get through to someone.
Saves filling out and posting paperwork though
Jakey123 said:
Nano2nd said:
I think you will need to submit a SA, as you'll want to claim the other 20% from your net pension contributions back if you don't SS.
You can just call HMRC and give them the details.5minute conversation, but you'll likely hold 30mins to get through to someone.
Saves filling out and posting paperwork though
It took two attempts actually, the first woman was hopeless, but now back on a nice simple 1257L and no SA to submit, and hopefully never have to ring them again.
Edited by WayOutWest on Tuesday 21st March 18:38
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